9911796707
TMI Blog1991 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... was an admissible deduction in computing the taxable income of the assessee ? " Shortly stated, the facts are that in the accounts furnished before the Income-tax Officer, the assessee claimed deduction of different sums as " incentive bonus ". The payment of incentive bonus was claimed to have been made to motivate the workers to produce more. The Incometax Officer, however, treated " incentive bonus " as part of bonus to which the provisions of the Payment of Bonus Act, 1965, were applicable. From the total amount, the Income-tax Officer disallowed amounts which were beyond the maximum limits prescribed under the above Act. He, accordingly, disallowed Rs. 1,51,591, Rs. 1,11,109 and Rs. 1,47,039 for the assessment years 1978-79, 1981-82 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duced in the assessee's Ujjain plant in April, 1970. The incentive bonus was paid by the company in accordance with an agreement reached with the representatives of the Employees' Association in April, 1970. Subsequently, in June, 1973, a revised incentive bonus scheme was introduced as agreed upon by the works manager and the president of the workers' union at Ujjain, in terms of which the employees of the assessee's Ujjain unit have been classified into three main groups, viz., Group I Productive (Direct), Group II Productive (Indirect) and Group III (Non-productive). The said scheme which was subsequently revised in June, 1973, reads as follows : "1. The Revised Incentive Bonus Scheme will be effective from June, 1973. 2. The Rev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g machines against daily converted units. Please see annexure I for details. The total incentive amount for the pay period of one month will be arrived at by multiplying the daily incentive payment rate with the actual number of days worked in a month. 8. This incentive bonus scheme is divided into fourteen (14) stages of units based on production of good pipes for double shift operation per day. This bonus table is valid for the production of units per day corresponding to 16 hours. Any production beyond the said hours will normally not be taken into account in calculating bonus : Provided, however, if due to causes like major breakdown, power failure also occurring during the course of the said two shifts of 16 hours in a day, over whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts shall be ascertained on the basis of the good pipe produced. 14. For employees manning other departments the unit shall be ascertained on the basis of good pipes put to stock. " The scheme, as has been made clear in clause 2, has been worked out solely for the purpose of motivating the employees to achieve higher production of good pipes. It is also found that the payment under the scheme has to be made monthly along with wages of the employees working out the scheme. It is also abundantly clear that the amount paid under the scheme is in no way linked with the actual production that may be achieved by the Ujjain plant at the end of the year or on the annual profits of the assessee-company. There cannot be any doubt that the incent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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