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TMI Blog1990 (8) TMI 79X X X X Extracts X X X X X X X X Extracts X X X X ..... the circumstances of the case, the Tribunal was justified in holding that the payment of Rs. 3,31,900 paid as production incentive was in the nature of additional wages and that even if it was treated as bonus it was only contractual bonus which was outside the provisions of the Bonus Act ?" The respondent/assessee is a public limited company. We are concerned with the assessment year 1978-79, for which the previous year ended on December 31, 1977. For the relevant assessment year, the assessee claimed deduction of a sum of Rs. 17,13,893 as payment by way of bonus. It also claimed deduction of a sum of Rs. 3,31,900 paid to the employees as cash award (production incentive). Both these claims were rejected by the Income-tax Officer. Regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the said sum. Regarding the sum of Rs. 3,31,900, the Appellate Tribunal held that the payment was made in commercial expediency to avoid industrial disputes and consequent loss and the payment was more in the nature of additional wages and it was not a payment of bonus to which the Payment of Bonus Act, 1965, will be applicable. Alternatively, the Appellate Tribunal held that even if it was to be treated as bonus, it was a contractual bonus and so outside the provisions of the Bonus Act. The said sum was allowed as a deduction. It is thereafter at the instance of the Revenue that the two questions of law formulated hereinabove have been referred for the decision of this court. We heard counsel. To what extent the bonus paid to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an agreement entered into by the parties or the payment was made as ex gratia, are of no consequence. The Appellate Tribunal did not consider as to whether the sum of Rs. 17,13,893, the ex gratia payment, could be allowed as a deduction in the light of the principles laid down by this court in the above decisions. It seems that the said amount is in excess of the statutory limit of 20% bonus. If that be so, it should satisfy the conditions laid down in section 36(1)(ii) of the Act and as laid down by this court in the various Bench decisions. In so far as this has not been done, the order of the Appellate Tribunal is erroneous in law. Therefore, we answer question No. 1 in the negative-against the assessee and in favour of the Revenue. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the nature of additional wages. This finding is based on no material. It is purely a surmise. Moreover, section 31A of the Payment of Bonus Act has not been considered to determine whether the sum of Rs. 3,31,900 could be claimed as additional wages. It does not appear from a perusal of the order of the Appellate Tribunal that the plea was ever raised that the amount was paid by way of additional wages (para 2. 5). In these circumstances, we hold that the Appellate Tribunal was in error in holding that the sum of Rs. 3,31,900 paid to the employees was production incentive and was in the nature of additional wages. We answer the first limb of question No. 2 against the assessee and in favour of the Revenue. However, it is for the Appellat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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