1989 (12) TMI 18

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..... any material to come to the conclusion that the payment of bonus was customary bonus and that the ban under the first proviso to section 36(1) (ii) does not apply in allowing such expenditure ? " The respondent is an assessee to income-tax. We are concerned with the assessment year 1976-77. The accounting period ended on September 30, 1975. The respondent is also an assessee to sales tax. He claimed deduction of purchase tax payable by him under the Kerala General Sales Tax Act in respect of kernels purchased by him for the purpose of export in the course of export business, in the sum of Rs. 3,39,133. This plea was disallowed by the Income-tax Officer. The Appellate Tribunal, following the decision of this court in Hindustan Cashew Prod .....

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..... questions of law, formulated hereinabove, for the decision of this court. We heard counsel for the Revenue, Mr. P. K. R. Menon, as also counsel for the assessee, Mr. P. Balachandran. It appears that, in the light of the decision of this court in Hindustan Cashew Products (P.) Ltd.'s case [1971] 28 STC 730, the assessee will not be entitled to exemption under the Kerala General Sales Tax Act on the purchase of cashew kernels and so the provision made by the assessee for payment of purchase tax is allowable as business expenditure. The reasoning and conclusion of the Appellate Tribunal, in that behalf, contained in paragraphs 12 and 13 of its order dated December 17, 1982, are entitled to acceptance. But it is brought to our notice that the .....

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..... f the assessee and against the Revenue, but with a rider that it will be open to the Revenue to negative or otherwise cancel the benefit afforded, if the assessee succeeds in the sales tax proceedings ultimately. It has been found that the bonus paid in this case is a customary festival bonus. It was paid on the basis of a settlement. The first proviso to section 36(1)(ii) of the Act will not apply. Even so, the payment, in order to qualify for deduction, should satisfy the test laid down by the second proviso to section 36(1)(ii) of the Act. From a perusal of the order of the Tribunal, paragraph 14 thereof, it does not appear that the Tribunal has evaluated all the three conditions specified in clauses (a) to (c) of the second proviso to .....

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