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TMI Blog1989 (12) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ii), first proviso, or otherwise, even though the Payment of Bonus Act is applicable to the assessee and hence first proviso to section 36(1)(ii) alone is applicable?" The assessee is a company. It manufactures staple fibre yarn and polyester viscose yarn. The Commissioner of Income-tax, exercising his power under section 263 of the Income-tax Act (for short, "the Act") revised the order of assessment passed by the Income-tax Officer for the reason that the Income-tax Officer had not disallowed the bonus paid in excess of the amount stipulated as payable under the Payment of Bonus Act. The Commissioner held that the payment of Rs. 1,22,995 was in excess of the amount of bonus payable under the Payment of Bonus Act and that the said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 36(1)(ii) of the Act. It reads thus : "36. (1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 (i) the amount of any premium paid in respect of insurance against risk of damage or destruction of stocks or stores used for the purposes of the business or profession ; (ii) any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission : Provided that the deduction in respect of bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge bonus on the basis of production or productivity also. Section 17 has been left intact. That section in express terms refers to puja bonus and other customary bonus as available for deduction from the bonus payable under the Act, thus making a clear distinction between the bonus payable under the Act and 'puja bonus or other customary bonus'. So long as this section remains without amendment, the inference is clear that the categories covered by the Act, as amended, did not deal with customary bonus." It is not correct to say that, in all cases where the first proviso to section 36(1)(ii) has no application, the payment of bonus cannot be allowed at all under section 36(1)(ii). The question whether the second proviso is applicable or n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shna Pillai [1990] 182 ITR 449) and I.T.R. No. 399 of 1985 (Kumar Industries' case [1990] 183 ITR 156 ). We make it clear that we are of the opinion that the bonus paid in the circumstances of the case requires to be examined to ascertain whether it will stand the test specified in the second proviso to section 36(1)(ii) of the Act. Since we have taken the above view, we decline to answer the question. However, we direct the Tribunal to consider the matter afresh in the light of the decisions of this court in P. Alikunju's case [1987] 166 ITR 611, I. T. R. No. 185 of 1985 (P. Balakrishna Pillai's case [1990] 182 ITR 449) and I. T. R. No. 399 of 1985 (Kumar Industries' case [1990] 183 ITR 156). A copy of this judgment under the seal of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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