9911796707
TMI Blog1989 (12) TMI 44X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the income-tax assessment for the assessment year 1976-77. The previous year is the year ended on March 31, 1976. The assessee paid a sum of Rs. 77,200 by way of bonus to its employees. It was contended before the Income-tax Officer that the payment was customary bonus and that was paid as per the Government order dated August 19, 1976. The Income-tax. Officer found that the assessee had no allocable surplus for the accounting period and that, as per the provisions of the Payment of Bonus Act, the assessee was not bound to pay any bonus. He held that the amount paid as bonus could not be allowed in view of the provisions of section 36(1)(ii). The assessee filed an appeal. The Commissioner of Income-tax (Appeals) accepted the conte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Bonus Act, 1965 (21 of 1965), apply shall not exceed the amount of bonus payable under that Act: Provided further that the amount of the bonus (not being bonus referred to in the first proviso) or commission is reasonable with reference to : (a) the pay of the employee and the conditions of his service: (b) the profits of the business or profession for the previous year in question ; and (c) the general practice in similar business or profession;" The second proviso to section 36(1)(ii) is relevant in this case. In order to attract the second proviso, the conditions are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ttracted to the case of payment of customary or contractual bonus. The assessee contended that the bonus was paid as customary bonus and that too as per the Government order dated August 19, 1976. The Tribunal, on a consideration of all the aspects, took the view that the contention of the assessee that the payment of bonus should be treated as contractual bonus is acceptable. While doing so, we feel that the Tribunal has not borne in mind the definite guidelines given by the statute in clauses (a) to (c) to the second proviso to section 36(1)(ii) and explained by this court in CIT v. P. Alikunju, M. A. Nazir, Cashew Industries [1987] 166 ITR 611 and in I. T. R. No. 186 of 1986 (CIT v. P. Balakrishna Pillai, International Cashew Traders [ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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