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TMI Blog1987 (9) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... or his work. The bank account maintained showed receipt of Rs. 8,32,346 from the Tata Iron and Steel Company Ltd., in respect of the contract works done. The Income-tax Officer estimated the net profits at Rs. 83,240 for the assessment year 1974-75. The claim of the assessee to deduct a sum of Rs. 29,228 out of the estimated net profit was disallowed on the ground that the estimation of net profit takes within its sweep all conceivable expenses including payment of bonus, depreciation, etc. On appeal, it was held that in the earlier years, deduction under the head of bonus, as claimed, used to be allowed and the same pattern has been followed in the cases of other contractors in the region. With this observation, the deduction of bonus clai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t bonus or anything else. The Revenue, however, did not challenge that a sum of Rs. 29,228 has been paid by the assessee by way of bonus to his employees. Mr. Rameshwar Prasad No. 2, appearing on behalf of the assessee, on the other hand, submitted that the question referred is a pure question of fact as it relates to the quantum of expenditure to be allowed based on comparable cases and assessment of previous years. The net taxable income held by the Revenue is based on an estimate which by itself is a finding of fact. Learned counsel also submitted that bonus is a statutory liability deduction whereof is allowable under section 36(1)(ii) of the Income-tax Act and this having not been questioned, the argument, on behalf of the Revenue, d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Raj), it was held that where the taxable income was arrived at by estimate, determination of the question of quantum of expenditure by the Tribunal was a pure question of fact. In the case of Ram Singh and Soils v. CIT [1981] 131 ITR 622 (All), it was held that the liability for statutory bonus created by sections 10 and 11 of the Payment of Bonus Act, 1965, is analogous to the liability for payment of sales tax. The liability is created by the statute itself and no formal order is necessary. The assessee is entitled to the deduction of such a liability in the year in which it arises. This deduction was allowed even though the assessee did not make a provision for it in its accounts. In the instant case, the Tribunal found that in the ea ..... X X X X Extracts X X X X X X X X Extracts X X X X
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