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TMI Blog1979 (11) TMI 35X X X X Extracts X X X X X X X X Extracts X X X X ..... ot actually paid during the relevant year of account ? " The assessment year involved is 1972-73. The assessee is a firm carrying on the business of manufacture and sale of machinery parts for sugar mills and also of repair work maintaining its books of account on mercantile system, the previous year being the financial year ending on 31st of March, 1972. In that year, the assessee had made a provision to the extent of Rs. 26,918 towards payment of bonus. This was made to cover the liability brought forward of the erstwhile HUF which carried on business till the assessment year 1971-72. In the course of the assessment proceedings, the assessee contended that it was entitled to deduction for an amount of Rs. 40,610 for which the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee had made profits in the year in question which exceeded the amount of minimum bonus payable under s. 10. The matter is governed by s. 11 of the Act. Under that provision, in cases where the allocable surplus exceeds the amount of minimum bonus payable under s. 10, the employer is liable to pay to every employee in the accounting year bonus which is proportionate to the salary or wages earned by the employee during the accounting year subject to a maximum of twenty per cent. of such salary or wage. Section 2(4) defines allocable surplus to mean sixty-seven per cent. of the available surplus in an accounting year or sixty per cent. of such available surplus in an accounting year depending on whether the employer has made arran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in its account books. Thus, the fact that the assessee had not made provision for the bonus liability was inconsequential. Counsel for the revenue urged that the matter should be sent back for an inquiry as to whether the amount of Rs. 40,610 claimed by the assessee was, in fact, the amount of bonus payable under s. 11 of the Act. It was urged that the amount in question represented the allocable surplus and not the liability created under s.11 of the Act. The contention does not appeal to us. It is clear from the order of the AAC that the amount of Rs. 40,610 was not the allocable surplus worked out by the auditors, but was the liability under the Payment of Bonus Act for the period April 1, 1971, to 31st March, 1972. Further, it is cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he test laid down for the allowability of non-statutory bonus in that case, cannot be applied to the statutory liability created by ss. 10 and 11 of the Payment of Bonus Act which is analogous to a liability for payment of sales tax. The case of Kanpur Tannery Ltd. [1958] 34 ITR 863 (All) is also not in point, for, in that case, the statutory liability arose only after ascertainment by an order passed by a competent officer. Here the liability is created by the statute itself, and no formal order is needed. We, accordingly, answer the question in the negative, in favour of the assessee and against the department. The assessee is entitled to costs which are assessed at Rs. 200. The counsel's fee is also assessed at the same figure. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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