1965 (11) TMI 27

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..... e High Court of Kerala at Ernakulam in Income-tax Reference No. 22 of 1961. C. D. Lonappan, the respondent, was carrying on business in groceries, rice, paddy, etc., under the name and style of C.L.V. Brothers at Mattancherry. During the accounting year ending with March 31, 1956, the respondent had 34 employees. He paid them a total annual salary of Rs. 16,000. As he had made a profit of Rs. 31 .....

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..... the bonus claimed had no relation to the salary or length of service; (ii) the bonus disbursement was only at the end of the year; (iii) the genuineness of the payment was doubtful; and (iv) there were over-writing and erasures in the ledger account of P. V. Lonappan. As the Tribunal refused to make a reference to the High Court, at the instance of the assessee, the High Court directed the Tribun .....

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..... s a question of law and the High Court expressed its opinion, as it came to the conclusion that the Tribunal misdirected itself in law in disallowing a part of the bonus paid to the employees of the assessee. A perusal of the order of the Tribunal discloses that it has rejected the claim of the assessee mainly on the ground that the bonus claimed had no relation to the salary and on the basis of t .....

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..... ing year were substantial. It further held that the bonus given worked out to about 7 1/2 months' salary and that, having regard to the low salary of the employees, it was impossible to say that the bonus paid was not reasonable. Under those circumstances the High Court held that the Tribunal, inasmuch as it did not take into consideration the relevant factors in terms of the said proviso, misdire .....

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..... 36 of the Constitution. The amount involved in the appeal was a few thousand rupees; and no important question of law arises for our decision. The scope of clauses (1) and (2) of section 66 of the Income-tax Act has been laid down by authoritative decisions of this court more than once. In the result, the appeal fails and is dismissed with costs. Appeal dismissed.  
Case laws, Decisi .....

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