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TMI Blog1982 (4) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... essee's claim under bonus. The assessee entered into an agreement with its workmen on 29-4-1974. According to this agreement, the assessee was to pay bonus, up to 20 per cent of the wages, for the financial years 1972-73 to 1975-76. According to the assessee, 20 per cent of the wages paid to the permanent, daily-rated and monthly-rated workmen came to Rs. 1,89,540, in respect of the financial year 1975-76, relevant to the assessment year 1976-77. When it filed a return on 8-10-1976, it did not claim this amount as a liability. However, a revised return on 24-1-1977 was filed, wherein the aforesaid deduction from the profits was claimed. The claim was negatived by the ITO. In fact, there is no discussion in the order of the ITO, on this poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estival contractual bonus---it would not apply. He relied upon the Supreme Court decision in the case of Mumbai Kamgar Sabha v. Abdulbhai Faizullabhal AIR 1976 SC 1455. He then referred to the Supreme Court judgment in the case of Hukumchand Jute Mills Ltd. v. Second Industrial Tribunal [1980] 3 Taxman 43, wherein the Supreme Court held that customary bonus was not impaired or eliminated by the amendment to the Bonus Act, with effect from 1-4-1976. He then referred to another order of the Central Government Industrial Tribunal-cum-Labour Court, New Delhi, dated 30-3-1977 in the case of S. Sundaram v. American Express International Banking Corporation. [No. 33(2)/9/76 of 1976]. In this case, the bonus payable, in accordance with the agreemen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1978] 111 ITR 1. He further argued that the claim was not there in the original return and the assessee had never argued before the Commissioner (Appeals) that the bonus payable by it was not production-based or productivity bonus. The claim of the assessee, now made before the Tribunal would require investigation into fresh facts and was, thus, not admissible. On merits, he argued that, firstly, the liability arose under the contract in 1974 itself and, thus, if at all, it should have been claimed in the assessment year 1975-76. Secondly, the claim was also being made in the assessment year 1978-79. Thirdly, the bonus payable to the employees was covered by section 36(1)(ii), as was clear from clause 14 of the agreement. This clause made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e agreement, entered into between the employer and the employees, was already there before the authorities below. What is required is an interpretation of that agreement in the light of the Payment of Bonus Act, 1965, and section 36(1)(ii). We, therefore, admit for consideration the arguments advanced by the assessee in its favour. 6. The Industrial Disputes Act, 1947 defines 'settlement' under section 2(p) of the Act as follows: "'settlement' means a settlement arrived at in the course of conciliation proceedings and includes a written agreement between the employer and workmen arrived at otherwise than in the course of conciliation proceedings where such agreement has been signed by the parties thereto in such manner as may be prescri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: "Labour Legislation : If, due to Labour Legislation or otherwise, identical or similar benefits as accruing to the workmen under this settlement are introduced by the Maharashtra State Government or Government of India the workmen shall be entitled to get either the benefits given under the legislation or under this settlement, but not both." It is clear from the above clause that the management merely attempts to safeguard its position if similar benefits are conferred by the legislation in future. Hence, we cannot say that the bonus under consideration is under the Payment of Bonus Act. 7. The decisions of the Supreme Court, relied upon by the learned counsel for the assessee, clearly place bonus-profit or productiv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pointment to the date of his retirement would be debitable, in the profits and loss account, on the day of the contract itself. (63 ITR 134 (sic) does not apply to the facts of this case.) We, therefore, hold that the liability to pay bonus arose during the relevant previous year and is deductible from the profits of the assessee. We wish to make it clear that since the deduction is allowed for the assessment year 1976-77, it cannot again be claimed, on the basis of actual payment in a future year. The assessee's ground in this behalf succeeds. 9. Regarding the disallowance under the general charges, we find that out of Rs. 14,686, there are a few items which could be treated as 'entertainment' or which are not for the purposes of busines ..... X X X X Extracts X X X X X X X X Extracts X X X X
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