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TMI Blog1983 (12) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... th specific language of sub-section (1) of section 10, being 20 per cent of the salary or wage paid to the employees, and that sub-section (1) of section 10 did not prohibit making of the payment in excess of allocable surplus and so long as there was allocable surplus in excess of the minimum bonus payable in terms of sub-section (1) of section 10 aforementioned, the employer could make the payment of bonus to the employees to any extent subject to the maximum of 20 per cent of the salary or wage. 3. The learned Commissioner (Appeals) rejected the above contention of the assessee and pointed out that " what is implied in the said section 10(1) of the Payment of Bonus Act is that though the minimum bonus to be paid is 4 per cent of the salary/wages or Rs. 100, whichever is higher, the upper ceiling of 20 per cent of the salary/wages to be paid as bonus within the meaning of section 10(1) of the Payment of Bonus Act, as referred to in the first proviso to section 36(1)(ii) of the Income-tax Act, 1961 ('the Act'), is fully and totally restricted within the allocable surplus available in the hands of the appellant-company. Since in this case it is evident that the upper limit of 20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the order of the learned Commissioner (Appeals) was entirely in order and that interpretation of sub-section (1) of section 10 of the Payment of Bonus Act, as placed by the assessee, was not correct and was far fetched. With regard to the alternative contention of the assessee, the learned departmental representative opposes its admission at this late stage. According to him, it has never been the assessee's case heretobefore that the bonus was not paid by the assessee to its workers in terms of the Payment of Bonus Act but that it was a customary bonus paid on the occasion of festivities irrespective of the profits earned or loss incurred by the assessee in a given year. Whether or not a bonus was a customary bonus was a question of fact which needed to be established by the assessee by leading cogent evidence. The assessee had never pleaded heretobefore that the bonus paid was a customary bonus and had not led any evidence in respect of the above plea. Raising of a fresh plea, it was pleaded, raised in this manner at the eleventh hour should not be encouraged by the Tribunal. 7. In any case, it was further urged, if the plea was admitted, the revenue will need time to verify ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act links the quantification of the amount of bonus to the concept of 'allocable surplus'. Sub-section (1) of the said section, so far as it is relevant for our purpose, reads as follows : " Subject to the other provisions of this Act, where an employer has any allocable surplus in any accounting year, then, he shall be bound to pay to every employee in respect of that accounting year a minimum bonus which shall not be less than four per cent of the salary or wage earned by the employee during the accounting year or one hundred rupees, whichever is higher, or, in a case where the allocable surplus exceeds the said amount of minimum bonus payable to the employees, an amount in proportion to the salary or wage earned by the employee during the accounting year subject to a maximum of twenty per cent of such salary or wage : " [Emphasis supplied] Sub-section (2) of the aforesaid section is not relevant for our purpose. Sub-section (3) modifies the concept of 'allocable surplus' as defined by sub-section (4) of section 2 of the said Act for the purpose of section 10 in the following terms : " For the purposes of this section, the allocable surplus shall be computed taking into accou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set off' may be, of available surplus allocable as bonus --------------------------------------------------------------------------------------------------------------------------------------------------- (1) (2) (3) (4) (5) --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. Rs. Rs. 1. 42,000 + 3,000 (a) 20,000 + 23,000 2. Nil + 23,000 20,000 3,000 3. 10,000 + 3,000 13,000 Nil 4. 10 Nil 4,000 - 3,990 5. 100 - 3,990 Nil - 3,890 6. Nil - 3,890 Nil - 3,890 7. 23,890 - 3,890 20,000 Nil 8. Nil Nil Nil Nil 9. 25,000 Nil 20,000 + 5,000 10. 15,100 + 5,000 20,000 + 100 11. Nil + 100 4,000 + 3,900 " --------------------------------------------------------------------------------------------------------------------------------------------------- A combined reading of the aforesaid provisions of the Payment of Bonus Act along with the illustrations given in the Third Schedule of the said Act would clearly go to show that the payment of bonus under the Payment of Bonus Act is directly related to the amount of 'allocable surplus'. If the assessee has even on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , i.e., the amount of allocable surplus available for the purpose. The underlying meaning of the italicized portion of section 10(1) at page 34, is brought out by the illustrations of the Third Schedule. 10. The above scheme of the Payment of Bonus Act, in our opinion, leaves no scope for the assessee's argument that sub-section (1) of section 10 does not lay down any restriction to the distribution of maximum bonus and that it is left to the assessee to decide the quantum of bonus to be distributed by it in a given year and that so long as the allocable surplus available in a given year was in excess of the minimum bonus payable, the assessee could distribute maximum bonus to the extent of 20 per cent of the salary or wage, even if the allocable surplus was less than the bonus so distributed. The language of sub-section (1) of section 10, as italicized by us, read with the illustrations given in the Third Schedule, decisively negative this interpretation. Accordingly, we reject the assessee's first line of reasoning as untenable in law. 11. So far as the alternative plea raised by the assessee is concerned, we are of the opinion that we should not permit the assessee to raise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is now attempting to do is to plead an altogether new factual position, contrary to its plea before the authorities below, and is seeking our permission to lead evidence in, support of the same. This situation is radically different from what it was before the Tribunal in the case of Hukumchand Jute Mills Ltd. 13. Section 17 of the Payment of Bonus Act, on which the assessee's learned counsel has placed reliance also does not, in our opinion, advance the assessee's case. The said section reads as follows : " 17. Where in any accounting year-- (a) an employer has paid any Puja bonus or other customary bonus to an employee ; or (b) an employer has paid a part of the bonus payable under his Act to an employee before the date on which such bonus becomes payable--, then, the employer shall be entitled to deduct the amount of bonus so paid from the amount of bonus payable by him to the employee under this Act in respect of the accounting year and the employee shall be entitled to receive only the balance. " As will be clear from the wordings of the aforesaid section, before clause (a) of section 17 can be brought into play, there has to be a finding of fact that Puja bonus or c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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