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TMI Blog1984 (1) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ntention in this behalf is that the entire depreciation would have been allowable to the assessee whether there had been any personal use of the motor car or not. Therefore, no disallowance should have been made out of the claim for depreciation. No authorities were cited in support of this proposition. But after considering the all over facts and circumstances of the case we are not inclined to accept this argument. According to sub-section (2) of section 38 of the Income-tax Act, 1961 ('the Act'), where any building, machinery, plant or furniture is not exclusively for the purpose of business or profession the deductions under various clauses of sections 30, 31 and 32 of the Act are to be restricted to a fair proportionate part thereof wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble apart from the fact that this is not the objection to the expenditure by the ITO. The question of their expenses being vouched was not considered by the Commissioner (Appeals) at all. Moreover, the ground mentioned by the ITO was that earlier also some disallowance had been made by him and the present disallowance was being made on the same line of reasoning. The assessee's representative contended that the earlier disallowances had already been deleted. We are not sure of the result for the earlier year. Therefore, there is no alternative but to get examined this matter afresh. The Commissioner (Appeals) shall look into the objection of the ITO and the ultimate position of these expenses in relation to the earlier year and then decide ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat the Commissioner (Appeals) shall look into the earlier year's order and then decide the issue afresh in the light of the objection raised by the ITO. 5. The last dispute in this case relates to bonus. The ITO observed that the maximum bonus that could be paid during the year was 20 per cent. He, however, noticed that the assessee had paid excess bonus in the form of ex gratia and he, therefore, disallowed a sum of Rs. 10,550. On appeal, it was argued before the Commissioner (Appeals) that this expenditure had to be incurred to keep the staff and employees satisfied, which was necessary for the efficient and smooth running of the business. Therefore, the same should have been allowed under section 37 of the Act. The Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , which reads as under: "Customary or festival bonus not affected: Communal festivals are occasions of rejoicing and spending. The employers usually make bonus payments to employees to help them meet the extra expenses. Even otherwise, if an employer had been paying bonus to his employees without linking it to a festival, and such payments are found to have been customary with the employer, these are taken as customary bonus. These are separate from and independent of the profit bonus. The profit bonus---and not customary or festival bonus---comes under the Payment of Bonus Act. Of course, section 17 of that Act entitles the employer to adjust, if he so likes, the amounts paid as customary or festival bonus out of the amount of profit bon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) and, therefore, would not be allowable under section 37. Again its allowance is to be restricted by first proviso to section 36(1)(ii) in case of employees employed in a factory or other establishment to which the provision of Payment of Bonus Act apply and the amount cannot exceed the bonus payable under that Act. The assessee's representative did not dispute that the Payment of Bonus Act is applicable to the assessee establishment. The later part of the commentary by Chaturvedi and Pithisaria abovequoted does not refer to any authority on the basis of which the learned authors have made the observations. The language of the first proviso to section 36(1)(ii) inserted by the Payment of Bonus Act, 1976 with effect from 25-9-1975 is quite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re not in a position to comment upon this limb of the assessee's argument. However, the ITO has made a mention of the word ex gratia in his assessment order. The Commissioner (Appeals) has not considered this aspect of the matter on the ground that the agreement does not refer to any ex gratia payment. We do not know whether the letter was actually produced by the assessee before the authorities below and whether a simple letter by the assessee would change the character of the payment unless the agreement itself is superseded. Since the matter has to go back to the Commissioner (Appeals) in respect of ground Nos. 2 and 3 and this letter was in existence long before the assessment it is quite likely that the assessee may have filed the lett ..... X X X X Extracts X X X X X X X X Extracts X X X X
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