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TMI Blog1984 (7) TMI 130X X X X Extracts X X X X X X X X Extracts X X X X ..... the company's employees. The CIT(A) in confirming the disallowance made by the ITO observed that, even though minimum bonus of 4 per cent was payable under the bonus Act, the assessee was not entitled to any deduction in terms of s. 36(2) of the IT Act, 1961, as in the CIT(A)'s opinion "the assessment of 1976 will not be applicable to the assessee because the appellant's accounting year ended on 31st May, 1975." 3. Before us, the assessee's ld. counsel pointed out that in terms of second proviso, to s. 36(1)(ii), the assessee was entitled to deduction in respect of bonus paid to its employees to the extent admissible under the Payment of Bonus Act, 1965. The said proviso was inserted by the Payment of Bonus (Amendment) Act, 1976 w.e.f. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Asst. yr. 1977-78 6. The first ground relates to the disallowance of Rs. 3841 being the excess amount of bonus paid to the employees in excess of 8.33 per cent i.e., the minimum bonus payable in accordance with the provisions of Payment of Bonus Act, 1965. 7. During the year the assessee paid total bonus of Rs. 23,045. The ITO found that the allocable surplus came to Rs. 19,204. He accordingly restricted the bonus paid by the assessee to its employees to Rs. 19,204 and added back the balance sum of Rs. 3,841. The CIT (A) upheld the ITO's addition. 8. Before us, the assessee's ld. counsel submitted a computation of the allocable surplus pertaining to the assessment year under appeal which revels that the allocable surplus, accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion on profits accounting to Rs. 4838.67. Besides, Shri Hazra; was paid meeting fees of Rs. 1200 reimbursement of medical expenses of Rs. 2,400 travelling allowance of Rs. 3000 and house rent of Rs. 7,500. The ITO worked out the total perquisites at a sum of Rs. 18,938 and after allowing Rs. 12,000 disallowed the balance of Rs. 6,938 by invoking the provisions of s. 40A(5) r/w s. 40(c) of the Act. The CIT(A) without recording the points raised by the assessee upheld the ITO's disallowance. 11. Before us, the assessee's ld. counsel furnished before us the break up figures from which it reveals that the assessee for purpose of determining the disallowable amount in terms of s. 40A(5)/40(c) considered the managerial remuneration of Shri Haz ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ical expenses. To our mind, the assessee's ld. counsel is correct in stating that the first two amounts of Rs. 57,000 and Rs. 4,838.67 totalling to Rs. 61,838.67 should be considered for working out the amount admissible under s. 40A(5)/40(c) of the Act. 13. In regard to the balance amount of Rs. 14,100, Rs. 1200 being the sitting fees paid to the Managing Director cannot be considered as a perquisite. After excluding the said amount of Rs. 1200 the ITO has to consider whether the travelling allowance paid to the Managing Director and the medical benefits enjoyed by him were in the nature of perquisites or not. 14. To our enquiry whether the conveyance allowance of Rs. 3,000 and the medical reimbursement amounting to Rs. 2,400 have be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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