Commissioner of Income Tax vs Sivanandha Mills Limited

Ramaswami, J.—The following question is sought to be referred in this petition :

Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the incentive bonus of Rs. 1,28,837

which was made in addition to the regular bonus as per the Payment of Bonus Act should be allowed as a deduction u/s 37 of the I.T. Act, 1961

?

Though we have rejected a similar question when it was sought to be referred in T.C.P. No. 554/1983 by an order dated November 26, 1984,

annexed herewith (see infra), learned counsel for the Revenue, reargued the matter on the ground that really this expenditure will come under s.

36(1)(ii) of the Act and not under s. 37 of the Act and that question will have to be decided and, therefore, a reference is called for. We are unable

to agree with this contention of the learned counsel. Section 36(1)(ii) has reference to bonus paid under the Bonus Act and incentive bonus or

attendance bonus or customary bonus is not bonus paid under the Bonus Act, and, therefore, s. 36(1)(ii) has no application. Therefore, the

question will have to be considered whether it will come for deduction under the general provision of s. 37. There could be no doubt that the

incentive bonus paid is an expenditure laid out wholly and exclusively for purposes of the business. That was the view we have held in the earlier

case. In the result, no question of law which is subsisting could be said to arise out of the order of the Tribunal and, therefore, this petition is

dismissed with costs.

Counsel''s fee Rs. 250.