INCOME TAX OFFICER v. COIMBATORE KAMALA MILLS LTD - 1984-LL-0725-6

Citation	1984-LL-0725-6
Appellant Name	INCOME TAX OFFICER
Respondent Name	COIMBATORE KAMALA MILLS LTD
Court	ITAT
Relevant Act	Income-tax
Date of Order	25/07/1984
Assessment Year	1980-81
Judgment	View Judgment
Keyword Tags	extra shift allowance • allowable deduction • additional payment • textile industry • additional bonus • bonus act
Bot Summary:	The CIT found that the assessee had paid a sum of Rs. 2,85,217 in addition to the bonus at the rate of 9.87 per cent payable under the payment of Bonus Act because of a settlement entered into between the management of the textile industry and the workmen under the auspices of the Commissioner of Labour on 12th Oct., 1979. It is admitted by the revenue that this payment was outside the scope of the payment of Bonus Act because there is no evidence to establish that this amount was either set off or set on under a scheme of the payment of Bonus Act. The Supreme Court has also held recently in the case of Baidyanath A.B. Mazdoor Union vs. B.A.B. Pvt Ltd. AIR 1984 SC 457 that the payment of Bonus Act is confined to profit oriented bonus only. In the circumstances, the additional payment does not fall within the scope of the Payment of Bonus Act and hence the proviso to s. 36(1) limiting the bonus payable under the Payment of Bonus Act to the ceiling prescribed the reunder has no application to the facts of the case. 9th Aug., 1976 instructing the ITO(s) to allow bonus under the first proviso of s.36(1) wherever the bonus does not fall; within the scope of the payment of Bonus Act. Since the additional amount was paid under a settlement with the workmen under the auspices of the Government it is not the case of the revenue that any of the conditions prescribed under the first proviso are not met or that the additional bonus was not allowable under that proviso. Even if the additional payment is not to;be considered as a bonus clearly, it is undisputedly paid for the purpose of the business and allowable as a business expenditure.

This appeal by revenue is directed against order of CIT(A) allowing deduction of additional payment made by assessee to its workmen. CIT found that assessee had paid sum of Rs. 2,85,217 in addition to bonus at rate of 9.87 per cent payable under payment of Bonus Act because of settlement entered into between management of textile industry and workmen under auspices of Commissioner of Labour on 12th Oct., 1979. It is admitted by revenue that this payment was outside scope of payment of Bonus Act because there is no evidence to establish that this amount was either set off or set on under scheme of payment of Bonus Act. Moreover, Supreme Court has also held recently in case of Baidyanath A.B. Mazdoor Union vs. B.A.B. Pvt Ltd. AIR 1984 SC 457 that payment of Bonus Act is confined to profit oriented bonus only. In circumstances, additional payment does not fall within scope of Payment of Bonus Act and hence proviso to s. 36(1) limiting bonus payable under Payment of Bonus Act to ceiling prescribed reunder has no application to facts of case. CBDT itself has issued Circular No.206 dt. 9th Aug., 1976 instructing ITO(s) to allow bonus under first proviso of s.36(1) (ii) wherever bonus does not fall; within scope of payment of Bonus Act. Since additional amount was paid under settlement with workmen under auspices of Government it is not case of revenue that any of conditions prescribed under first proviso are not met or that additional bonus was not allowable under that proviso. Even if additional payment is not to;be considered as bonus clearly, it is undisputedly paid for purpose of business and, therefore, allowable as business expenditure. Since in any view of matter, additional payment was allowable deduction, we see no reason to interfere with order of CIT(A) on this point. Commissioner had also directed ITO to follow instructions of t h e CBDT in its Circular dt. 28th April, 1970 and compute extra shift allowance on basis of working of concern as such and not with reference to working of each individual machinery. In view of decisions of Supreme Court cited by Commissioner and followed by him, grounds of appeal challenging his decision on this point are not maintainable. Hence, appeal is dismissed. *** INCOME TAX OFFICER v. COIMBATORE KAMALA MILLS LTD

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