MOHTA INDUSTRIES LTD. v. INSPECTING ASSISTANT COMMISSIONER
[Citation -1984-LL-0913-1]

Citation 1984-LL-0913-1
Appellant Name MOHTA INDUSTRIES LTD.
Respondent Name INSPECTING ASSISTANT COMMISSIONER
Court ITAT
Relevant Act Income-tax
Date of Order 13/09/1984
Assessment Year 1978-79, 1979-80
Judgment View Judgment
Keyword Tags provision for gratuity • termination of service • ascertained liability • system of accounting • contingent liability • method of accounting • statutory liability • medical certificate • allowable deduction • commercial practice • gratuity liability • income-tax purpose • development rebate • trading liability • actual liability • mercantile basis • production bonus • privilege leave • customary bonus • general manager • legal liability • actual payment • leave salary • ex gratia • bonus act
Bot Summary: The ITO observed that as and when an employee would in future avail of leave, then his leave account will be debited with the days of leave availed of and the assessee-company can claim the expenditure on leave salary so paid in the year in which the employee proceeded on leave. 1979-80, Rs. 4,966 was disallowed on the ground that there was no present liability to pay leave salary and the liability was contingent on the employees proceeding on leave and the said provision was made in respect of those employees who have not exercised option to avail of leave in the year under consideration. The High Court observed that a worker is paid for the leave period to which he may be entitled only if he takes the leave, or if he is discharged, or if being refused leave, he quits his employment before the holidays are allowed to him. According to the said rules, an employee is entitled to 21 days of privilege leave on full pay after one year of service and to 14 days of sick leave on half pay on medical certificate with option to consolidate the leave for seven days on full pay. In the leave account filed for the accounting year ending 31st May, 1977 the following employees have been credited leave exceeding 60 days, for which accumulation is allowable under the rules : Amount Name of the staff Leave due Rs. S.L. Kalani 74 2,893 P.N. Dogra 11 2 2,781 V.V. Dixit 90 6,750 In the accounting year ending 31st May, 1978, the following employees have been credited leave exceeding 60 days : Amount Name of the staff Leave due Rs. S.L. Kalani 83 3,522 P.N. Dogra 99 2,574 V.V. Dixit 89 6,815 Rolling unit No. 2, Senior 106 8,100 Executive 10. If sick leave of 21 days is, thus, ignored and only ceiling of 60 days of privilege leave is considered as liability, then the entire provision for leave salary made in the asst. Even provision for privilege leave salary as per the leave rules is contingent because in the said rules, there is no provision for encashment of leave salary on retirement, death, termination of service of an employee and it is likely that there may be some leave to the credit of an employee in the unexpected event of his death or in the case of sudden termination of his service, by resignation or otherwise.


RAJENDRA, A.M.: ORDER As common points are involved in these appeals by assessee, they were heard together and are disposed of by consolidated order. 2. assessee is company manufacturing ingots. It follows accounting year ending on 31st May. 3 . first controversy before us is regarding allowability of leave salary of Rs. 16,928 in asst. yr. 1978-79 and Rs. 4,966 in asst. yr. 1979- 80, which ITO treated as contingent liability and disallowed same and disallowance was confirmed by CIT(A). 4. ITO, in asst. yr. 1978-79, noted that assessee had credited Rs. 10,938 as leave salary of employees and Rs. 5,990 as leave salary of workers and as per leave rules, leave salary was payable only to permanent employees who availed of leave and till employee goes on leave, there is no liability to pay leave salary. Leave salary was payable only when employee proceeded on leave and he was paid for said period of leave. There is no provision for encashment of leave salary though ITO's order gives impression as if leave was encashable. ITO observed that as and when employee would in future avail of leave, then his leave account will be debited with days of leave availed of and assessee-company can claim expenditure on leave salary so paid in year in which employee proceeded on leave. Similar was position according to ITO in respect of workers, who were covered under Factories Act, 1948 (and not by aforesaid leave rules framed by assessee-company). ITO, accordingly, disallowed provision for leave salary of Rs. 16,928 in asst. yr. 1978-79. Similarly, in asst. yr. 1979-80, Rs. 4,966 was disallowed on ground that there was no present liability to pay leave salary and liability was contingent on employees proceeding on leave and said provision was made in respect of those employees who have not exercised option to avail of leave in year under consideration. ITO observed that in subsequent years, actual payment of leave salary will be allowed in year in which payment of leave salary was made. 5. CIT(A) in asst. yr. 1978-79 noted that under leave rules of company, on rendering one year's service, 21 days privilege leave and 14 days of sick leave on half pay on medical certificate became due to permanent employees and at close of each year, each employee's account w s credited with 35 days (should be 21+7) of leave and debited with number of days leave availed of and net balance was shown to his credit. But maximum privilege leave permitted to be accumulated was 60 days and sick leave of 42 days with half pay with option to convert into 21 days of full pay. CIT(A) noted assessee's contention that leave salary/wages was statutory liability provided under s. 79 of Factories Act, and s. 23 of Shops and Commercial Establishment Act and that said liability was similar to gratuity liability and that Supreme Court in Metal Box Co. of India Ltd. vs. Their Workmen (1969) 73 ITR 53 (SC), had held that contingent liability duly discounted and valued could be taken into account as trading liability and that under similar circumstances, Tribunal, Delhi Bench 'E', by order dt. 22nd May, 1981, in Bharat Commerce & Industries vs. ITO (IT Appeal Nos. 53 and 538 (Delhi) of 1980) since reported in (1981) 7 Taxman 194 had held that liability t o encashment of leave by permanent employees at time of discontinuance of their service was allowable as deduction. assessee also contended that it had regularly adopted system of accounting with regard to such liability to leave salary on accrual basis. 6 . CIT(A) rejected assessee's contention, holding that assessee's case was on all fours with Chhaganlal Textile Mills (P) Ltd. vs. CIT (1966) 62 ITR 274 (MP), where it was held that provision on account of holidays, wages under s. 79 was only contingent liability and cannot be allowed in computing profits, even though accounts were kept on mercantile basis. High Court observed at p. 277, relying on Peter Merchant Ltd. vs. Stedeford (Inspector of Taxes) (1948) 30 TC 496, that nature of liabilities which may be deducted on business and accountancy principles does not accord with nature of liabilities deductible for income-tax purposes. For income-tax purposes, it was held that distinction must be drawn between actual, i.e., legal liability, it was held that distinction must be drawn between actual, i.e., legal liability, which is future or contingent and for which no deduction can be made. High Court observed that worker is paid for leave period to which he may be entitled only if (i) he takes leave, or (ii) if he is discharged, or (iii) if being refused leave, he quits his employment before holidays are allowed to him. It was clear to High Court that it was impossible for employer to know in advance in any one year as to how many of his employees will go on leave next year, and at what rate wages would have to be paid to them for period of leave. Till these circumstances arise, liability that rests on employer to pay to worker wages in accordance with s. 79 for leave period remains contingent liability which employer may or may not be called upon to discharge. Madhya Pradesh High Court noted that similar view was taken by Calcutta High Court in Bengal Enamel Works Ltd. vs. CIT (1955) ILR 2 (Cal) 13, where Chief Justice of Calcutta High Court said that statutory liability for holiday wages as Factories Act creates, is only contingent liability which may or may not have to be discharged, and, secondly, measure of that liability can never be known in advance. Similar view was taken by Bombay High Court in CIT vs. Rajkumar Mills Ltd. (1971) 80 ITR 244 (Bom), where it was similarly held that question of payment of wages for leave to worker would arise only if worker goes on leave, or if he is discharged, or on being refused leave, he quits his employment and till these circumstances arise, liability that rests on employer to pay to worker wages in accordance with s. 79 of Factories Act for leave period remains contingent liability which employer may or may not be called upon to discharge. In this connection, reference was also made to Indian Molasses Co (P) Ltd. vs. CIT (1959) 37 ITR 66 (SC), where it was observed that IT law makes distinction between actual liability in praesenti and liability de futuro which, for time being, is only contingent. Reference was also made to case of Calcutta Co. Ltd. vs. CIT (1959) 37 ITR 1 (SC), where it was observed that for income-tax purpose, there is distinction between actual liability and liability which is future contingent. 7. CIT(A) referred to Vazir Sultan Tobacco Co. Ltd. vs. CIT (1981) 25 CTR (SC) 186 : (1981) 132 ITR 559 (SC), where question was whether gratuity reserve was deductible for computing capital under Companies (Profits) Surtax Act, 1964, and Supreme Court noted with approval at p. 576, observations in Metal Box Co. of India Ltd.'s case (supra) at p. 54, where it was held that contingent liabilities discounted and valued as necessary, can be taken into account as trading expenses if they are sufficiently certain to be capable of valuation and if profits cannot be properly estimated without taking them into consideration. Supreme Court observed that estimated liability under scheme of gratuity, if properly ascertainable and its present value is discounted, is deductible from gross receipts while preparing profit and loss account, and this was recognised in trade circle and there was nothing in Payment of Bonus Act, 1965, which prohibits such practice. CIT(A) observed that observations of Supreme Court in Vazir Sultan Tobacco Co. Ltd.'s case (supra) were in context of determining real character of appropriations for gratuity under Surtax Act and observations in Metal Box Co. of India Ltd.'s case (supra) were confined to computation of net profit under Payment of Bonus Act and that observations in said two cases were not in supersession of principles laid down by Supreme Court in Indian Molasses Co. (P) Ltd.'s case (supra) and Calcutta Co. Ltd.'s case (supra) and therefore, contingent liability did not amount to expenditure as held in last mentioned two cases and that even liability for leave salary is not known and existing and is uncertain in accounting year under consideration and liability may or may not arise when worker quits employment and measure of liability for leave salary can never be known in advance. CIT(A), accordingly, disallowed provision of Rs. 16,928 on account of leave salary in asst. yr. 1978-79. He followed this order in asst. yr. 1978-79, when he disallowed provision of leave salary of Rs. 4,966. 8. assessee is in appeal before us and urges that provision for leave salary was allowed by ITO in asst. yrs. 1976-77 and 1977-78 and should have been allowed in years under appeal (asst. yrs. 1978-79 and 1979-80) because assessee was following same method of accounting in two years under consideration. It is urged that leave is charge on profits of year in which year employee earned it and, therefore, cash equivalent of leave salary was rightly deducted from profits of year in which employee earned his right to leave salary and this was mere scientific method. Reliance was placed on Metal Box Co. of India Ltd.'s case (supra) for claiming that even though leave salary is contingent liability, yet its present value is deductible from P&L a/c. Copy of leave rules and details of leave account have been filed to support claim that provision has been made in accordance with rules and on scientific basis. 9 . Leave rules stated to be framed on 1st April, 1973, do not apply to workers covered under Factories Act. According to said rules, employee is entitled to 21 days of privilege leave on full pay after one year of service and to 14 days of sick leave on half pay on medical certificate with option to consolidate leave for seven days on full pay. Accumulation of privilege leave up to 60 days and sick leave for 21 days on full pay is allowed. Only leave actually earned is allowable with pay. There is no provision for encashment of leave salary either during service or on retirement or on termination of service by resignation, or otherwise, on death of employee. In leave account filed for accounting year ending 31st May, 1977 (relevant for asst. yr. 1978-79) following employees have been credited leave exceeding 60 days, for which accumulation is allowable under rules : Amount Name of staff Leave due Rs. S.L. Kalani 74 2,893 P.N. Dogra 11 2 2,781 V.V. Dixit 90 6,750 In accounting year ending 31st May, 1978 (relevant for asst. yr. 1979-80), following employees have been credited leave exceeding 60 days : Amount Name of staff Leave due Rs. S.L. Kalani 83 3,522 P.N. Dogra 99 2,574 V.V. Dixit 89 6,815 Rolling unit No. 2, Senior 106 8,100 Executive (name not given) 10. assessee claimed that considering accumulation of sick leave of 21 days in addition to 60 days of privilege leave, excess provision in asst. yr. 1978-79 was of Rs. 770 in case of P.N. Dogra and of Rs. 675 in respect of V.V. Dixit and, therefore, out of claim of Rs. 10,678, only Rs. 1,445 was disallowable. In asst. yr. 1979-80, assessee similarly claimed that provision disallowable was of Rs. 2,562 out of total provision of Rs. 4,966. 1 1 . We are unable to accept assessee's contention for considering accumulation of sick leave of 21 days for working out excess. Sick leave can be availed of only in contingency of employee falling sick, which contingency may or may not happen during entire service span of employee and more so during next few years, following years under consideration. Further, sick leave can be availed of only on furnishing medical certificate from registered medical practitioner. employee may or may not exercise option to convert half pay medical leave into half number of days on full pay. In view of all these contingencies, provision in respect of sick leave of 21 days in respect of each employee is clearly contingent provision. If sick leave of 21 days is, thus, ignored and only ceiling of 60 days of privilege leave is considered as liability, then entire provision for leave salary made in asst. yrs. 1978-79 and 1979-80 would appear to exceed said ceiling and, hence, there is no liability in any of two years (details on this basis have not been supplied). 1 2 . Even provision for privilege leave salary as per leave rules is contingent because in said rules, there is no provision for encashment of leave salary on retirement, death, termination of service of employee and it is likely that there may be some leave to credit of employee in unexpected event of his death (which is uncertain event and may happen in any year) or in case of sudden termination of his service, by resignation or otherwise. Even at time of retirement, some leave may be to credit of employee which he may not have been able to avail of during service period. Thus, liability for leave salary is also contingent. Even according to Metal Box Co. of India Ltd.'s case (supra), present value of liability has to be arrived at by discounting future contingent liability, which has not been done by assessee before us. 13. details of liability under Factories Act for asst. yr. 1978-79 being furnished by assessee, has indicated relevant provisions of Factories Act. We do not know whether there is any provision for accumulation of leave wages under Factories Act and as to what is ceiling and other relative conditions and whether leave wages can be encashed on retirement, death, resignation, termination of service, etc. 14. Considering all above-mentioned factors, we are not satisfied that there is any present liability for leave salary/wages in two years under consideration. liability, if any, is uncertain both regarding its quantum and time in future. 15. We now consider legal proposition (on which assessee relies) that contingent liability is allowable in view of observations of Supreme Court in Metal Box Co. of India Ltd.'s case (supra). Kanga and Palkhivala in Law and Practice of Income-tax, Seventh edition, Vol. 1, P. 449, under head "Whether contingent liabilities constitute 'expenditure' Definite liabilities to be discharged in future"observed that s. 37 of IT Act, 1961 ('the Act'), allows deduction only in respect of expenditure. Generally speaking, contingent liability is not 'expenditure', and, therefore, cannot be subject of deduction even under mercantile system of accounting. Reliance is placed on Indian Molasses Co. (P) Ltd.'s case (supra) and M.S.P. Senthikumara Nadar & Sons vs. CIT (1957) 32 ITR 138 (Mad), where Madras High Court reviewing case law observed that only ascertained liability justifies entry in accounts maintained on mercantile basis and deductions are not permissible for anticipated losses or contingent liabilities, even if they are inevitable. Madras High Court in M.S.P. Senthikumara Nadar & Sons' case (supra) relied on Spencer & Co. vs. Inland Revenue (1950) TR 149 and Peter Merchant Ltd.'s case (supra). We have noted above in para 6 that Madhya Pradesh High Court in Chhaganlal Textile Mills (P) Ltd.'s case (supra) had also relied on Peter Merchant Ltd.'s case (supra). Similarly, Chaturvedi and Pithisaria in Income-tax Law, Third edition, Vol. II, p. 1288, have expressed same opinion that where obligation of assessee is purely contingent, no question of estimating its present value may arise, for to be permissible outgoing or allowance, there must in year of account be present obligation capable of commercial valuation. Sampath Iyengar in Law of Income-tax, Seventh edition, p. 1624, observed that for determining whether there is expenditure, it is necessary to see whether there is existing liability to pay out moneys irretrievably and referred to Supreme Court's observations in Calcutta Co. Ltd.'s case (supra) that distinction should be made between contingent liability which may or may not arise in future, and present liability which has to be performed in future. Thus, accrued liability was deductible on estimate but not contingent liability. 16. It is interesting to note that all three commentators, while referring copiously to case law, do not refer to Metal Box Co. of India Ltd.'s case (supra) as having any bearing on question of allowability of contingent liability. 17. We now consider Metal Box Co. of India Ltd.'s case (supra), which was case under Payment of Bonus Act, and Supreme Court was laying down guidelines for computation of payment of bonus to workmen and in that context observed that Second Schedule of Payment of Bonus Act requires adding back to net profit in profit and loss account, depreciation, development rebate, etc., and then observed : "Contingent liabilities discounted and valued as necessary, can be taken into account as trading expenses if they are sufficiently certain to be capable of valuation and if profits cannot be properly estimated without taking them into consideration. estimated liability under scheme of gratuity, if properly ascertainable and its present value is discounted, is deductible from gross receipts while preparing P&L a/c. This is recognised in trade circles and there is nothing in Bonus Act which prohibits such practice. Such provision provides for known liability of which amount can be determined with substantial accuracy. It cannot, therefore, be termed 'reserve'. Therefore, estimated liability for year on account of scheme of gratuity should be allowed to be deducted from gross profits. allowance is not restricted to actual payment of gratuity during year." 18. While making above observations at pp. 63 to 67, Supreme Court besides observing that contingent liability duly discounted was proper deduction from P&L a/c, according to accepted principles of commercial practice and accountancy, did compare provisions of WT Act, 1957 with that of Payment of Bonus Act and also referred to 1961 Act when it observed : "If under IT Act estimated liability ascertainable with substantial accuracy can be taken into account for arriving at true profits and gains, there is no reason why same cannot be done under Bonus Act."The Supreme Court was, thus, essentially considering provisions of Payment of Bonus Act and allowability of provision for gratuity under said Act. Thus, decision is not direct authority on question before us, i.e., allowability of contingent liability. We have already noted above two direct decisions of Supreme Court, namely, in Calcutta Co. Ltd.'s case (supra) and Indian Molasses Co. (P) Ltd.'s case (supra) as also three direct decisions of High Courts regarding non-allowability of provision for wages, namely, Chhaganlal Textile Mills (P) Ltd.'s case (supra), Bengal Enamel Works Ltd.'s case (supra) and Rajkumar Mills Ltd.'s case (supra), as also Madras High Court's decision in case of M.S.P. Senthikumara Nadar & Sons (supra), regarding non-allowability of contingent liability. Madras High Court followed it in Tarachand Ghanshyamdas vs. CIT (1966) 59 ITR 378 (Mad). In view of these legal authorities, we hold that assessee is not entitled to deduction of leave salary/wages in two years both on legal grounds as well as factual grounds. We, accordingly, uphold orders of lower authorities disallowing said provision in two years. 19. next controversy in asst. yr. 1979-80 is regarding CIT(A), holding that ex gratia payments of Rs. 38,759 and Rs. 2,430 to General Manager is customary bonus disallowable under s. 36(1)(ii) of Act and that bonus of Rs. 2,430 paid to General Manager is disallowable under s. 36(1)(ii). Thus, assessee has not disputed disallowance of excess bonus 36(1)(ii). Thus, assessee has not disputed disallowance of excess bonus of Rs. 7,735 disallowed by ITO and upheld by CIT(A). 20. assessee-company had paid bonus of Rs. 1,96,194 at rate of 20 per cent of salary and production bonus of Rs. 82,696 to its employees. Both these amounts have been allowed by ITO. However, ex gratia payment of Rs. 38,759 and extra salary of Rs. 34,586 was held by ITO to be nothing but bonus and as it was over and above production incentive and bonus, therefore, it was hit by first proviso to s. 36(1)(ii) and was hence, disallowable. In respect of extra salary of Rs. 34,586, CIT(A) had upheld only excess bonus of Rs. 7,735 (accepted by assessee) and two payments at rate of Rs. 2,430 to General Manager, Bhumla, on account of extra salary and ex gratia payment of one month's salary. CIT(A) rejected assessee's contention that ex gratia payment of one month's salary to General Manager, Bhumla, and ex gratia payment of Rs. 38,759 to employees was regular feature in case of assessee and had become customary bonus. CIT(A), by referring to chart of payments made in earlier and subsequent years, held that there was no such custom of payment of one month's salary. We also find that ex gratia payment of Rs. 38,759 is not equal to one month's salary. CIT(A), thus, held that in order to qualify as customary bonus, appellant should have, proved that such custom prevailed in line of business carried on by assessee. He, accordingly, upheld ITO's action in disallowing ex gratia payment of Rs. 38,759 to employees and ex gratia one month's salary paid to General Manager, Bhumla, as also one month's extra salary of Rs. 2,430 paid to General Manager, Bhumla. He further upheld disallowance of Rs. 7,735 as excess bonus (which disallowance, as mentioned above, has been accepted by assessee). 21. assessee in its grounds, challenges disallowance of ex gratia payment to employees, as customary bonus as also bonus of Rs. 2,430 paid to General Manager, Bhumla. assessee has, thus, not challenged disallowance of ex gratia payment of Rs. 2,430 to General Manager, Bhumla. 2 2 . assessee before us relied on Tribunal, Madras Bench 'A's decision in ITO vs. Egmore Benefit Society Ltd. (1981) 11 TTJ (Mad) 265, where it was held that bonus equal to five months' salary was customary bonus as similar bonus had been paid by assessee regularly in earlier years. In view of said admitted position, Tribunal had held that payment of customary bonus was not covered by Payment of Bonus Act and, hence, w s outside first proviso to s. 36(1)(ii). Similar view was taken by Bangalore Bench in ITO vs. Kasturi Ramesh Pai & Co. (1982) 1 ITD 803 (Bang). In case before us, aforesaid ex gratia payment has not been proved to be customary bonus and, therefore, assessee's case is distinguishable. 23. assessee next relied on Tribunal's decision in ITO vs. Indra Cotton Mills (P) Ltd. (1980) 9 TTJ (Mad) 172, where bonus at rate of 36 per cent was paid to manager and at rate of 16 per cent to other employees and Tribunal held that payment exceeding 20 per cent of bonus was remuneration for services rendered and was allowable under s. 37. However, contrary view has been taken by Tribunal, Calcutta Bench 'C' in ITO vs. Daga & Co. (P) Ltd. (IT Appeal Nos. 2124-2126 (Cal) of 1982) for asst. yrs. 1979-80 to 1981-82, where following decision of Tribunal, Calcutta Bench 'A', in Tinplate Co. of India Ltd. (IT Appeal No. 11 55 (Cal) of 1982, dt. 30th Dec., 1983) and CBDT's Circular No. 287 (F. No. 204/21/80-IT(A-II)), dt. 4th Dec., 1980, it was held that bonus paid cannot be taken as anything else and i f it is not allowable deduction under s. 36, then s. 37 cannot be pressed into service and in any case expenditure falls within ambit of ss. 30 to 36 of Act, then it cannot be allowed under residuary s. 37 and if such interpretation was not adopted, various restrictions imposed by ss. 30 to 36 would become ineffective and not workable. We respectfully agree with Calcutta Bench's view and reject assessee's contention based on Indra Cotton Mills' case (supra). 2 4 . assessee next relied on Tribunal Hyderabad Bench 'A's decision in National Litho Printers vs. ITO (1980) 10 TTJ (Hyd) 510, where bonus paid on special occasion of silver jubilee of firm was held to be allowable de hors Payment of Bonus Act. However, in case before us, there is no claim of any special occasion and thus said decision is distinguishable. 2 5 . Reliance was next placed on Tribunal Hyderabad Bench 'B's decision in Indian Cashew Mfg. Co. vs. ITO (1992) 1 ITD 516 (Hyd) Shaw Wallace Gelatines Ltd. vs. ITO (1983) 3 ITD 177 (Cal) and IAC vs. Jawahar Mills Ltd. (1984) 8 ITD 20 (Mad). In all these three cases, bonus exceeding 20 per cent was paid as result of agreement/settlement between assessee and its workers. In case before us, there is no such claim of any settlement or agreement between assessee and its workers. assessee's case is, therefore, distinguishable. 26. Decision of Tribunal Calcutta Bench in Molins of India Ltd. vs. ITO (1984) 8 ITD 30 (Cal) is not relevant for resolving controversy before us because in that case, limited controversy was that bonus paid at rate of 20 per cent even though within limit set by Payment of Bonus Act, was in excess of allocable surplus. assessee also relied on Hukumchand Jute Mills Ltd. vs. Second Industrial Tribunal (1980) 3 Taxman 43 (SC), where it was held that customary bonus was allowable under s. 17 of Payment of Bonus Act and was available for deduction from bonus payable under Payment of Bonus Act. This was also case of payment as result of agreement between employees and employer. facts of case before us are, therefore, clearly distinguishable. 27. Supreme Court in Baidyanath Ayurveda Bhawan Mazdoor Union v s . Management of Shri Baidyanath Ayurveda Bhawan (P) Ltd. (1984) 17 Taxman 19 (SC) held that attendance bonus paid to workers was outside purview of Payment of Bonus Act. This case is also distinguishable as facts of case before us are entirely different. 28. facts and circumstances of case before us are entirely different from case laws relied upon by assessee as discussed above. Ex gratia payment of Rs. 38,759 to employees is neither customary bonus nor payment to employees as result of agreement or settlement between employer and employees. Under these circumstances, lower authorities were justified in disallowing said ex gratia payment of Rs. 38,759. Similar is position regarding payment of Rs. 2,430 in lieu of bonus to General Manager, Bhumla. We, accordingly, uphold CIT(A)'s order on this point and reject assessee's grounds (b) and (c). 29. In result, assessee's appeals for asst. yrs. 1978-79 and 1979-80 are dismissed. *** MOHTA INDUSTRIES LTD. v. INSPECTING ASSISTANT COMMISSIONER
Report Error