The payment of Bonus (Amendment) Act, 1976-Amendment to section 36(1)(ii) of the Income-tax Act, 1961-Effect thereof-Clarification regarding - Income Tax - 206/1976

The payment of Bonus (Amendment) Act, 1976-Amendment to section 36(1)(ii) of the Income-tax Act, 1961-Effect thereof-Clarification regarding Circular No. 206 Dated 9/8/1976 To All Commissioners of Income-tax. Sir, Subject: The payment of Bonus (Amendment) Act, 1976-Amendment to section 36(1)(ii) of the Income-tax Act, 1961-Effect thereof-Clarification regarding. Section 29 of the Payment of Bonus (Amendment) Act, 1976, has inserted a new proviso to clause (ii) of sub-section (1) of section 36 of the Income-tax Act, 1961, and has made an amendment to the existing proviso to the said clause with effect from 25th September, 1975. The newly inserted first proviso to clause (ii) of section 36(1) will apply in relation to bonus paid to an employee employed in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965, apply. The term "employee" has been defined in section 2(13) of the Payment of Bonus Act to mean "any person (other than an apprentice) employed on a salary or wage not exceeding Rs. 1,600 per month in any industry to do any skilled or unskilled, manual, supervisory, managerial, administrative, technical or clerical work for hire or reward, whether the terms of employment be express or implied". Under this definitions, persons drawing a salary or wage exceeding Rs. 1,600 per month and employed in a factory or establishment to which the provisions of the payment of Bonus Act apply are not covered by the provisions of that Act relating to compulsory payment of bonus. In view thereof, the restriction laid down in the aforesaid first proviso regarding deduction in respect of bonus paid to employees covered by the Payment of Bonus Act will not apply in relation to such persons. Bonus paid to such persons will, therefore, fall under the second proviso to section 36 (1)(ii) of the Income-tax Act, 1961, and its admissibility will be governed by the conditions spelt out in the said proviso. 2. Since the amendment made in section 36(1)(ii) of the Income-tax Act by the Payment of Bonus (Amendment) Act has come into force with effect from 25th September, 1975, the amended provisions will apply in relation to the assessment year 1976-77 and subsequent years. 3. Necessary instructions may kindly be issued to all the officers working in your charge. Yours faithfully, (Sd.) T.P. Jhunjhunwala, SECRETARY, CENTRAL BOARD OF DIRECT TAXES.