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TMI Blog1987 (4) TMI 118X X X X Extracts X X X X X X X X Extracts X X X X ..... d of 12. ITA No. 336/D/1985, Asst. yr. 19th Jan., 1982 14. In this appeal by the Revenue, the first objection is that the CIT(A) erred in deleting the disallowance of Rs. 8,21,755 out the payment of bonus to workers rightly made by the ITO. The IAC(Asst.) noted that, in the assessment order for the asst. yr. 1980-81, there was a detailed discussion as to how the payments made by the assessee, which were in the nature of bonus (described variously as production bonus, ex gratia payment, attendance incentive bonus) had to be within the limits prescribed by s. 36(1)(ii) of the Act. Adopting the reasons recorded there, the IAC (Asst.) held that he would allow as deduction only bonus of 20 per cent being the maximum permissible under the Paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion involved payments of various kinds, viz. (a) payment to employees retrenched/ retired under the Industrial Disputes Act, (b) payments to loyal workers during the strike period, (c) production bonus and (d) overtime payments. The Tribunal was of the view that the above kind of payments did not fall to be described as bonus within the meaning of Payment of Bonus Act under s. 36(1)(ii) of the IT Act, 1961. That such payments were allowable as revenue expenditure incurred for the purpose of business expediency. 18. Attention was then invited to page 23 of the paper book. This is also an order of the Tribunal in this case for the asst. yr. 1980-81 (ITA No. 2633/Del/84 dt. 12th Dec., 1986). For that year, the Revenue came up with a simila ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m. He then looked into the capital gains of the partners of the firm. He noted that on31st Dec., 1979, the partners were credited with certain amounts and the assessee, in explanation, filed the following extract: "As on 31st Dec., 1979 To partners capital a/c (As per list) 5,28, 527.39 . By partners capital a/cs . 5,46,175.52 To advance (as per list) 11,48,020.00 . By sundry creditors . 2,41,298.01 To balance . 8,89,073.86 16,76,547.39 16,76,547.39 As on 30th Sept., 1980 1st Jan., 1980to Balance 8,89,073.86 . To partners capital a/cs 90,000.00 . 30th Sept., 1980by balance . 9,790,073.86 9,79,073.86 9,79,073.86 It may be noted here that, as explained by the assessee in its letter to the IAC (Asst.) dt.22nd M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hence the same should be taxed. The assessee explained that the amount in question had not been written off in the book and that it had merely been transferred to the old firm's account. It was also pointed out that the assessee had not derived any benefit in any past assessment with regard to such liabilities so as to bring in s. 41(1). The IAC did not find these submissions acceptable. He brought to tax the said amount for the following reasons briefly: (i) It was incorrect on the part of the assessee to say that it never received the benefit of the above amounts. Complete details how and when the liabilities arose was asked for but the same were not given on the ground that they related to very old balances. All the same, the liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in a balance of Rs. 8,89,073, shown in the balance-sheet as noted above. Similar adjustment on account of current accounts of the partners was made in the second period (after31st Dec., 1979) and this resulted in the balances outstanding in these accounts going to Rs. 9,79,073 as on 30th Sept., 1980. (c) What has been done here was merely aggregation of certain accounts under one consolidated head i.e. the account with a balance of Rs. 8,89,073 was one of the assets taken over by the new firm as per the balance sheet as on 31st Dec., 1979. On the second dissolution of the new firm on 30th Sept., 1980, where by all the partners retired and the business was taken over by the Limited Company, the assets standing at Rs. 9,79,073 were taken ov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fictitious asset in its hands. Notwithstanding this factually, the case does not fall under s. 41(1). The Revenue is in further appeal. 24. We have heard the parties. While the Departmental Representative supported the order of the IAC (Asst.), Shri Relan relied upon the CIT(A)'s order. He also drew our attention to the fact that in the balances-sheet of the Ltd. Co. as on 30th Sept., 1981, the advances recoverable are shown at a total of Rs. 52,29,174, a break-up of this is also filed before us. It is seen, included in the above amount is an time of Rs. 9,79,073.86 shown as recoverable from Auto Pins' old firm. In our view, the order of the CIT(A) does not call for any interference. The basic finding of the CIT(A) is that there is no e ..... X X X X Extracts X X X X X X X X Extracts X X X X
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