TMI Blog1984 (2) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... sallowance under sections 40(c) and 40A(5) of the Income-tax Act, 1961 ('the Act') [Assessment years 1978-79 and 1979-80]: We agree with the reasoning and conclusions of the Commissioner (Appeals). The submission raised in the grounds of appeal before the Commissioner (Appeals) as well as before us that commission is not salary and that it is the principal and agent relationship and not employer and employee are not acceptable to us. Ground rejected. 4. (iii) Bonus under the Bonus Act [Assessment years 1978-79 to 1980-81]: The accounting year is 30-6-1977 for the assessment year 1978-79 and so on. The assessee follows mercantile system of accounting. It made a rough estimated provision of Rs. 7,24,441 for the assessment year 1978-79, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us. The method of accounting even for that item is really mercantile. The assessee is making a provision for bonus in the accounts. It is only in income-tax adjustment statement for the income-tax purposes that it is being added back. The method of accounting is to be found out not from what the assessee did in income-tax proceedings before the ITO to determine the assessable total income, but from what the assessee used to do in the preparation of its profit and loss account to ascertain the commercial profits. So the system being mercantile and the bonus being a statutory liability, the provisions are to be deducted in the year itself in which they are made. So we are allowing a deduction of Rs. 7,11,669 for the assessment year 1978-79 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ver got flooded and breach also had occurred in the dam. Many villages were inundated. Many of the workers and relatives stayed in those or nearby villages. The assessee spent much amount in cash and kind on flood relief. The assessee claimed 50 per cent of it, perhaps under section 80G of the Act. The IAC (Assessment) directed its disallowance both under section 37(1) of the Act and also under section 80G on the ground that it is only in kind and not cash. The following ground was raised before the Commissioner (Appeals): "3. Your petitioner had at the request of the Government officers provided food and cloth to the persons who were affected by floods in the area from where the workers of the petitioner come. The expenditure was incurre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee-mill. That averment also in a situation like that would have been only a truth. It is acceptable to us. In such situations of devastating floods everybody contributes their might for relief. So the workers would have ordinarily requested the mill to take a lead in such matters. So the expenditure was at the behest, initiative and desire of the local officials and mill workers. The assessee in private enterprise cannot afford to displease the local officials nor their workers. Non-cooperation with the local officials or indifference to the request of the workers will lead to difficult situations. The adverse effect of such a conduct can well be imagined than described. So the expenditure incurred at the behest of Government officials ..... X X X X Extracts X X X X X X X X Extracts X X X X
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