TMI Blog1984 (7) TMI 180X X X X Extracts X X X X X X X X Extracts X X X X ..... mbatore District dt. 12th Oct. 1979. This additional payment was calculated at the rate of 12 per cent of the total earnings. This was in addition to 8 per cent that was given as bonus by the assessee to its workers. The ITO considered that this payment was also bonus because earlier under a settlement dt. 9th Jan., 1979, the issue of bonus for the year ended Dec., 1978 was considered, discussed and settled at 20 per cent of the to total earnings. He was of the view that this payment should also be brought within the purview of the first proviso to s. 36(1)(ii) and since the sum of Rs. 4,33,433 represented excess over 8 per cent which he considered to be permissible under the Payment of Bonus Act, he disallowed this sum. The CIT (A) on appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant and machinery and not worked throughout the previous year for this assessment year. He has relied upon the decision of the Madras High Court in the case of South India Viscose Ltd. vs. CIT (1982) 29 CTR (Mad) 56 : (1982) 135 ITR 206 (Mad). The CIT (A) on the other hand, allowed this claim and directed the allowance of the extra shift allowance on the ground that the concern as a whole has worked extra shift for the relevant period. He has pointed out the instructions of the CBDT given in its Circular No. F 10/83/8/ITA.II and relying on the decisions of the Supreme Court in Navnital C. Javeri vs. K. K. Sen, ITO (1967) 56 ITR 198 (SC) and Ellerman Lines Ltd. vs. CIT 1972 CTR (SC) 71 : (1971) 82 ITR 913 (SC), held that the ITO is bound to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered for the assessment, as far as depreciation is concerned only the claim for a period of one year/12 months will be allowed. The assessee accepted this condition by its letter dt. 30th Nov., 1979 and has stated in this regard as follows: "...........We were also advised that the depreciation for one year only is admissible against the income of fifteen months and we have already stated that we would agree for this condition in our letter dt. 20th Nov., 1979." 7. The ITO completed the assessment on the basis, that is to say allowing depreciation only for a period of one year comprising of twelve months, inspire of the proviso to r. 5(1) of the IT Rules. The assessee did not accept the assessment on this point even though it has agree ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed by the CIT (A) is in accordance with r. (5)(1) and its proviso. The Allahabad High Court has held that the ITO cannot impose conditions which are not reasonable and consonant with the Act. In view of this decision the condition imposed by the ITO with regard to depreciation cannot be considered to be reasonable and, therefore, cannot be considered to be a proper and valid condition for allowing the change in the previous year. We are of the view that the ITO could not have denied the change even if the assessee had not accepted this condition. As regards the point made by the ITO regarding the anomaly that would be involved if the depreciation is allowed with the condition imposed by the ITO we have only to point out the disposal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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