1981 (12) TMI 105

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..... ance of Rs. 20,000 in the assessment for the asst.yr.1977-78. 2. The assessee is a registered firm and doing business as engineering contractors. The accounting year is the financial year ending 31st March, 1977.The assessee made a provision in the accounts on the last day of the accounting year for a sum of Rs. 20,000 as provision for bonus. This was disallowed on the ground that there was no "S .....

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..... ities below that there was no obligation was incorrect. It was pointed out that only low wage was paid and that there were no other benefits like Provident Fund Gratuity, Leave or Compensation for leave or other benefits generally available to employees in the organised sector. Since the employment was usually for the duration of the contract, there was also no security of employment. It is claime .....

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..... to describe the amount as a provision. The credits to these employees created an obligation on the part of the assessee to pay the amount credited to them. This obligation cannot be ignored. In the light of this fact, it cannot be stated that this is a mere provision towards a contingent liability. We are therefore, of the view that the assessee is entitled to the deduction on the basis of the mer .....

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