TMI Blog1991 (3) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal was justified in holding that the assessee was entitled to the deduction of both the amounts of Rs. 12,84,200 and Rs. 14,39,543 respectively, being the actual payment of bonus and the provision for the payment of bonus during the previous year? 2. Whether, on the facts and in the circumstnaces of the case and in law, the Tribunal was justified in holding that the following amounts were the part of the profits attributable to its priority industry for the purpose of deduction under section 80-1 of the Income-tax Act, 1961: (i )Rs. 3,50,000, being the technical collaboration fees received from Andhra Pradesh Paper Mills as part of the consideration for the technical know-how supplied by the former to the latter; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ustry and excluded them from the profits of the priority industry, thereby reducing the deduction allowable to the assessee under section 80-1. It is common ground that with the introduction of the Payment of Bonus Act, 1965, payment of bonus to the employees became the assessee's statutory obligation. However, even though the assessee was following mercantile system of accounting in respect of other income and expenditure, it continued to follow cash method of accountancy with regard to bonus liability. During the previous year relevant for the year under reference the assessee paid bonus of Rs. 12,84,200 and claimed it as a revenue deduction which the ITO allowed. The assessee, however, further claimed deduction of Rs. 14,39,453 being p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is could not, at the same time, be allowed. Accordingly, he directed the withdrawal of the deduction for that amount. The Tribunal has considered this issue in its order at length. It has come to the conclusion that the AAC was not right in withdrawing the deduction of the sum of Rs. 12,84,200 which was allowed by the ITO. 4. So far as the second question referred to us at the instance of the Commissioner is concerned, the counsel are agreed that the issue is covered by our Court's decision in the assessee's own case in CIT v. West Coast Paper Mills Ltd [1988] 169 ITR 288 . Accordingly, we answer the second question in the affirmative and in favour of the assessee. 5. As regards the only question referred to us at the instance of the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that in any case where the accounts are correct and complete to the satisfaction of the Assessing Officer but the method employed is such that, in the opinion of the Assessing Officer, the income cannot properly be deduced therefrom, then the computation shall be made upon such basis and in such manner as the Assessing Officer may determine: Provided further that where no method of accounting is regularly employed by the assessee, any income by way of interest on securities shall be chargeable to tax as the income of the previous year in which such interest is due to the assessee: Provided also that nothing contained in this sub-section shall preclude an assessee from being charged to income-tax in respect of any interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat it will be for the ITO to impose conditions for allowing the change of method. However, he was not able to point out any authority in support of his submission. Accordingly, we proceed to examine the issue on the basis that the change of method in this case as regards bonus has been bona fide and has been consistently and regularly followed thereafter by the assessee. 7. The question that requires consideration is only this that because of the change of accounting method during the year under reference, the assessee is claiming deduction in respect of bonus liability both on cash basis and mercantile basis. The question is whether the assessee can do it. Here again, in our judgment, whenever there is a change of method, something of t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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