TMI Blog1970 (3) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... 1950-51, the respondent assessee mills company claimed deduction of the respective amounts of Rs. 4,16,604 and Rs. 1,75,246. The Income-tax Appellate Tribunal accepted the company's case in respect of the sum of Rs. 4,16,604, but rejected the company's case in respect of the sum of Rs. 1,75,246. In this reference, the questions Nos. 1 and 3 relating to these two amounts are as follows : " (1) Whether, in the computation of the assessee's business income of the accounting year 1949, its claim for deduction under section 10(2)(xv) of the Act of the sum of Rs. 4,16,604, being bonus relating to the accounting year 1948 can be properly allowed ? (3) Whether in computing the business profits of the year 1949, the assessee was entitled to get ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowance and deduction in respect of this amount. Now, Mr. Joshi for the revenue has fairly drawn our attention to the decision of the Supreme Court from the above referred decision of the Madhya Pradesh High Court in the matter of Commissioner of Income-tax v. Swadeshi Cotton and Flour Mills Pvt. Ltd. The Supreme Court rejected the appeal filed by the Commissioner of Income-tax and upheld the decision of the High Court of Madhya Pradesh. In that case, the question related to a large amount paid by way of bonus for the calendar year 1947 in terms of an award made on January 13, 1949. The question of law referred to the High Court was : " Whether on the facts and in the circumstances of the case, the assessee is entitled to claim a de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... year 1949 and assessment year 1950-51. The question No. 1 accordingly is answered in the affirmative. The question No. 2 is not pressed and does not require to be answered. The facts in connection with the question No. 3 are that the assessee-company made a debit entry in respect of the sum of Rs. 1,75,246 in the books of accounts for the accounting year 1949, in respect of leave wages payable in the next ensuing year to its employees under sections 79 and 80 of the Factories Act, 1948. Now, this claim was held not sustainable by the Appellate Tribunal. The advocate for the assessee-company has remained absent and has not made any contentions in support of its claim for deduction. Mr. Joshi for the Revenue has, in connection with this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iii) if being refused leave he quits his employment before the holidays are allowed to him. " Having regard to the above provisions, the court observed : " The question of payment of wages for leave to a worker would arise only if the worker goes on leave, or if he is discharged, or on being refused leave he quits his employment. Till these circumstances arise, the liability that rests on the employer to pay to a worker wages in accordance with section 79 for leave period remains a contingent liability which the employer may or may not be called upon to discharge. That being so, any sum set apart by an employer in any year for meeting the contingency of some of his workers going on leave the next year cannot be regarded as a permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X
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