TMI Blog2000 (2) TMI 78X X X X Extracts X X X X X X X X Extracts X X X X ..... the Tribunal was right in holding that the ex-gratia payment paid on the basis of a memorandum of settlement entered with the workers was unreasonable having regard to the pay and allowances of the workers and hence not allowable under section 36(1)(ii) ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that in spite of the decision of the Supreme Court, the conditions mentioned in the second proviso to section 36(1)(ii) are cumulative in nature ?" A brief reference to the factual position would suffice : I. T. A. Nos. 618 and 619 of 1984 were disposed of on November 29, 1985, in favour of the assessee, for the relevant assessment year 1980-81. A reference was sought for by the Revenue bef ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction is not permissible in respect of an employee covered by the Bonus Act if what is paid as bonus, or as commission, is in excess of, or otherwise than, what is payable under that Act, even if the payment of the excess amount, whether as bonus or commission, is justifiable when considered with reference to clauses (a) to (c) of the second proviso. In our view, the two provisos must be read together to correctly understand the permissible deduction in terms of clause (ii) of sub-section (1) of section 36. The object of that clause is to encourage the management to pay bonus not only to the extent to which it is statutorily bound to pay to the employee, but also in excess of that limit, provided the payment is justifiable as a reasonable p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions on the fulfilment of which alone the amount of commission paid to an employee can be regarded as reasonable. They are merely factors to be taken into account by the Revenue authorities in determining the reasonableness of the amount of commission. It may be that one of these factors yields a negative response. To take an example, there may be no general practice in similar business or profession to give commission to an employee, but, yet, having regard to the other circumstances, the amount of commission paid to the employee may be regarded as reasonable. What the proviso requires is merely that the reasonableness of the amount of commission shall be determined with reference to the three factors. But, it is well-settled that these fa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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