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TMI Blog2014 (10) TMI 998X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has claimed expenses of Rs. 1,19,60,183/-. The return of income filed on 29.09.2008 declaring loss of Rs. 1,13,224/-. The Assessing Officer made addition of Rs. 12,85,255/- by invoking the provisions of section 43B for the reason that assessee has not submitted evidence to show that actual payment has been made before filing the return of income of Rs. 12,85,255/- as bonus. The CIT (A) confirmed the addition by holding as under :- " Thus any expenditure on a/c of payment of commission to an employee will be allowable as deduction under 36(1)(ii) irrespective of the fact whether the employee is a shareholder or not, only it is subject to the condition that it is not in lieu of dividend. In this case the appellant has stated that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct to the provisions of section 43B (c) of the Act. 1.2 That the Commissioner of Income Tax (Appeals) erred on facts and in law in not appreciating that the performance linked incentives payable by the appellant to its employees is not covered under section 36(1)(ii) of the Act as the same are not dependent upon the profits of the appellant which is a sine qua non for applicability of the said section. The appellant craves leave to add, alter, amend or vary the above grounds of appeal at or before the time of hearing." 4. While pleading on behalf of the assessee ld. AR submitted that this expenditure of Rs. 12,85,255/- was incurred by the assessee on acc0unt of performance incentive payable to the employees during the relevant previous y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (c) Customary bonus usually associated with festivals. (d) Profit-sharing bonus. The "good work reward" that is given by the assessee to some employees on the recommendation of senior officers of the assessee does not fall in any one of these above categories. 37. For the purpose of section 36(1)(ii) of the Act, it has been held by this Court in CIT v. Kelvinator India Ltd. [IT Case No. 266 of 1983, decided on July 23, 1987] that bonus is related only to the profit that a company makes and is not relatable to production incentive. 38. The Revenue had challenged the decision of this court by filing a special leave petition in the Supreme Court in [1988] 171 ITR (St.) 256. The special leave petition was dismissed by the Supreme Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atia payment or some sort of reward given to an employee for the good work done by him and would therefore, fall within the category of expenditure incurred for the purpose of business expediency and for improving the working of the assessee. Therefore, it would not fall within the meaning of section 36(1)(ii) of the Act but would fall within the ambit of section 37 of the Act. Accordingly, the third question is answered in the affirmative, in favour of the assessee and against the Revenue and it is held that the "good work reward" is allowable as business expenditure under section 37(1) of the Act." As held by Hon'ble High Court, such expenditure paid for good work reward is allowable as business expenditure u/s 37 (1) of the Act, the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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