TMI Blog1993 (10) TMI 62X X X X Extracts X X X X X X X X Extracts X X X X ..... m deduction of the bonus in excess of the statutory limit ?" The assessee is a textile manufacturing company. The assessee/company claimed expenditure of Rs. 9,69,563 incurred by it on modernising its machinery. The Income-tax Officer was of the view that this amount having been incurred by the assessee for installation of new machinery was of capital nature. He disallowed the claim. On appeal, the Commissioner of Income-tax (Appeals) did not agree with the Income-tax Officer and held that the expenditure incurred by the assessee on modernising its machinery was allowable as revenue expenditure. He allowed the claim. The Revenue filed an appeal before the Appellate Tribunal. The Appellate Tribunal found that the expenses incurred by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he expenditure in question incurred by the assessee was for the better conduct and improvement of the existing business on a scheme of modernisation and not for a fresh and new venture and the object of modernisation was for facilitating the assessee's trading operations and the conduct of the assessee's business to be carried on more efficiently and to update the facilities on the line of the modern trends in the business and should therefore be held to be revenue expenditure. This case, Income-tax Reference No. 168 of 1986, was also heard along with the batch of cases, Income-tax References Nos. 105 and 106 of 1989, etc. The general question involved in those batch of cases was identical to the first question in this case. We are appendin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that the customary bonus paid by the assessee to its employees on the occasion of Onam is not hit by section 36(1)(ii) of the Income-tax Act and the same is governed by section 37 of the Income-tax Act. An identical question has been considered on identical facts in Income-tax Reference No. 87 of 1986. We have held in that case that the proviso to section 36(1)(ii) of the Income-tax Act was not considered properly and so we declined to answer the question and directed the matter to be enquired into afresh by the Tribunal. In CIT v. Kerala Agro Industries Corporation [1990] 183 ITR 197, this court held that bonus paid to an employee in a factory or other establishment to which the provisions of the Payment of Bonus Act, 1965, do not appl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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