TMI Blog1991 (1) TMI 28X X X X Extracts X X X X X X X X Extracts X X X X ..... the close of the business on December 31, 1977. The assessee made provision for bonus at Rs. 15,40,720. The provision was made for the assessment year 1978-79. The assessee made payment of bonus of Rs. 18,08,911. The said payment exceeded the provision by Rs. 2,68,191. The excess payment was disallowed by the Income-tax Officer on the ground that it related to the earlier year. The assessee came tip in appeal before the Commissioner of Incometax (Appeals). The Commissioner of Income-tax (Appeals) was impressed with the arguments of the assessee and, accordingly, deleted the addition. Before the Tribunal, it was contended on behalf of the Revenue that, since the assessee was following the mercantile system of accounting, it ought to hav ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the liability not provided for but discharged by it. In our view, the answer must be in the negative. In Kedarnath Jute Manufacturing Co. Ltd. v. CIT [1971] 82 ITR 363 (SC), the assessee who was assessed to sales tax initiated proceedings for a reduction or cancellation of the assessment. During the pendency of the income-tax assessment of the assessee, its liability to sales tax was quantified and a demand for a specific sum was raised. The assessee had not made any provision for the said sales tax demand in its original return but filed a revised return claiming such deduction. It was held by the Supreme Court that the assessee was entitled to do so and that liability for payment of tax arose independent of the assessment thereof a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue to some error or oversight, this was not taken into account in computing the provision for bonus for the period up to December 1977. This had been taken into account when bonus in respect of 1977 was actually paid in 1978, by Moran Tea Co. (India) Ltd. This omission in not taking into account the eligible salary for the three months January to March, 1977, has resulted in the bonus paid in 1978 by Moran Tea Co. (India) Ltd., in respect of 1977 being more than the provision made therefor in the accounts up to December 31, 1977, of the sterling company. The excess amount paid (excess over the provision) was Rs. 2,68,191 as the following will show : Rs. "Actual eligible salary/wages 90,44,555 Bonus thereon at 20% 18,08,911 Actua ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ompany after all the assets and liabilities of the sterling company were transferred to and vested in the Indian company. The bonus was also paid to the staff taken over by the Indian undertaking of the sterling company. On these facts, in our view, the Tribunal came to a correct conclusion. Mr. R. C. Prasad, the learned advocate for the Revenue, has, however, submitted that the principles laid down in Kedarnath Jute Manufacturing Co. Ltd. [1971] 82 ITR 363 (SC), would not apply to the facts of this case and there is divergence of opinion on the question of applicability of the principles laid down therein. He has drawn our attention to the decision of this court in the case of Shalimar Chemical Works Private Ltd. v. CIT [1987] 167 ITR 13 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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