TMI Blog1987 (8) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... the payment in computing the business income ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in admitting the claim for payment of incentive bonus over and above the admissible bonus under the Payment of Bonus Act ? 3. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in stating that if particular payment does not fall within the first proviso, it can still be considered under the second proviso to section 36(1)(ii) of the Act or even under section 37(1) of the Act ? 4. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the assessee is entitled to the deduction of the entire incentive bonus of Rs. 22,23,518 ? " We have heard learned counsel for the parties and have also looked into the order of the Income-tax Appellate Tribunal. All these four questions are concerned about the deductibility of Rs. 22,23,518 which the assessee claimed as deduction in computing its taxable income. This amount is said to have been paid by the assessee to its workers and members of its staff and debited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7] 166 ITR 758 has taken the view that such questions were questions of law. The Supreme Court in CIT v. C. D. Lonappan [1966] 60 ITR 247, while considering the objection of the Revenue that the High Court should not interfere in its advisory jurisdiction with the order of the Tribunal where it had disallowed a part of the bonus under the provisions in the Act of 1922 corresponding to the second proviso to section 36(1)(ii), has held that ex facie it involved a question of law and the High Court could give its opinion when it came to the conclusion that the Tribunal misdirected itself in disallowing a part of the bonus paid to the assessee's employees. This brings us to question No. 1 for consideration. In order to appreciate the contentions of the parties, it is necessary to state some facts in detail. Before the assessing officer, the assessee claimed that the disputed amount represented overtime payments for extra work done by the workers in double shift. It was also claimed that some loyal workers had agreed to remain in the factory premises when the employees of the assessee company were on strike during the period November 22, 1980, to May, 1981. These workers were provi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payment, the assessee produced certain vouchers and a wages register before the appellate authority for the first time. These documents had not been produced earlier at the time of assessment. On initial scrutiny, the appellate officer entertained some doubt about the genuineness of the thumb impressions appended to the various vouchers representing payments to workers. The assessing officer was thus required to submit a remand report after a thorough enquiry. During the remand proceedings, the opinion of a handwriting and fingerprint expert was sought, who confirmed the doubts of the assessing officer that the thumb impressions appended to payment vouchers in several cases were similar and identical, though payments in respect thereof were said to have been made to different persons. Some of the workers were also examined but their statements were not found acceptable for the detailed reasons stated in the appellate order. The explanation furnished by the assessee in this regard that some workers had authorised other persons to receive payment was rejected as this fact was not noted in the wages sheet. In addition to the above, the appellate authority further observed that pay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the extent of rupees 10 lakhs only. Being aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee, as well as the Revenue, both filed appeals before the Income-tax Appellate Tribunal. These cross-appeals were decided by a consolidated order, The Appellate Tribunal dismissed the Department's appeal whereas the assessee's appeal was accepted in toto. Thereafter, the Revenue applied for references under section 256(1) of the Act which were not granted. It is in these circumstances that the present two applications under section 256(2) of the Act have been filed giving rise to question No.1 and other questions considered earlier. Learned counsel for the Revenue took us through the Tribunal's order and various findings concerning question No. 1. The main thrust of his argument was that the Income-tax Appellate Tribunal had reversed the orders of the tax authorities without referring and dealing with the evidence relied upon by those authorities. It was argued that the Tribunal while allowing the assessee's claim relied upon tailor-made and self-serving certificate obtained by the assessee, instead of meeting the material used against the assessee. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn version, filed in writing, passed over the issue, relying upon certificate issued by the Chamber of Commerce dated July 27, 1985, which was of a general nature and did not refer to the affairs of the assessee. This certificate admittedly is of a date after the assessment order had been made. Likewise, the Tribunal did not dispute the fact that the thumb impressions appended to the payment vouchers were of persons other than those who were supposed to be the recipients. Instead of dealing with the statements of the workers referred to in the order of the Commissioner of Income-tax (Appeals) and other material, the Tribunal relied upon the certificate issued by the assessee's chartered accountants and two trade unions of the assessee's mill, etc., in reversing the finding of the lower authorities. Similarly, the discrepancies pointed out by the Commissioner of Income-tax (Appeals) while determining the reasonableness of the amount were not taken notice of by the Tribunal. It did not also refer to the assessee's claim which was severely commented upon by the Commissioner of Income-tax, namely, that the workers could not have worked for 24 hours round the clock for the entire month ..... X X X X Extracts X X X X X X X X Extracts X X X X
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