TMI Blog1984 (7) TMI 34X X X X Extracts X X X X X X X X Extracts X X X X ..... at Rs. 3,24,800 is not allowable as business expenditure, in computing the assessee's income for the assessment year 1978-79 ? " The relevant facts of the case as per the statement of facts furnished by the Tribunal may be stated in brief, thus: The assessee, the Malwa Vanaspati and Chemical Company Ltd., Indore, is a private limited company carrying on business of manufacture of hydrogenated oil and allied products. For the assessment year 1978-79, the assessee-company claimed, inter alia, an amount of Rs. 3,24,800 as " set on of bonus " representing a sum out of the allocable surplus payable to the employees in subsequent years as provided under s. 15(1) of the Payment of Bonus Act, 1965. The IAC (Assessment) disallowed this claim follo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in the manner illustrated in the Fourth Schedule. (2) Where for any accounting year, there is no available surplus or the allocable surplus in respect of that year falls short of the amount of minimum bonus payable to the employees in the establishment under section 10, and there is no amount or sufficient amount carried forward and set on under sub-section (1) which could be utilised for the purpose of payment of the minimum bonus, then, such minimum amount or the deficiency, as the case may be, shall be carried forward for being set off in the succeeding accounting year and so on up to and inclusive of the fourth accounting year in the manner illustrated in the Fourth Schedule. (3) The principle of set on and set off as illustrated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not exist in praesenti. In similar case in Chhaganlal Textile Mills P. Ltd. v. CIT [1966] 62 ITR 274, it was held in that case that the liabilities for which provision was made were only contingent liabilities and cannot be allowed in computing the income, even though the accounts were kept on mercantile basis, as in the present case. The learned counsel for the assessee was unable to convince us on the wording of s. 15(1) of the Bonus Act, that the assessee-company has got a liability to the workers who could enforce the right to receive such bonus in future years. Enforceability by legal process subject to some qualifications is a sine qua non of a legal right which is either enforceable or an assertable claim. Further, in the present ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereof as business expenditure as the amount lay with the assessee-company by way of reserve and in support of his submission, he placed reliance on the decisions in CIT v. Jethalal Zaverchand Patalia [1966] 61 ITR 357 (Guj), CIT v. Sundararaj [1975] 99 ITR 226 (Mad), CIT v. Gemini Cashew Sales Corporation [1967] 65 ITR 643 (SC) and CIT v. Andhra Prabha P. Ltd. [1980] 123 ITR 760 (Mad). After hearing the learned counsel and after going through the case law cited as also the facts and circumstances of the case, we are unable to agree with the submission made by the learned counsel for the assessee. The question as to whether an item of expenditure is wholly and exclusively laid out for the purpose of business or not has to be decided on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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