TMI Blog1995 (1) TMI 106X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has no grievance in respect of that part of the order of the CIT regarding the claim of extra shift allowance on diesel generator as the same has subsequently been allowed. However, the assessee is having a grievance against that part of the order of the CIT setting aside the original assessment in respect of additional bonus paid to employees amounting to Rs. 2,28,696. 2. The facts giving rise to the controversy can be narrated in this manner. The assessment of the assessee for the year under appeal was completed originally on 30th March, 1988, wherein the AO allowed an extra amount of Rs. 2,28,696 being bonus payable to employees as per the Bonus Act which got subsequently amended through Ordinance No. 8 of 1985 amending the Payme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted a mistake by allowing the additional amount of Rs. 2,28,696 which, according to him, was not the liability of the assessee company as at the close of the previous year/accounting year relevant to the year under appeal. The CIT after issuing show-cause notice to the assessee and obtaining his reply came to the conclusion that the order passed by the AO originally on 30th March, 1988, was erroneous thereby causing prejudice to the interests of Revenue. He, therefore, set aside the assessment with a direction to the AO to re-examine the claim of additional bonus amount of Rs. 2,28,696. Further direction was also given in the impugned order regarding the extra shift allowance/depreciation in respect of diesel generator set but as stated by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of s. 12 of the Payment of Bonus Act, 1965. According to the amendment effected to the said provision in the Payment of Bonus Act, the sum of Rs. 750 per month as salary and wage of an employee was substituted for the sum of Rs. 1,600 per month and this amendment was retrospective in effect because it cast an obligation and liability on the part of the assessee-company to pay bonus to its employees as per the law as it stood then. Thus, when the assessment was being finalised the assessee's liability as per the Payment of Bonus Act got increased and enhanced and the assessee was well within its right as per law to claim this additional liability in computing its taxable income/profits for the year under appeal. It therefore, addressed a le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mount of sales-tax which it was liable under the law to pay during the relevant accounting year. It may be added that the liability remained intact even after the assessee had taken appeals to higher authorities or Courts which failed." Thus, from the above observation of their Lordships of the apex Court it is abundantly clear that even in the absence of entries in account books the assessee is entitled to a deduction of a liability if the same is accrued and payable in accordance with the provisions of law. In the instant case, when the assessment was being finalised the additional bonus liability fell upon the assessee-company in terms of s. 12 of the Payment of Bonus Act through the Ordinance at the first instance and later by an ame ..... X X X X Extracts X X X X X X X X Extracts X X X X
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