Bonus computation requires proof for depreciation, working capital and rehabilitation claims, and statutory reserves must be considered in surplus calculations.

For bonus computation, double-shift depreciation may be included only on reliable proof of actual double-shift working, and the employer's unsupported claim was rejected. Return on working capital is allowable only when reserves and their actual use as working capital are proved, and rehabilitation reserve likewise requires clear evidence of the relevant cost and replacement factors; both claims failed for want of proof. Contingency reserve and development reserve under the Electricity (Supply) Act are not strict prior charges, but they must still be accounted for while fixing the available surplus so statutory requirements are not ignored. The bonus award was therefore modified to reflect these reserves and leave a workable surplus.

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Issues: (i) whether double shift depreciation was allowable in computing the available surplus for bonus, (ii) whether return on working capital and rehabilitation reserve were allowable as prior charges, and (iii) whether contingency reserve and development reserve under the Electricity (Supply) Act had to be provided for in determining the bonus.

Issue (i): Whether double shift depreciation was allowable in computing the available surplus for bonus.

Analysis: Depreciation for bonus purposes had to be computed on the basis of the income-tax rules and could include multiple-shift allowance where proved. The employer, however, had to establish the factual basis for the claim by reliable evidence. On the record, the evidence regarding actual double-shift working of the plant and machinery was unsatisfactory and unsupported by proper proof.

Conclusion: The claim for double shift depreciation was rejected, and the disallowance was upheld.

Issue (ii): Whether return on working capital and rehabilitation reserve were allowable as prior charges.

Analysis: A return on working capital is allowable only when it is proved that reserves were available and were in fact used as working capital. The balance-sheet by itself is not enough to prove such utilisation. Similarly, rehabilitation reserve requires clear proof of the original cost, age, replacement need, multiplier, divisor, and other relevant materials. On the facts, the employer failed to prove actual utilisation of reserves as working capital and also failed to substantiate the rehabilitation claim with dependable evidence.

Conclusion: The claims for return on working capital and rehabilitation reserve were rejected.

Issue (iii): Whether contingency reserve and development reserve under the Electricity (Supply) Act had to be provided for in determining the bonus.

Analysis: Although these statutory reserves are not prior charges in the strict sense, they must still be taken into account while fixing bonus so that the undertaking is left with sufficient funds to meet statutory requirements. The Tribunal erred in completely ignoring these reserves while working out the available surplus.

Conclusion: The contingency reserve and development reserve were required to be provided for in the bonus computation.

Final Conclusion: The bonus award was modified by accepting the statutory reserves in the computation and reducing the bonus to a level that left a workable surplus for the undertaking.

Ratio Decidendi: In determining bonus, depreciation, working-capital return, rehabilitation needs, and statutory reserves must be allowed or accounted for only on satisfactory proof, and statutory reserves under the Electricity (Supply) Act must be considered in fixing the final distributable surplus.

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