Customary bonus deduction raised no referable question of law where payment served commercial expediency and labour relations.

Deduction of customary bonus paid to employees was treated as allowable on the facts noted: the assessee had obtained similar deduction in earlier years, the bonus was declared before the Bonus (Amendment) Ordinance, 1975, and the payment was made for commercial expediency and to maintain good labour relations. As the rate of bonus also fell within the range permitted by the Ordinance, the Calcutta High Court found that no referable question of law arose from the Tribunal's order. The Revenue's application under section 256(2) of the Income-tax Act, 1961 therefore failed.

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Issues: Whether any question of law arose out of the Tribunal's order so as to warrant a reference under section 256(2) of the Income-tax Act, 1961, in relation to deduction of customary bonus paid to employees.

Analysis: The assessee had been allowed deduction for similar bonus in earlier years. For the year in question, the bonus had been declared before the Bonus (Amendment) Ordinance, 1975, and the payment was found to have been made on grounds of commercial expediency and for maintaining good labour relations. The rate of bonus was also within the range permitted by the Ordinance. In these circumstances, the matter did not raise any referable question of law.

Conclusion: No question of law arose for reference and the Revenue's application under section 256(2) failed.

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