Deductibility of gratuity and bonus arrears turned on missing findings on business nexus and commercial expediency.

A reference concerning deduction of gratuity and bonus arrears could not be answered because the Tribunal had not recorded clear reasons for the payments or examined their nexus with the business. The absence of findings on whether the expenditure related to the future conduct of the assessee's business or was justified on grounds of commercial expediency made the reference incomplete. The matter was therefore remitted to the Tribunal for rehearing and for fresh disposal after consideration of the relevant material.

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Issues: Whether the reference question regarding deduction of gratuity and bonus arrears could be answered on the basis of the Tribunal's findings, which did not disclose the reasons for the payments or the nexus, if any, with the business.

Analysis: The Tribunal had recorded that details of the payments and the reasons for them were furnished, but it did not set out those reasons or examine whether the expenditure was connected with the future conduct of the assessee's business or whether it was supportable on the principle of commercial expediency. In the absence of a clear and complete finding on the relevant factual and legal basis, the question referred could not be properly answered. The appropriate course, following the course adopted in analogous cases, was to remit the matter to the Tribunal for rehearing and for recording a clear finding after consideration of the relevant material.

Conclusion: The reference question was not answered, and the matter was sent back to the Tribunal for fresh disposal after rehearing.

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