Bonus deduction allowed in full where prior-year salary was only a computation method for current year payment.

Bonus actually paid during the relevant year pursuant to an employee agreement was treated as current year expenditure, even though the amount was computed partly by reference to an earlier year's average salary. The earlier year's average salary was only a calculation method and did not change the character of the payment. As the liability was not shown to be excessive or beyond permissible bonus limits, the disallowance was held unsustainable and the full bonus deduction was allowed.

---

---

Issues: Whether the bonus payment claimed by the assessee, though calculated partly with reference to an earlier year's average salary, was allowable in full as a current year expenditure.

Analysis: The bonus had been actually paid during the relevant year and was stated to be pursuant to an agreement with the employees. The use of the average salary of an earlier year was only a mode of calculation and did not alter the character of the payment as relating to the current year. The liability was not shown to be excessive or outside the permissible bonus limits.

Conclusion: The disallowance was unsustainable and the full bonus claim was allowable in favour of the assessee.

---