Allocable surplus limits bonus entitlement; fresh customary bonus plea requiring evidence was refused at Tribunal stage.

Bonus entitlement under the Payment of Bonus Act is confined to the allocable surplus computed under the Act, so payment cannot be extended beyond that surplus merely because the statutory ceiling contemplates a maximum bonus. The assessee's claim for bonus in excess of available allocable surplus was rejected and the disallowance was upheld. A new plea that the payment was customary bonus under section 17 could not be raised for the first time before the Tribunal because it required fresh factual proof of prior practice; permission to advance that alternative case was refused.

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Issues: (i) Whether, under section 10(1) of the Payment of Bonus Act, 1965, bonus could be paid up to 20 per cent of salary or wages even when the allocable surplus was lower. (ii) Whether the assessee could be permitted to raise, for the first time before the Tribunal, the plea that the payment was customary bonus falling under section 17 of the Payment of Bonus Act, 1965.

Issue (i): Whether, under section 10(1) of the Payment of Bonus Act, 1965, bonus could be paid up to 20 per cent of salary or wages even when the allocable surplus was lower.

Analysis: The statutory scheme of sections 2(4), 2(6), 5, 10 and 15 of the Payment of Bonus Act, 1965 links bonus strictly to allocable surplus. The minimum bonus is payable if there is allocable surplus, while higher bonus can be paid only to the extent that allocable surplus permits, subject to the statutory ceiling. The Third Schedule and the provisions dealing with set on and set off show that the ceiling does not authorise payment beyond available allocable surplus merely because 20 per cent represents the maximum bonus contemplated by the Act.

Conclusion: The assessee's interpretation was rejected. Bonus under section 10(1) cannot exceed the allocable surplus available under the Act.

Issue (ii): Whether the assessee could be permitted to raise, for the first time before the Tribunal, the plea that the payment was customary bonus falling under section 17 of the Payment of Bonus Act, 1965.

Analysis: The plea of customary bonus involved a fresh question of fact requiring evidence of prior practice. The assessee had proceeded throughout on the footing that the payment was made under the Payment of Bonus Act, 1965, and no evidence had been led to establish customary bonus. Section 17 applies only where payment of Puja bonus or other customary bonus is first shown as a fact. A new factual case requiring further evidence could properly be refused at the appellate stage.

Conclusion: Permission to raise the alternative plea was refused.

Final Conclusion: The disallowance of the excess bonus claim was upheld, and the assessee received no relief in appeal.

Ratio Decidendi: Under the Payment of Bonus Act, 1965, bonus entitlement is confined to the allocable surplus computed under the Act, and a new factual plea requiring evidence cannot be raised for the first time at the Tribunal stage.

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