Appeal partially allowed under Payment of Bonus Act, 1965; fees remanded for segregation.

The Tribunal partially allowed the appeal by disallowing the production bonus and productivity payment, citing Section 31A of the Payment of Bonus Act, 1965. However, the attendance incentive bonus was allowed based on a decision of the Madras High Court. The issue of fees paid for financial consultancy amounting to Rs. 1,00,000 was remanded back to the Assessing Officer for proper segregation, following the decision in Brooke Bond India Ltd., allowing only the fee related to raising loans.

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Issues:
- Disallowance of production bonus, productivity payment, and attendance incentive bonus.
- Disallowance of fees paid for financial consultancy.

Production Bonus, Productivity Payment, and Attendance Incentive Bonus Disallowance:
The appeal was filed by the Revenues against the order of the CIT(A) for the assessment year 1981-82. The dispute revolved around the disallowance of various payments made by the assessee to staff and workers under different categories such as production bonus, productivity payment, and attendance incentive bonus. The Assessing Officer contended that these payments were in addition to the profit-sharing bonus and thus should be treated as bonus payments rather than wages. The Assessing Officer relied on the Payment of Bonus Act, 1965, specifically Section 31A, which limits the bonus linked with production or productivity to not exceed 20% of the salary or wages earned by the employees. The CIT(A) deleted the disallowances based on the assessee's arguments and previous year's order. However, the Tribunal held that the amounts in question were hit by Section 31A and disallowed the production bonus and productivity payment but allowed the attendance incentive bonus based on a decision of the Madras High Court.

Fees Paid for Financial Consultancy Disallowance:
The second issue pertained to the disallowance of fees amounting to Rs. 1,00,000 paid to IC & ICI Ltd. for financial consultancy in connection with raising loans and issuing new shares. The Assessing Officer treated this amount as capital expenditure, but the CIT(A) deleted the disallowance citing the decision of the Supreme Court in India Cements Ltd. case. The Departmental Representative argued against the deletion, referencing a decision of the Calcutta High Court in Brooke Bond India Ltd. case. The Tribunal analyzed the nature of the expenditure and differentiated between obtaining capital through shares and loans. Following the decision in Brooke Bond India Ltd., the Tribunal held that the fee paid for the issue and subscription of new shares could not be allowed as revenue expenditure. However, as the bifurcation of the expenditure was not provided by the Assessing Officer, the matter was remanded back for proper segregation and allowing only the fee related to raising loans.

In conclusion, the Tribunal partially allowed the appeal, disallowing the production bonus and productivity payment while remanding the issue of fees paid for financial consultancy back to the Assessing Officer for proper bifurcation.

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