Contractors permitted bonus provision deduction of Rs. 20,000 by Appellate Tribunal under mercantile system.

The Appellate Tribunal allowed the appeal by M/s. T. Alagappan and Sons, contractors Sankari Drug, permitting the deduction of Rs. 20,000 for bonus provision. The Tribunal deemed the bonus as a deferred wage, recognizing the obligation created upon crediting the amount to employees, and approved the deduction under the mercantile system.

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The appeal was filed by M/s. T. Alagappan and Sons, contractors Sankari Drug against the disallowance of Rs. 20,000 for provision of bonus. The Appellate Tribunal found that the amount was credited to employees, creating an obligation to pay, and allowed the deduction based on the mercantile system. The Tribunal considered the bonus as a deferred wage and allowed the appeal.

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