Plain meaning of bonus tax deduction rules excludes concessional income-tax rate from rebate or relief treatment.

Section 7(e) of the Payment of Bonus Act, 1965 was construed on its plain wording to exclude only a rebate, relief, credit or deduction in direct tax expressly allowed for industrial development. The concessional 55% income-tax rate for industrial companies under the Finance Act, 1966 was treated as a rate prescription, not as a rebate or relief within that provision. The Supreme Court rejected reliance on the Finance Minister's speech to enlarge clear statutory language, and held that the employer could not compute direct tax at 65% for bonus purposes. The answer was against the appellant.

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Issues: Whether the concessional income-tax rate of 55% applicable to an industrial company under the Finance Act, 1966 could be treated as a rebate or relief for the development of industry within the meaning of section 7(e) of the Payment of Bonus Act, 1965, so as to permit deduction of direct tax at the higher rate of 65% in computing available surplus.

Analysis: The scheme of the Payment of Bonus Act, 1965 requires computation of available surplus after deducting direct tax payable by the employer, but section 7(e) excludes only a rebate, relief, credit or deduction in the payment of direct tax that is allowed under a law relating to direct taxes or under the relevant annual Finance Act and is for the development of any industry. The language of section 7(e) was treated as clear and self-contained, so it had to be construed according to its plain grammatical meaning. On that construction, the difference between the 55% rate for industrial companies and the 65% rate for other companies was only a rate prescription under the Finance Act, 1966 and was not shown to be a rebate or relief allowed as such under any law for direct taxes. The speech of the Finance Minister could not be used to enlarge or alter the clear statutory language.

Conclusion: The 55% concessional rate was not a rebate or relief within section 7(e) of the Payment of Bonus Act, 1965, and the employer was not entitled to compute direct tax at 65% for bonus purposes; the answer was against the appellant.

Ratio Decidendi: Where statutory language is clear and unambiguous, it must be given its plain meaning, and external materials cannot be used to read into it a rebate or relief not expressly provided by the statute.

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