TaxTMI 
TaxTMI 
1965 (7) TMI 39
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....acts are that for the assessment year 1949-50, the previous year being 31st December, 1948, the assessee-company claimed as a deduction a provision made for bonus amounting to Rs. 4,50,000 provided for in the profit and loss account in the relevant previous year, but actually paid in the following year. For the accounting year ending October 31, 1942, although a provision was made in its accounts for bonus in the sum of Rs. 1,00,000, only Rs. 63,385, the actual payment made, was allowed to be deducted in that year and the balance was disallowed. For the years ending October 31, 1943, up to the year ending December 31, 1947, the position was more or less the same. Allowance for bonus was invariably made on the basis of actual payments and in....
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....ct of bonus payment. It found that the allowance for bonus in the past had never been on the basis of what had been provided by the company in its books of account "during each of the years but it was based entirely on the actual payments made during each such year". Such disallowance was made year after year out of the provision made by the assessee and it had consistently accepted that position. In these circumstances it was held that the assessee itself had adopted the cash basis in regard to the claim under bonus and as such this was a hybrid system of accounts which, under the proviso to section 13 of the Act, was an acceptable system of accounting provided it was regularly employed by the assessee. The disallowance was accordingly uph....
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.... doubt open to the assessee to change his method of accounting but the change should be bona fide and not a casual departure from the regular method which has hitherto been accepted by him for a number of years. Merely because in the subsequent assessment year there was a loss and the bonus actually paid in that year could not be effectively set off but had to be carried forward would furnish no justification for permitting a change in the method of accounting. The bona fides, in the instant case, are absent and the Income-tax Officer was justified in resisting the attempt of the assessee to change its method of accounting. Therefore, on the set method of accounting accepted by the assessee for a number of years the allowance of bonus on t....
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.... has laid down the conditions which must be satisfied before bonus can be allowed even on the mercantile system of accounting. They are : "(a) That the workmen are entitled to make a claim to profit bonus because certain conditions stood satisfied ; (b) The workmen have to make a claim from year to year ; (c) That such claim was made and it has either been settled amicably or by industrial adjudication ; and (d) if there is a loss or if no claim is made, no bonus will be permissible." In the instant case no attempt has been made to show that any of the aforesaid conditions laid down by the Supreme Court were complied with. It has not been shown that the bonus provided for by the assessee in its books of accounts was upon a claim made b....