1957 (9) TMI 30

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....essee is the Nagri Mills Co. Ltd., Ahmedabad, and the accounting year corresponding to the assessment year 1952-53 is the calendar year 1951. There was a dispute in regard to the bonus payable to the workers for the year 1951 and the matter was referred to conciliation. The conciliation board gave its award in June, 1952, and a bonus was actually distributed in December, 1952. The assessee company maintains its accounts on a mercantile basis and no entry was made in the account books of the company for the year 1951 making a provision for payment of bonus. However, in their return, the company claimed to deduct from the profits the bonus directed to be paid by the conciliation board by its award as an allowable expense which had not been ch....

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....ds used in section 10, sub-section (2), clause (x), which allows a deduction in respect of bonus and section 10(5). Now, in section 10(2)(x), what is allowable as a deduction is "any sum paid to an employee as bonus". By itself this contemplates actual payment; but section 10(5) defines the word "paid" which appears in sub-section (2) as meaning "actually paid or incurred according to the method of accounting upon the basis of which the profits or gains are computed under this section". Therefore, an actual payment is not necessary for the purpose of this deduction; it is sufficient if the liability to bonus is incurred according to the method of accounting upon the basis of which the profits or gains are computed. Now, considering that the....