TaxTMI 
TaxTMI 
2016 (12) TMI 233
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....e disallowance of bonus of Rs. 9,40,000/- u/s 43B. 2] The learned CIT(A) failed to appreciate that the appellant had credited the bonus payable to the employees to their respective accounts in the books of the appellant through journal entries and thus, there was no reason to disallow the bonus u/s 43B. 3] The learned CIT(A) failed to appreciate that the bonus was not appearing in the balance sheet as on 31st March, 2011 as a liability and this indicated that the bonus was paid. 4] The learned CIT(A) failed to appreciate that the respective employees had also confirmed the receipt of bonus and thus, there was no reason to disallow the same u/s 43B. 3. The appeal of assessee was fixed for hearing but none appeared on behalf of th....
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....d not made actual payment of amount shown as bonus but had merely credited the bonus amount. The Assessing Officer was of the view that the same was in contravention of provisions of section 43B of the Act and hence, the same is not to be allowed as deduction in the hands of assessee. In view thereof, the assessee was show caused and the reply of assessee in this regard was the same and the Assessing Officer disallowed sum of Rs. 9,40,000/- under section 43B of the Act. 6. The CIT(A) referred to the Explanation (2) to section 43B of the Act to observe that the assessee could claim the said deduction when it is actually paid by the assessee on or before the due date of filing the return under section 139(1) of the Act. The assessee was fu....
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....ee had credited the accounts of employees in respect of said bonus and complied with the provisions of the Act in respect thereof, the said expenditure to have been incurred wholly and exclusively for the purpose of business merits to be allowed. Another contention which was raised by way of written submissions was that the provisions of Bonus Act were not applicable to the assessee as he had not employed 20 or more at any time. He stressed that in the absence of the same, the bonus at best could be said to be an incentive paid by the assessee. In this regard, reliance was placed on different decisions of various High Courts. The assessee stressed that where the expenditure was neither bogus nor genuine, it could not be disallowed. Another ....
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.... more than 20, the provisions of Bonus Act were not attracted. The payment at best could be said to have an incentive to the employees or ex-gratia payment to the employees and the provisions of section 43B of the Act are not applicable. Another point raised by the learned Authorized Representative for the assessee was that under the provisions of the Act, there is no requirement to make cash / cheque payments to the employees in order to entitle any person to claim the said deduction. The provisions of section 43B of the Act reads as under:- "43B. Notwithstanding anything contained in any other provision of this Act, a deduction otherwise allowable under this Act in respect of- (a) any sum payable by the assessee by way of tax,....
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....er sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 10. The said provisions are to be applied notwithstanding contained in any other provisions of the Act. It is provided under clause (c) to section 43B of the Act that where any sum referred to in section 36(1)(ii) of the Act i.e. sum paid to an employee as bonus or commission for services rendered, then the same shall be allowed as deduction, of the previous year in which such sum was actually paid by the assessee, irrespective of the previous year in which the liability to pay such sum was incurred by the assessee. The pro....