1970 (3) TMI 27

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....f the sum of Rs. 1,75,246. In this reference, the questions Nos. 1 and 3 relating to these two amounts are as follows : " (1) Whether, in the computation of the assessee's business income of the accounting year 1949, its claim for deduction under section 10(2)(xv) of the Act of the sum of Rs. 4,16,604, being bonus relating to the accounting year 1948 can be properly allowed ? (3) Whether in computing the business profits of the year 1949, the assessee was entitled to get deduction of the sum of Rs. 1,75,246, being the amount of leave wages ascertained in accordance with the provisions of sections 79 and 80 of the Factories Act, 1948 ? " The first question is raised at the instance of the Commissioner of Income-tax and the third que....

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....Swadeshi Cotton and Flour Mills Pvt. Ltd. The Supreme Court rejected the appeal filed by the Commissioner of Income-tax and upheld the decision of the High Court of Madhya Pradesh. In that case, the question related to a large amount paid by way of bonus for the calendar year 1947 in terms of an award made on January 13, 1949. The question of law referred to the High Court was : " Whether on the facts and in the circumstances of the case, the assessee is entitled to claim a deduction of bonus of Rs. 1,08,325, relating to the calendar year 1947 in the assessment year 1950-51 ? " The Supreme Court held that, ". . . . . it is only when the claim to profit bonus, if made, is settled amicably or by industrial adjudication that a liability ....

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....a debit entry in respect of the sum of Rs. 1,75,246 in the books of accounts for the accounting year 1949, in respect of leave wages payable in the next ensuing year to its employees under sections 79 and 80 of the Factories Act, 1948. Now, this claim was held not sustainable by the Appellate Tribunal. The advocate for the assessee-company has remained absent and has not made any contentions in support of its claim for deduction. Mr. Joshi for the Revenue has, in connection with this question, drawn our attention to the decision of the Madhya Pradesh High Court in the case of Chhaganlal Textile Mills (P.) Ltd. v. Commissioner of Income-tax. In that case also, the assessee-company purported to set apart a sum of Rs. 75,000, for payments it m....