2005 (2) TMI 59

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....lahabad, has referred the following question of law under section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion to this court: "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the payment of Rs. 24,674 under the head 'Bonus to senior members of employees who are not entitled to receive the bonu....

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....annot be regarded as being more than what was reasonably required to be paid. Heard Shri Shambhu Chopra, learned standing counsel for the Department, and Shri R.S. Agrawal for the assessee. Learned standing counsel submitted that a sum of Rs. 24,674 being the amount of bonus was paid to the senior members of the staff although for the year under consideration there were no profits of the business....

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....able amount or not had to be determined with reference to the three factors, as pointed by the Supreme Court in the case of Shahzada Nand and Sons v. CIT [1977] 108 ITR 358. The relevant paragraph is quoted below: "Turning to the provisions of section 36, sub-section (1), clause (ii), we find that the proviso to that clause lays down three factors for the purpose of determining the reasonableness....

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....e payment of bonus cannot be said to be unreasonable even if there is no profit from the business. The Tribunal has not recorded any finding on the above three factors as laid down by the Supreme Court. There is absolutely no discussion in the order of the Tribunal regarding the pay and service conditions of the senior employees. Nor is there anything on record to show that it was the general prac....