2005 (3) TMI 99

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....s referred the following question of law under section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion to this court: "Whether the Income-tax Appellate Tribunal is correct in law in restricting the field of enquiries to be made by the Assessing Officer with regard to the payment of bonus from the point of view of genuineness of payment alone?" The r....

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....xamining the facts as directed by the Commissioner of Income-tax (Appeals), the Assessing Officer completed the assessment afresh on March 21, 1989, by making an addition of Rs. 4,46,929 again on account of incentive bonus. In the assessment year 1981-82, the Tribunal had observed that responsibility of payment of the incentive bonus has to be judged not on any subjective standard by the assessing....

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....its provided under section 64 of the Payment of Bonus Act, 1965, was not allowable. The Department's contention was that resort cannot be had to the provisions of section 37(1) of the Act to claim deduction in respect of larger amount paid by way of bonus either in cash or in species. The Tribunal restricted the powers of the Assessing Officer to make enquiry regarding the genuineness of the payme....

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....he Payment of Bonus Act, 1965 (21 of 1965), apply shall not exceed the amount of bonus payable under that Act. Provided further that the amount of the bonus (not being bonus referred to in the first proviso) or commission is reasonable with reference to- (a) the pay of the employee and the conditions of his service; (b) the profits of the business or profession for the previous year in qu....