1996 (1) TMI 67

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.... the head 'Bonus payable' ? " The question for consideration is whether, on the facts and circum stances of the case, the assessee can be allowed deduction in respect of payment of bonus at the rate more than 8.33 per cent., i. e., the minimum limit of bonus. Section 36(1)(ii) of the Act states as follows : "(1) The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28-- . . . . (ii) any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profits or dividend if it had not been paid as bonus or commission ;" The first proviso to clause (ii) was insert....

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....1, it is clear that the maximum limit is twenty per cent. and the payment of bonus between the minimum and maximum limit will vary depending on the position of the allocable surplus, which according to counsel for the applicant was not at all available in the instant case. That being so, in our view, the assessee could have paid bonus under the Act of 1965 only at the minimum rate, i. e., 8.33 per cent. The submission of Shri V. Upadhyaya, learned counsel for the assessee is that bonus was paid at 20 per cent., i. e., the maximum limit, under the agreement dated February 29, 1982. The question for consideration is whether the bonus at the maximum rate can be paid under an agreement. We have already pointed out that under the first provis....

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....low at any stage that the payment of bonus is reasonable with reference to the payment of employees and the conditions of their services, and therefore, we refrain from going into this question. Then the question is whether the payment of bonus at the rate of twenty per cent. falls under clause (c). Shri Upadhyaya submits that the agreement dated February 29, 1982, implies that there was general practice in the business. In our view, the agreement does not imply general practice. If the assessee wants to rely on that then it should have set up and established that case by cogent evidence. Neither was such case set up nor any evidence was adduced. Mere execution of the agreement cannot establish the general practice in such business ab....