1990 (8) TMI 17

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....AR J. -This is an application under section 256(2) of the Income-tax Act, 1961, requesting that we should direct the Tribunal to refer to us the following question as a question of law arising out of the Tribunal's order. The question is : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the following funds constituted 'reserves' and we....

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....id reserve. It represents an amount set aside out of the profits and other surpluses not designated to meet any liability. Item No. (ii), viz., provision for contingencies, is created in the following circumstances. The employees of the respondent had made claims for additional salary, dearness allowance, etc., which were not accepted by the respondent. Negotiations were going on between the re....

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.... employee would be as if the salary were Rs. 750 per month. The respondent felt that despite these provisions of the Payment of Bonus Act, its employee might make a claim for bonus on the basis of its past practice. There was, in fact, no demand at the relevant time from the employees at all for such payment of bonus. This amount has been included in the computation of the respondent's income. ....