1979 (11) TMI 35

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ined by it on the mercantile system of accounting and that such amount was also not actually paid during the relevant year of account ? " The assessment year involved is 1972-73. The assessee is a firm carrying on the business of manufacture and sale of machinery parts for sugar mills and also of repair work maintaining its books of account on mercantile system, the previous year being the financial year ending on 31st of March, 1972. In that year, the assessee had made a provision to the extent of Rs. 26,918 towards payment of bonus. This was made to cover the liability brought forward of the erstwhile HUF which carried on business till the assessment year 1971-72. In the course of the assessment proceedings, the assessee contended that....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... the present case, we are not concerned with the minimum bonus, for, it appears that the assessee had made profits in the year in question which exceeded the amount of minimum bonus payable under s. 10. The matter is governed by s. 11 of the Act. Under that provision, in cases where the allocable surplus exceeds the amount of minimum bonus payable under s. 10, the employer is liable to pay to every employee in the accounting year bonus which is proportionate to the salary or wages earned by the employee during the accounting year subject to a maximum of twenty per cent. of such salary or wage. Section 2(4) defines allocable surplus to mean sixty-seven per cent. of the available surplus in an accounting year or sixty per cent. of such availa....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....year in which it arises, irrespective of the fact as to whether it had made entries in its account books. Thus, the fact that the assessee had not made provision for the bonus liability was inconsequential. Counsel for the revenue urged that the matter should be sent back for an inquiry as to whether the amount of Rs. 40,610 claimed by the assessee was, in fact, the amount of bonus payable under s. 11 of the Act. It was urged that the amount in question represented the allocable surplus and not the liability created under s.11 of the Act. The contention does not appeal to us. It is clear from the order of the AAC that the amount of Rs. 40,610 was not the allocable surplus worked out by the auditors, but was the liability under the Paymen....