1978 (11) TMI 30

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....rpose of considering the applicability or otherwise of the provisions of section 23A of the Indian Income-tax Act, 1922 ? " The assessment years involved are 1956-57, 1957-58 and 1961-62 and the relevant accounting years are the financial years ending on March 31, 1956, March 31, 1957, and March 31, 1961, respectively. The assessee is a private limited company and manufactures razor blades known as " Bharat ". In order to act as an inducement for distributors or sellers to effect larger sales of the blades manufactured by the assessee, the assessee devised a scheme of giving bonus to such distributors and sellers. The bonus given will hereinafter be referred to as " incentive bonus ". The exact terms on which the assessee had agreed t....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ar 1961-62 the ITO disallowed the assessee's claim of Rs. 9,95,321.62 being the provision made in respect of incentive bonus in the assessee's books. However, he allowed Rs. 1,73,452.11, being the actual amount paid during the accounting year relevant for the assessment year 1961- 62 as per the aforesaid settlement. The assessee had declared dividends in respect of the assessment years 1956-57, 1957-58 and 1961-62 as under : Assessment General body Dividend years meeting declared Rs. 1956-57 15- 1-56 1,02,500 1957-58 2-11-57 1,75,500 1961-62 3-9-61 7,15,000 According to the ITO, the dividends declared by the assessee for the said three years fell short of what the assessee should have distributed as stipulated in s. ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....---------------------------------------------------------------------- Assessment Accounting Opening Amount of year year balance of bonus incentive provided in bonus the year 1 2 3 4 --------------------------------------------------------------------------------------------------------------------------------------------------- Rs. Rs. 1956-57 1955-56 --- 2,26,687.50 1957-58 1956-57 2,26,687.50 4,21,182.37 1958-59 1957-58 6,06,002.29 3,80,038.00 1959-60 1958-59 8,96,188.11 9,02,158.75 1960-61 1959-60 17,35,935.10 10,85,769.75 1961-62 1960-61 25,57,343.10 8,95,321.62 1962-63 1961-62 33,79,212.61 6,32,640.00 1963-64 1962-63 29,81,824.26 --- -------------------- 46,43,795.99 --------------------------....