Additional Commissioner of Income Tax vs Anamallais Bus Transports (P.) Ltd.

Govindan Nair, C.J.—The question referred to us for decision is in these terms :

"Whether the Tribunal was right in holding that the sum of Rs. 2,50,361 being the amount provided for payment of bonus was allowable as a deduction in computing the income from business for the assessment year 1965-66?"

The assessee had made certain provision for payment of bonus for the accounting year 1964-65 as detailed at page 15 of the typed set of papers. The total amount under the provision amounted to Rs. 2,50,361.

The Tribunal noticed that the ITO himself had allowed a sum of Rs. 2,11,016 paid out towards bonus during the relevant accounting period. The dispute before the Tribunal related to a sum of Rs. 39,345. Regarding this sum the Tribunal followed its earlier order in I.T.A. Nos. 2321 and 14167 of 1965-66, relating to the assessment years 1962-63 and 1963-64 dated September 22, 1967, and allowed this sum of Rs. 39,345 also. In Commissioner of Income Tax Vs. Anamallais Bus Transports (P.) Ltd., , this court had to consider the question whether allowing deductions on the basis of the provision was permissible in relation to the years 1962-1963 and 1963-64, the same years regarding which the Tribunal had held that such deductions were permissible. This court held that deductions could not be permitted on a mere provision and that, in the absence of any agreement or actual payment, no deductions could be claimed. We only wish to add that, apart from agreement or payment, there may be cases where the liability might arise by virtue of some statutory provision. If a statutory provision is pleaded and the liability is established, amounts which had accrued due under the statutory provision could also be claimed as bonus. No such claim had been put forward for the year in question and we are not concerned with that aspect in this reference. We only wish to safeguard the interests of the assessee by pointing out that our answer to the question in this case is not meant to preclude him from claiming such amounts which had accrued due under a statute in any future year.

Following the decision of this court in Commissioner of Income Tax Vs. Anamallais Bus Transports (P.) Ltd., , we answer the question that has been referred to us in the negative, viz., in favour of the revenue and against the assessee. The revenue will have its costs. Counsel''s fee Rs. 500.

A copy of this judgment with the signature of the Registrar and under the seal of this court will be sent to the Income Tax Appellate Tribunal, Madras Bench.