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C.I.T. versus M/S C.S.CO.LTD.

High Court of Judicature at Allahabad

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C.I.T. v. M/S C.S.Co.Ltd. - INCOME TAX REFERENCE No. 213 of 1992 [2005] RD-AH 666 (9 March 2005)


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I.T.R.213 of 1992


The Commissioner of Income Tax, Kanpur Vs. M/s.

Champaran Sugar Co. Ltd. Kanpur.


Hon'ble R.K.Agarwal, J.

Hon'ble Prakash Krishna, J.

(Delivered by Hon.P.Krishna, J)

The Income Tax Appellate Tribunal, Allahabad has referred the following question of law under section 256 (1) of the Income Tax Act, 1961 ( here in after referred to as the Act) for opinion to this Court:-

"Whether on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the payments of Rs.28,205/- and Rs.30,218/- for the assessment years 1979-80 and 1980-81 respectively under the head ''Bonus' to Senior Members of Employees who are not entitled to receive the bonus under the provisions of Payment of Bonus Act, 1965 is an admissible expenditure" under the I.T.  Act.?"

Briefly stated the facts giving rise to the present case are as follows:-

The reference relates to the assessment years 1979- 80 and 1980-81. The assessee respondent is a limited company earning its income from the manufacture and sale of sugar. The Assessing Officer as well as Commissioner of Income Tax (Appeals) both disallowed Rs.28,205/- and Rs.30,218/- claimed by the assessee towards bonus paid to the senior staff members, in view of the provisions of Section 36 (1) (ii) of the Act. The Tribunal, however, relied upon its earlier order and decided the issue in favour of the assessee  for both the years.

Heard Shri A.N. Mahajan, the learned standing counsel for the department and Shri R.S. Agrawal, learned counsel, for the assessee. In ITR No.20 of 1990 Commissioner of Income Tax Vs. M/s. Champaran Sugar Co. Ltd. Kanpur decided on 14.2.2005 we have held that bonus to senior staff members has wrongly been allowed by the Tribunal.

Respectfully following the aforesaid judgment we are of the opinion that the Tribunal was not correct in holding that the payment to senior members of the employees who were not entitled to receive the bonus under the provisions of the Payment of Bonus Act, is an admissible expenditure under the Act.

Accordingly we answer the question referred to us in negative i.e. in favour of the Revenue and against the assessee. However, no order as to costs.

Dt. 9th March, 2005



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