LONAPPAN C D Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE question that has been referred to this court reads :

(2.) IN the year of account ending on March 31, 1956, the assessee made a profit of Rs. 91,812 on his grocery business. He paid Rs. 10,125 towards bonus that year to his 34 employees in this business. They had been paid during that year Rs. 16,000 and odd as salary and the whole of this amount has been allowed as a deduction for computing the income. But the taxing authorities felt that Rs. 10,125 paid as bonus was not reasonable. Rs. 10,125 works out to about 7 1/2 months salary. They reduced the bonus to be months salary.

(3.) WE, therefore, answer the question referred to us in the affirmative and in favour of the assessee. The parties will bear their costs in these proceedings.