COMMISSIONER OF INCOME TAX Vs. KERALA SPINNERS LIMITED

JUDGEMENT

(1.) AT the instance of the Commissioner of Income-tax, Kerala, the Income-tax Appellate Tribunal (for short, "the Tribunal"), Cochin Bench, has referred the following question for the opinion of this court:

(2.) THE assessee is a company. It manufactures staple fibre yarn and polyester viscose yarn. THE Commissioner of Income-tax, exercising his power under Section 263 of the Income-tax Act (for short, "the Act") revised the order of assessment passed by the Income-tax Officer for the reason that the Income-tax Officer had not disallowed the bonus paid in excess of the amount stipulated as payable under the Payment of Bonus Act. THE Commissioner held that the payment of Rs. 1,22,995 was in excess of the amount of bonus payable under the Payment of Bonus Act and that the said amount has to be disallowed as per the provisions of the Act, THE Commissioner also found that when the said amount is disallowable in terms of the first proviso to Section 36(l)(ii) of the Act, the question of allowing the same in terms of the second proviso to Section 36(l)(ii) would not arise. THE Commissioner directed the Income-tax Officer to amend the assessment by disallowing the excess amount of Rs. 1,22,995 paid as bonus in terms of the first proviso to Section 36(l)(ii) of the Act.

(3.) THE Supreme Court in Mumbai Kamgar Sabha v. Abdulbhai Faizullabhai, (supra) observed thus: (pp.200, 193):