COMMISSIONER OF INCOME TAX Vs. NAVJIVAN MILLS LIMITED

JUDGEMENT

(1.) IN respect of the asst. year 1974 75, at the instance of the CIT, the following two questions of law have been referred to this Court for its opinion by the Tribunal, Ahmedabad Bench "B", said to be arising out of its order in Income tax Appeal No. 1939/Ahd/80.

(2.) THE first question relates to allowance of Rs. 4,46,458, the amount of bonus actually paid to its workmen by the assessee. The bonus was paid in respect of calendar years 1970, 1971 and 1972. The ITO disallowed the claim on account of expenditure incurred for payment of bonus, because the assessee was required to make a provision for the same in the relevant year and since the assessee follows mercantile system of accounting and since the same was not provided for, it cannot be allowed on the basis of payment.