COMMISSIONER OF INCOME TAX Vs. SESA GOA LTD

JUDGEMENT

(1.) This is an appeal under Section 260-A of the Income Tax Act, 1961, hereinafter referred to as the "Act," directed against the order of the Income Tax Appellate Tribunal, Panaji Bench, dated 2nd May, 2002. The Appeal was admitted by an order of a Division Bench of this Court on 21st October, 2002 where it framed the following substantial questions of law.

(2.) The Income Tax Appellate Tribunal was concerned with the Assessment Years 1985-86, 1988-89 and 1990-91. The questions aforestated were referable to Assessment Year 1988-89 and issue was related to payment of bonus over and above the limit in the Payment of Bonus Act. The assessee had paid Rs. 18,73,192/- over and above the statutory limit and claimed deduction under Section 36(1)(ii) of the Act. As already noticed in the present Appeal, the Revenue Department felt aggrieved in relation to the relief granted by Commissioner of Income Tax (Appeals) vide order dated 26th September, 1990 which accepted the contention of the assessee and permitted the deductions. The contention raised on behalf of the Revenue Department before the Tribunal and before this Court as well is that, if the amount is not allowable under Section 36 then the amount paid over and above the statutory limit is also not allowable under Section 37 of the Act and reliance was placed upon a decision of Division Bench of this Court in the case of Commissioner of Income Tax v. Rajaram Bandekar and Sons (Shipping) Pvt. Ltd.,. According to the Department, the case of the assessee was not covered as permissible deductions under Section 36(1)(ii) of the Act inasmuch as under the Proviso, deductions permissible have to be within the specified limits of admissible bonus under the Payment of Bonus Act.

(3.) On the contrary, according to the assessee, there is no settled principles of law stated by the Division Bench of this Court in Rajaram Bandekar & Sons case (supra), as contemplated under the first Proviso to Section 36(1)(ii) of the Act for the relevant Assessment Years 1988-89. There is no dispute regarding proposition of law as stated by the Division Bench in Rajaram Bandekar & Sons case (supra) but the assessee would be fully covered under second proviso to Section 36(1)(ii) of the Act, which reads as under: