INDIA CARBON LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE assessee in this case is India Carbon Ltd. at Gauhati and the questions in the reference relate to the asst. year 1976 -77. The subject -matter in the questions pertains to whether bonus amounts set apart (called "set -on" amount) can be deducted from the P&L a/c of the assessee.

(2.) THE assessee claimed deduction of two amounts, Rs. 8,56,241 as bonus paid and Rs. 7,36,915, the amount deposited in "set - on" account. The former was claimed under S. 36(1)(ii) and the latter under S. 37 of the INCOME TAX ACT, 1961. The ITO allowed the deduction of Rs. 8,56,241 but rejected the claim for Rs. 7,36,915. The AAC at Shillong ordered both to be deducted. The Tribunal held that the latter cannot be held to have been paid and following a decision in ITA No. 5429(Cal) of 1975 -76 dt. 11th May, 1978, overturned the decision of the appellate authority.

(3.) THE questions turn on the meaning of the word "bonus" and, therefore, a brief discussion on the etymological sense of that word is not out of place. Bonus in the past was understood conceptually a premium paid in addition to what is strictly due; a gratuity to which the recipient had no right to make a demand; a premium of extra remuneration to encourage the performance of workman or workmen; a gift in recognition of successful performance of work. Bonus at times is used in invidious terms. Sometimes, the word is used to mean what is offered by the vendors. These nuances of the word "bonus" are found/defined in Black's Law Dictionary, 5th edn., p. 165. We are concerned in this case with what is paid to workmen as bonus.