- (1.) The Income-tax Appellate Tribunal, Allahabad has referred the following question of law under Section 256(2) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the assessment year 1982-83 for opinion to this Court : 1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the amount of Rs. 59,271 paid as incentive bonus was allowable expenditure ?
(2.) The brief facts of the case are as follows :
(3.) The assessee/opposite party (hereinafter referred to as "the assessee"), is a company. In its profit and loss account the assessee claimed incentive bonus amounting to Rs. 59,271 as business expenditure to meet out the business expediency. The assessing authority noticed that the assessee had already paid a sum of Rs. 74,343 by way of bonus to its employees which was calculated at 20 per cent, of the salary and in addition to that bonus a sum of Rs. 59,271 was paid to the employees by way of incentive bonus. The assessing authority was of the view that the bonus and the incentive bonus both should be considered together for watching the limit of 20 per cent, allowable under the Payment of Bonus Act. In that view of the matter, he disallowed a sum of Rs. 59,271 being in excess of 20 per cent, of the salary paid to the employees. In appeal before the Commissioner of Income-tax (Appeals), it was pointed out by the assessee that the incentive bonus was paid for better efficiency and it was being given to the workers since the year 1971 and was never disallowed. It was further pointed out that the incentive bonus had been paid at figures varying from 10 per cent. to 19 per cent. Of the salary depending on the performance appraisal of each employee on time scale. The Commissioner of Income-tax (Appeals) allowed the said amount on the ground that the incentive bonus was by way of additional salary linked with the productivity and efficiency of the workers. On appeal being filed by the Department, the Tribunal confirmed the order of the Commissioner of Income-tax (Appeals) on the ground that the incentive bonus had been paid in the past and it had not appeared to be profit linked, rather it was linked with the productivity efficiency of the worker.;