Prakash Krishna, J. - (1.) The Income-tax Appellate Tribunal, Allahabad, has referred the following question of law under Section 256(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), for the opinion to this court : "Whether, on the facts and in the circumstances of the case, the Tribunal is correct in law in holding that the payment of Rs. 24,674 under the head 'Bonus to senior members of employees who are not entitled to receive the bonus under the provisions of the Payment of Bonus Act, 1965, is an admissible expenditure' under the Income-tax Act ?"
(2.) Briefly stated the facts giving rise to the present case are as follows :
(3.) The reference relates to the assessment year 1976-77. The assessee-respondent is a limited company and derives income from the manufacture and sale of sugar. The accounting period relevant to the assessment year 1976-77 ended on September 30, 1975. The Assessing Officer disallowed a sum of Rs. 24,674 as bonus paid to the senior members of the staff in view of the provisions of Section 36(1)(ii) of the Act. The disallowance was confirmed by the Commissioner of Income-tax (Appeals), Kanpur. The Tribunal has set aside the disallowance of the above sum on the finding that the payment of bonus of Rs. 24,674 cannot be regarded as being more than what was reasonably required to be paid.;