Ajit K.Sengupta, J. - (1.) At the instance of the Revenue, the following two questions of law have been referred to this court under Section 256(1) of the Income-tax Act, 1961, for the assessment year 1981-82 : " (1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the payment of annual special incentive, of Rs. 1,17,714 was production bonus and does not come under the purview of the Payment of Bonus Act, 1965 ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the payment of monthly incentive bonus amounting to Rs. 5,56,963 was production bonus and does not come under the purview of the Payment of Bonus Act, 1965 ? "
(2.) Shortly stated, the facts are that, for the assessment year under consideration, the assessee-company had allocable surplus of Rs. 3,35,766 within the meaning of the Payment of Bonus Act, 1965. Even then, the assessee paid profit-sharing bonus to the extent of Rs. 3,37,000. In addition to such profit-sharing bonus, the assessee-company paid monthly incentive bonus of Rs. 5,66,963 and special incentive bonus of Rs. 1,17,314. The Income-tax Officer disallowed Rs. 1,254 out of the profit sharing bonus of Rs. 3,37,000 as it was in excess of 8.33% of the salary and wages and the entire monthly incentive bonus and special incentive bonus. On appeal, the Commissioner of Income-tax (Appeals) held that the monthly incentive bonus was " nothing but incentive wages" and, therefore, allowed this amount of monthly incentive bonus of Rs. 5,56,963. He, however, declined to accept the assessee's claim in respect of the special incentive bonus of Rs. 1,17,314. This disallowance was contested by the assessee in an appeal to the Tribunal. The Department also preferred an appeal against the finding relating to the monthly incentive bonus.
(3.) The Tribunal held that the annual special incentive bonus and monthly incentive bonus are production bonuses and as such additional or further emoluments which do not come under the provisions of the Payment of Bonus Act, 1965, and are allowable deductions. As such, it upheld the finding of the Commissioner of Income-tax (Appeals) relating to the monthly incentive bonus, but it deleted the said addition of Rs. 1,17,314.;