Ajit K.Sengupta, J. - (1.) In this reference under Section 256(1) of the Income-tax Act, 1961, for the assessment years 1978-79, 1981-82 and 1982-83, the following common question of law has been referred to this court : " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the incentive bonus paid by the assessee to its employees for the period relevant to the assessment years 1978-79, 1981-82 and 1982-83, was an admissible deduction in computing the taxable income of the assessee ?"
(2.) Shortly stated, the facts are that in the accounts furnished before the Income-tax Officer, the assessee claimed deduction of different sums as " incentive bonus", The payment .of incentive bonus was claimed to have been made to motivate the workers to produce more. The Income-tax Officer, however, treated " incentive bonus" as part of bonus to which the provisions of the Payment of Bonus Act, 1965, were applicable. From the total amount, the Income-tax Officer disallowed amounts which were beyond the maximum limits prescribed under the above Act. He, accordingly, disallowed Rs. 1,51,591, Rs. 1,11,109 and Rs. 1,47,039 for the assessment years 1978-79, 1981-82 and 1982-83, respectively.
(3.) Being aggrieved, the assessee challenged the above disallowances in appeals before the Commissioner of Income-tax (Appeals). It was claimed that incentive bonus was paid to workers in pursuance of an agreement with the employees. The decision of the Supreme Court in the case of Hukumchand Jute Mills Ltd., was also relied upon for the proposition that Payment of Bonus Act, 1965, deals only with profit or productivity bonus which does not include puja, customary bonus and other bonus. The Commissioner of Income-tax (Appeals) on consideration of the assessee's claim deleted the disallowance made, vide separate orders in all the three years.;