- (1.) THE aforesaid two cases have been referred to this court by the Income Tax Appellate Tribunal, Jaipur Bench, Jaipur. Submitting a statement of case in each case, the following substantial question of law has been referred to this court for its opinion: Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that bonus was a part of the normal business expenditure was covered by the net profit rate applied to the instant case
(2.) BOTH the cases are in respect of the same assessee for successive assessment years 1985 -86 and 1986 -87. The respondent -assessee is MES contractor. For each year, finding the books of account to be defective, the assessing officer invoked the proviso to Section 145(1) for resorting to best judgment assessment. While resorting to best judgment assessment, the assessing officer had applied a net profit rate of 10 per cent, subject to depreciation and interest to third party and any other expenditure of such nature. On appeal, the net profit rate was reduced from 10 per cent, to 9.5 per cent. While applying the net profit rate by the assessing officer, the claim of the assessee for deduction of Rs. 1,29,330 as expenditure of such nature by way of payment of bonus to its workers under an agreement with the labourers entered on February 20, 1984, was rejected, inter alia, on the ground that it cannot be termed as special nature, but ordinary incident of business. However, the Commissioner (Appeals), while adjusting the net profit rate did not agree with the aforesaid finding of the assessing officer for disallowing the claim of deduction for payment made to the labourers for bonus for the assessment years in question.
(3.) WE may notice here that for the assessment year 1986 -87, Rs. 1,60,000 were paid by way of bonus.;