SATYANARAYAN TEA CO P LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THE following question of law has been referred to us by the income-tax Appellate Tribunal, "B" Bench, Calcutta, under section 66(1) of the Indian Income-tax Act, Hereinafter called the Act, for our opinion :

(2.) THE assessee, Messrs. Satyanarayan Tea Co. (P.) Ltd., Dibrugarh, is a private limited company doing tea business and the assessments year in question is 1957-58, the accounting year being the year ending on the 31st December, 1956. THE account were kept according to the calendar year. From the year 1953, the company had been agitating for bonus to be payable in its account of bonus from the year 1954 onwards In the account for the year 1954. It the company had provided for a sum of Rs. 35,246 as the amount of bonus payable to its workers and, for the year 1955, it had provided for a sum of Rs. 23,770. THE income-tax authorities however, did not allow any deduction in respect of the aforesaid amount in the relevant accounting years. Sometime in January, 1956, there was an agreement between the planters, workers and the Government and the actual liability of the company was determined for the year 1954, 1955 and 1956. On that basis, the company made a provision of Rs. 64,173 for bonus payable in respect of the accounting year 1956, the assessments year being 1957-58. During the accounting year 1956, a sum of Rs. 35,246 was actually paid towards the bonus of the year 1954 and for years 1955 and 1956, the bonus was actually paid after the and fit the accounting year 1956. On this basis, before the Income-tax Offices, the company claimed a deduction of the sum of Rs. 64,173, the amount for the which thy had made provision for the payment of boons in the accounting year 1956. THE Income-tax Officer disallowed the amount on the ground that no particulars were furnished to prove the actual quantum of bonus due and payable by the assessee. THE Appellate Assistant Commissioner, however upheld the finding of the Income-tax Officer that no particulars were furnished by the assesses which would go the show the actual amount of bonus due from the company to the workers, but as the books of accounts showed an actual payment of Rs. 35,246 towards the bonus of the year 1954, he allowed a education of the said amount out of the claim of Rs. 64,173. Before the Income-tax Appellate Tribunal, the assessee claimed that it was entitled to have education of the balance of Rs. 28,927, as the liability in respect of the bonus for the year 1956 arose and was ascertained and quantified as a result of the tripartite agreement in January, 1956. It was further claimed that, in respect of the 1955 bonus amounting to Rs. 23,770 the petitioner was entitled to claim deduction although the liability arose in the accounting year after the tripartite agreement. THE Tribunal however, relied upon certain circulars dated the 24th July, 1956, and 3rd December 1956, issued by the Central Board of Revenue and held that an exception had been made in the case of section 23A-companies in the following terms :

(3.) SUB-section (2) of section 10 provides that such profits or gains shall be computed after making the following allowances, namely :