High Court Of Madras
Vijayeswari Textiles Ltd. vs. CIT
Sections 37(1), 253(5)
Asst. Year 1978-79
R. Jayasimha Babu & A.K. Rajan, JJ.
Tax Case No. 1664 of 1986
1st October, 2001
M.P. Senthil Kumar, for the Applicant : Mrs. Chitra Venkataraman, for the Respondent
R. JAYASIMHA BABU, J. :
The Tribunal has even while purporting to reject the appeal on the ground that it was barred by limitation proceeded to consider the merits of the case elaborately and has rejected the appeal on merits as well. It is evident that the Tribunal, while holding that the delay was not condonable, was itself not convinced that the appeal should be rejected on that ground. The reason for seeking condonation of delay was the death of the senior assistant of the company, who was incharge of income-tax work and who died shortly after the receipt of the order which was to be appealed against, which event was a little later followed by the demise of the mother of the authorised representative of the company. The circumstances were sufficient to condone the delay the delay being a period of about 60 days in filing the appeal. It is not in dispute that the Tribunal has power to condone the delay. The Tribunal has proceeded to consider the case on merits, we consider it to be in the interest of justice that we should examine the correctness of their finding which is also one of the questions referred to us. The assessee is a textile mill, which though required to pay only the statutory bonus for the year 1977-78, had paid the additional bonus of 3 per cent under a settlement, entered into under s. 18 (1) of the Industrial Disputes Act. That payment was made with a view to ensure industrial peace and to avoid strife with the workmen so that the production would not be hampered. The payment so made was clearly one which had nexus with the business interest of the assessee and was an item of expenditure allowable under s. 37 of the IT Act. The expenditure incurred was one which was wholly and exclusively for the purpose of the business of the assessee.
The payment made to the workmen in an industry, which is one, for manufacture in the production of goods, by way of bonus whether profit-sharing or as incentive bonus is an amount which is paid to supplement the wages of the workmen for maintaining production and increasing productivity in the industrial unit. Such payment though not statutorily mandated, if in fact is expended under agreements permitted by law, and such payments are not made solely with a view to avoid payment of tax, such payments must be regarded as expenditure incurred wholly and exclusively for the purpose of business, and allowable under s. 37 of the IT Act. We, therefore, hold that the Tribunal was in error in not condoning the delay and that it was also in error in holding that the additional bonus of 3 per cent could not be claimed as expenditure under s. 37 of the Act. Matters relating to condonation of delay are indeed discretionary and are normally left to the Tribunal and this Court will not ordinarily interfere with the discretion. In this case, as we have already pointed out, the Tribunal did not stop with the order declining to condone the delay, but considered the matter on merits and has practically treated the appeal as being properly before it and has answered the question brought before it with reference to the material placed on record. It is, in the circumstances, we hold that the Tribunal was in error in not condoning the delay. The question regarding the correctness of the Tribunalâs holding that the delay is not to be condoned is, therefore, answered in favour of the assessee and against the Revenue. The question regarding the correctness of the Tribunalâs holding on the allowability of the additional amounts paid as bonus is also answered in favour of the assessee and against the Revenue.
[Citation : 256 ITR 560]