Bonus Act, 1965 ss. 4, 6, 7--Scope of-..Con1puta1io11 of bonus-Principles for deduction from /;l'OS profit; on uccuunt of deprecia1k>n, deve/op111cn1 rebate, and estinwtt.'d liability .for grotuity-1'reatnt OJ interest on capira/ reserve attributable to revaluation of assets-Principks for deter1nining allowance for direct tcxes that employer ''i.r liable to pay". In a dispute between the appellant and it.; !.'Ork.men relating to the computation of bonll under 1hc Payment df Bonus Act, 1965. the Company contended that the available surplus came to R•. 49.96 lakhs, mty per cent of which, namely, Rs. 29.98 laklt• was the alloeablc surplus. The employees di.•putcd 1he computation claiming that the Company !tad \.Tongly reduced the gross profil~ and the available surplus and contended, inter a/ia, that certain amounts deducted on accounl oi provic;ions for gratuity and for doubtful debt' should be added hack: they challenged a dcc!.uction of interest on reserves on the ground that the capital reserve wa.~ artificially arrived at by a mere revaluation of the company's fixed assets as on April I, i 956; and also dispuled the figures of depreciation, development rebalc and direct taxes deducted by the company while \vorking out the available surplus. The Unions disputed the amount of Rs. 28.82 lakhs worked out by the Company's auditors a.~ depreciation in accordance with the lncometax Act, 1961 on the ground (I) that there was no evidence that the amount of depreciation came 10 Rs. 28.82 lakhs; and (2) that since the profit and Joss account mentioned R~. 23.48 lakhs as depreciation, the Company could only claim that ;1mount. In it• award the Tribunal alloW<d Rs. 23.48 laklt• instead of Rs. 28.82 lak.hs claimed by the company as depreciation. Similarly it allowed only Rs. 7 lakhs inslead of Rs. 8.8 lakhs claimed by the company as development rebate. The Tribunal held that the amount of Rs. 18.33 lakhs claimed under the hcJd of grc1tuitv wa'i not a reserYe but a provision and therefdrc. was not liable to be added hack, but it held 1hat the company could deduct only ahout Rs. 10 Jakhs as also Rs. l.31 lakhs and Rs. 87.000/- actually paid durin~ the year to employees who retired during that year and added back 1he balance of Rs. 6 lakh• to the gross profits. Except for these amount~. the Trihunal accepted_ the rest of the company's comput.1tion. Both the Unions and the Company ohtaioed ,pccial le.we and filed appeals challenging the correctness of the Tr;btinal's ay.·ard. In their appeal it was al<>o contended by the Union~ that tho Trihunal had wrongly allowed a dcduc1jon of Rs. 145 lakhs as direct t<tXCS under sec. 6( c); all that the empJoyer could deduct was direct taxes which he "is liable to pay" for the accounting year in respect of ''his income, profits and ~ains during that year", _i.r ••_ the employ« ~ entitled to deduct only his aclual tax liability. Such liability. therefore, has to he wdrkcd out in accordanee wi!h the provision~ of the Income>-tax Act and other relevant Act<> by first arriving at the actual taxable income, oaill.'I and profit• under tho<e Acts and then compute the u..,. at ral"'i, provided by them for that particular accounting year.
