The Income Tax Appellate Tribunal (ITAT), Mumbai bench has held that the customary bonus cannot be treated as par with the paid under the Bonus Act and therefore, not attract the provisions of section 36(1)(ii) and Section 43B(C) of the Income Tax Act.
The assessee claimed that the outstanding bonus was a customary bonus and not filing u/s. 36(1)(ii) to come under the ambit of disallowance u/s. 43B(C). in support of their contention, the assessee has quoted several case laws.
The bench noted that the assessee has submitted that the outstanding bonus was a customary bonus and not filing u/s. 36(1)(ii) to come under the ambit of disallowance u/s. 43B(C). The assessee has quoted several case laws for the proposition that the customary bonus does not attract the rigors of the provision of section 36(1)(ii) which are applicable to payable underpayment of Bonus Act.
“Accordingly, we find that without giving a finding to the contrary in this regard, the A.O. has referred that the case laws quoted by the assessee were with regard to section 36(1)(ii) and, hence, not applicable. This is clearly a lack of application of mind by the A.O. The said case laws duly provide that the customary does not attract the provision of section 36(1)(ii) and, hence, as a consequence, they did not attract the disallowance u/s. 43B(C),” the Tribunal said.
Subscribe Taxscan Premium to view the Judgment
