Indian Kanoon - Search engine for Indian Law

18. Aggrieved by the order of the Ld.CIT(A), the Revenue is in appeal before the Tribunal.

19. Shri B.Bala Krishna, Ld.CIT-DR submitted that the Ld.CIT(A) erred in holding that the payment of performance bonus does not fall under the provisions of 36(1)(ii) of the Act, Rohini Minerals Private Limited ignoring the provisions, which clearly stated that any sum paid to an employee as bonus or commission for services rendered, where such sum would not have been payable to him as profit or dividend, then the same falls under the provisions of section 36(1)(ii) of the Act. The Ld.CIT-DR further submitted that although the assessee files relevant evidences and proves payment of performance bonus for services rendered to the company, but the AO has brought out clear facts and analysis that the performance of the company, when compared to earlier years has come down, which is evident from drastic decrease in turnover. Therefore, the argument of the assessee that the bonus is paid on performance of the Directions is devoid of merit. The Ld.CIT-DR further referring to section 11 of the Payment of Bonus Act, 1965 ("the Bonus Act") submitted that the law prohibits more than 20% bonus to employees. In the present case, going by the amount of salary paid to Directors and the impugned bonus paid, then it is in excess of the statutory limit of the Bonus Act and therefore, definitely falls under the provisions of section 36(1)(ii) of the Act. The Ld.CIT(A), without considering relevant provisions, simply deleted the additions made by the AO, therefore, the order of the Ld.CIT(A) should be set aside and the additions made by the AO should be sustained.