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[2007] 292 ITR 468 (RAJ.) HIGH COURT OF RAJASTHAN Commissioner of Income-tax v. Maheshwari Builders RAJESH BALIA AND R. P. VYAS, JJ. D.B. I T REFERENCE NOS. 114 AND 117 OF 1995 APRIL 12, 2006 Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of â–  Where though bonus paid was not under statutory obligation nor was it a continuous one but Tribunal held it to be a payment of a special nature, while applying net profit rate Tribunal was justified in allowing deduction of amount of payment made to workers as bonus during relevant assessment year as a result of agreement arrived at between labour union and assessee for first time [Assessment years 1985-86, 1986-87] The assessee was an MES contractor. Finding the books of account to be defective, the Assessing Officer invoked the proviso to section 145(1) for resorting to best assessment. While resorting to the best assessment, the Assessing Officer had applied a net profit rate of 10 per cent subject to depreciation and interest paid to third party and any other expenditure of such nature. On appeal, the net profit rate was reduced from 10 per cent to 9.5 per cent. While applying the net profit rate by the Assessing Officer, the claim of the assessee for deduction of Rs. 1,29,330 as expenditure by way of payment of bonus to its workers under an agreement with the labourers entered on 20-2-1984, was rejected, inter alia, on the ground that it could not be said to be of special nature, but was an ordinary incident of business. The Tribunal upheld the claim of the assessee that payment of bonus during the relevant assessment year in question was of special nature for those assessment years and consequently that amount was to be reduced from the profit arrived at by applying the net profit rate. Held that the finding reached by the Tribunal about the special nature of expenditure incurred on the payment of bonus during the relevant assessment year in question was a finding of fact and did not give rise to question of law. There was no finding that the liability of bonus was a continuous liability arising under the statutory provisions of the Payment of Bonus Act or under any statute.…

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