Law:

Section:

Section 256, read with section 36(1)(ii), of the income-tax act, 1961-reference-question arising from tribunal's order-ito disallowed assessee's claim for deduction of additional bonus paid to employees on ground that this liability had neither crystallised in accounting year nor entered into books of account of assessee during relevant accounting period-tribunal, however, allowed assessee's claim-on application under section 256(2), revenue sought reference of question whether tribunal was in error in allowing impugned deduction without considering limitation under first proviso to section 36(1)(ii )-this contention was not raised before tribunal or at any earlier stage-whether question sought to be referred by revenue did not arise from tribunal's order-held, on facts, yes Facts The assessee-company maintained its books of account on mercantile basis. In the books of account for the relevant previous year, the assessee provided for certain bonus to. its employees but, pursuant to certain conciliation proceedings, paid an additional amount as bonus to the employees. In the books of account of the assessee, the liability for the payment of this additional amount as well as the payment were entered after the accounting year. The assessee claimed the impugned additional sum as a deduction by way of a revised return but the ITO disallowed the assessee's claim on the ground that this liability had neither crystallised in the accounting year nor was it earned into the books of account of the assessee during the relevant accounting period. On appeal, the Commissioner (Appeals) allowed the claim of the assessee for deduction. On appeal by the revenue, it contended that, notwithstanding the fact that the assessee maintained its books of account on mercantile basis, the liability for the additional bonus was neither claimed nor quantified nor paid during the relevant accounting period and hence the deduction could not be allowed against the profits in the relevant accounting year. The Tribunal rejected the revenue's contention and upheld the order of the Commissioner (Appeals). It also rejected the revenue's reference application under section 256(1). On application…

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