Law:

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Section 36(1)(ii) of the Income-tax Act, 1961 - Bonus - Whether assessee, who was not maintaining any books of account and whose income was determined on estimated basis, was entitled to deduction under head 'Bonus' which was being allowed in earlier years, out of net profit so determined - Held, yes Facts The assessee, a handling contractor, had maintained no books of account for his work and the bank account maintained showed receipt of certain amount in respect of the contract works done. In the relevant assessment year the assessee claimed deduction in respect of the bonus, as allowed in the previous years, out of the net profit as worked out by the ITO. The ITO disallowed the assessee's claim. On appeal it was held that in the earlier years the deduction on the head of bonus, as claimed, used to be allowed and the same pattern was followed in the case of other contractors in the region. The claim of assessee was, therefore, allowed. On appeal the Tribunal also allowed assessee's claim. On reference: Held In the instant case while estimating the income the Tribunal kept in view the conditions of trade obtaining and the average margin of profit in the particular lifted/business which was a relevant consideration for arriving at a finding of fact. It was not possible to say that the estimate of income was arbitrary or capricious to justify for holding that some error of law had been committed by the Tribunal. What would be the net taxable income and the quantum of expenditure allowable to the assessee was a pure question of fact and not of law. The finding of fact arrived at by the Tribunal was final on this aspect and order of the Tribunal was, therefore, justified. Cases referred to CIT v . Babcock & Willcox of India Ltd. [1987] 165 ITR 105 (Cal.), CIT v. Golecha Firms (P. ) Ltd. [1987] 164 ITR 753 (Raj.) andRam Singh & Sons v. CIT [1981] 131 ITR 622 (All.). B.P. Rajgarhia and S.K. Sharan for the Applicant. Rameshwar Prasad and S.K. Narain for the Respondent. JUDGMENT Sanyal, J. - The present reference is under section 256(2) of the Income-tax Act, 1961 ("the Act') arising- out of the order of the Tribunal. The reference called for reads as…

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