Law:

Section:

Section 256, read with section 37(1), of the Income-tax Act, 1961 - Reference to High Court - Question of fact - Whether Tribunal's finding that bonus and ex gratia payments in excess of prescribed limit under Payment of Bonus Act, 1965 were made for purpose of business expediency and were, therefore, allowable under section 37, is a pure finding of fact - Held, yes FACTS The petitioner had paid to its workmen bonus under the Payment of Bonus Act as well as other types of bonus such as production bonus, attendance bonus, and incentive bonus. In addition thereto, an ex gratia payment of Rs. 1,08,751 was also paid. The Commissioner (Appeals) as well as the Tribunal came to the conclusion that the aforesaid types of payments which were made were not under the provisions of section 36(1)(ii) but were payments which were allowable as revenue expenditure, having been incurred for the purpose of business expediency. On an application by the revenue under section 256(2): HELD The aforesaid finding that such ex gratia payment was made for the purpose of business expediency was a pure finding of fact and, in any case, the answer to the question proposed was self-evident. Therefore, no question of law arose from the Tribunal's order. Section 256, read with section 41(1), of the Income-tax Act, 1961 - Reference to High Court - Question of fact - Tribunal agreed with finding of Commissioner (Appeals) that there was no evidence to hold that any liability had ceased to exist and, thus, provisions of section 41(1) were not attracted - Whether any question of law arose from Tribunal's order - Held, no FACTS The Tribunal had agreed with the finding of the Commissioner (Appeals) that there was no evidence at all to hold that any liability had ceased to exist. It further held that there was consolidation of various accounts and no liability had been written off. In view of this finding, it came to the conclusion that the provisions of section 41(1) were not attracted. On an application by the revenue under section 256(2): HELD The question whether liability continued to exist or not, is a question of fact. The finding of fact was that the liability continued to exist. That being…

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