Payment of Bonus Act,1965

Act No : 21

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Section : Sums deductible from gross profits.

6. Sums deductible from gross profits.- The following sums shall be deducted from the gross profits as prior charges, namely:-- (a) any amount by way of depreciation admissible in accordance with the provisions of sub-section (1) of section 32 of the Income-tax Act, or in accordance with the provisions of the agricultural income-tax law, as the case may be: Provided that where an employer has been paying bonus to his employees under a settlement or an award or agreement made before the 29th May, 1965, and subsisting on that date after deducting from the gross profits notional normal depreciation, then, the amount of depreciation to be deducted under this clause shall, at the option of such employer (such option to be exercised once and within one year from that date) continue to be such notional normal depreciation; --------------------------------------------------------------------- 1. Added by Act 8 of 1969, s. 2. 432 (b) any amount by way of 1*[development rebate or investment allowance or development allowance] which the employer is entitled to deduct from his income under the Income- tax Act; (c) subject to the provisions of section 7, any direct tax which the employer is liable to pay for the accounting year in respect of his income, profits and gains during that year; (d) such further sums as are specified in respect of the employer in the 2*[Third Schedule].

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Comments

Prakash Yedhula wrote on 19 April 2009

(i) This Act is a self-contained Code. [Vellore Central Co-op. Bank Ltd. v. Industrial Tribunal & Ors., (1989) 58 F.L.R. 924 (Mad.)]. (ii) All direct taxes for the time being in force have to be deducted from the gross profits as prior charges in order to ascertain the "available surplus" for purpose of bonus. [1975 I.L.R. Born. 1339]. (iii) Bonus paid to trainees (not apprentices) is admissible deduction under the Income-tax Act. [Textool Co Ltd. v. Income-Tax Officer (1984) 9 I.T.D. 820 (Mad.)].

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