JUDGMENT

N.V. BALASUBRAMANIAN, J.-At the instance of the Revenue, the Appellate Tribunal has stated a case and referred the following question of law under section 256(1). of the Income Tax Act, 1961 (hereinafter referred to as the "Act"), for the assessment year 1980-81:"Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is correct in law in allowing as deduction the entire claim for payment of additional bonus to the workers, even though such payment alongwith payment of bonus exceeded the quntum prescribed under the Bonus Act?"The assessee is a company engaged in manufacturing cotton yarn. During the previous year relevant to the assessment year 1980-81, the assessee paid a sum of Rs.1,32,263 as bonus in excess of the amount prescribed under the Payment of Bonus Act and claimed that the said sum of Rs.1,32,263 was paid as incentive bonus as per the industrial settlement arrived as between the management and employees, dated October 15, 1979. The Income-tax Off...