By TIOL News Service

NEW DELHI, APRIL 19, 2018: THE ISSUE BEFORE THE TRIBUNAL IS - Whether in absence of any details regarding extra ordinary contribution in company by employee can performance linked bonus be disallowed. YES IS THE ANSWER.

Facts of the case:

The assessee company designs, develops and markets energy management solutions for industrial applications. The assessee had filed return for relevant AY. During assessment AO disallowed the claim of assessee for Performance Bonus paid due to non furnishing of relevant details. On appeal CIT (A) observed that as per the policy / practice followed by the assessee company, performance bonus was assessed, reviewed and approved by the separate competent authority in HR dept. There was a scientific and systematic system to evaluate the performance and payment of performance bonus which was consistently being followed by the assessee and had been accepted by the department in its earlier assessments. Hence addition of Performance Bonus was deleted by CIT(A).

Tribunal held that,

++ admittedly neither AO made any reference regarding the addition in respect of performance bonus in the remand report, nor did assessee provide any order of any preceding AYs passed by any Appellate Authorities, wherein such bonus paid had been allowed. Assessee had not even explained what was the scientific method in determining the bonus payable to its employees for extraordinary performances. AR has not provided any details regarding the extra ordinary contribution by these employees in lieu of which such huge bonus has been paid amounting to Rs. 13.5 Lacs and 15 lakhs being Sh. Ashok Hattangady and Hema Hattangady respectively. Admittedly assessee in the remand proceedings has not submitted any details regarding the payments made to justify its claim. Thus no purpose would be served by setting aside this issue back to the file of AO. It was decided to confirm the addition made by AO in this regard and reverse the findings of CIT(A). Accordingly this ground raised by revenue stands allowed.

(See 2018-TIOL-585-ITAT-DEL)