JUDGMENT
K.S. Paripoornan, J.
1. At the instance of the Revenue, the Income-tax Appellate Tribunal has referred the following two questions of. law for the decision of this court :
“(i) Whether, on the facts and in the circumstances of the ease, the Tribunal is right in holding that the bonus paid as per the settlement arrived at at a conciliation conference does not come within the purview of the Payment of Bonus Act and, therefore, the first proviso to Section 36(1)(ii) of the Income-tax Act, 1961, cannot govern its allowability ?
(ii) Whether, on the facts and in the circumstances of the case, the commission payment made in India in respect of exports made by the assessee to Russia is entitled to weighted deduction under Section 35B of the Income-tax Act, 1961 ?”
2. The respondent is an assessee to income-tax. He carried on business in the manufacture and export of cashew. We are concerned with the assessment year 1978-79. The assessee claimed that he was entitled to a deduction of Rs. 6,64,443 paid as bonus for the relevant previous year. The assessing authority held that the bonus paid in excess of the amount payable as per the provisions of the Payment of Bonus Act was not a permissible deduction. The assessee also claimed weighted deduction under Section 35B of the Income-tax Act for commission payment of Rs. 1,07,599 paid to Messrs. Kasturi Nagesh Pai and Co. for the sale of goods by the assessee outside India, that is, Russia. The Income-tax Officer negatived the plea holding that the payment was made in India and not outside India. On appeal, the Commissioner of Income-tax (Appeals) upheld the plea of the assessee for deduction of Rs. 3,54,790 for bonus paid. He also allowed the claim made under Section 35B of the Act in respect of Rs. 1,07,599. On further appeal by the Revenue, the Tribunal held that the payment of bonus in this case was as a result of a settlement arrived at at the conciliation conference and not a bonus paid under the Payment of Bonus Act, and so the first proviso to Section 36(1)(ii) cannot govern the allowability of the claim of the assessee. The claim for weighted deduction was allowed following the decision of the Appellate Tribunal in Income-tax Appeals Nos. 333 to 336 (Coch) of 1981 in Kerala Nut Food Company’s case. Thereafter, at the instance of the Revenue, the questions of law formulated herein-above have been referred for the decision of this court.
3. We heard counsel. Regarding the payment of bonus, the Appellate Tribunal held that the first proviso to Section 36(1)(ii) cannot govern the allowability of the claim. None the less, the Appellate Tribunal proceeded to consider the claim under the second proviso to Section 36(1)(ii) of the Act. It held that the amount paid was reasonable. This is stated in paragraph 3 of its order dated March 2, 1984. The guidelines to be adopted for considering as to whether the amount paid in excess of the 20 per cent. limit can be considered to be reasonable have been laid down in a Bench decision of this court in CIT v. Alikunju (P.), Nazir (M. A.) Cashew Industries [1987] 166 ITR 611. This court held that all the three conditions postulated by Clauses (a) to (c) of the second proviso must be satisfied, if the payment made, in excess of the amount allowed by the Payment of Bonus Act, is to be regarded as reasonable within the meaning of, Section 36(1)(ii) of the Act. On a perusal of the order of the Appellate Tribunal, we are of the view that the Tribunal has not borne in mind the above guidelines laid down by this court. There has been no adjudication in accordance with law. Therefore, while holding that the bonus paid as per the settlement arrived at at the conciliation conference should stand the test specified in Section 36(1)(ii) of the Act read along with the provisos, we decline to answer the question further, but direct the Income-tax Appellate Tribunal to consider the matter afresh in the light of the decision of this court in CIT v. Alikunju (P.) Nazir (M. A.) Cashew Industries [1987] 166 ITR 611. Question No. (i) is answered as above. With regard to the weighted deduction, this court had occasion to consider the matter in a series of decisions. We mention a few decisions, viz., CIT v. Aluminium Industries Ltd. [1990] 182 ITR 172 (Ker) (Income-tax Reference No. 239 of 1982) and ITRs Nos. 91 to 102, 203 and 211 of 1984–18-6-1987, etc. The matter requires evaluation and appraisal by the Income-tax Appellate Tribunal, especially in the context of the administrative relief granted by the Central Board of Direct Taxes in the circular dated December 28, 1981. Therefore, we decline to answer question No. (ii) referred to us, but at the same time direct the Income-tax Appellate Tribunal to restore the appeal to its file and adjudicate the matter afresh in the light of our directions contained in CIT v. Aluminium Industries Ltd, [1990] 182 ITR 172 (Ker) and Income-tax References Nos. 91 to 102, 203 and 211 of 1984. The questions referred to us are answered as above.
4. The Registrar shall forward a copy of this judgment to the Income-tax Appellate Tribunal, Cochin Bench, forthwith.