JAIPUR ELECTRO PRIVATE LIMITED Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AS directed by this Court under S. 256(2) of the IT Act, 1961 (for short the Act) the Tribunal, Jaipur Bench, Jaipur has referred the following question to this Court for its opinion.

(2.) THE relevant facts, giving rise to the above mentioned question, are these :

(3.) THE ITO did not accept the contention of the assessee company and pointed out that the employees to whom the incentives were given were already in the employment of the assessee's predecessor firm. He further pointed out that the sales of M/s Asiatics Jaipur amounted to about Rs. 1.80 crores in the preceding year but no payment as work incentive was ever made by the said firm to any of its employees in any year. He further pointed out that the work incentive was not given to all the employees of the company and also that no evidence was brought on record to show that the increase in sales in the year under consideration or in the following year was entirely due to the efforts made by the aforementioned employees. In this respect the ITO pointed out that the assessee had made payments of Rs. 64,000 to various parties during the year and such parties had helped it in obtaining orders for its products from various parties. The increase in sales in the next year was partly due to increase in the prices of raw material. The ITO took note of the fact Name of the employee Work