-1_ IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.503 OF 2002 WITH INCOME TAX APPEAL NO.504 OF 2002 DGP Windsor India Ltd. : Appellant v/s DCIT, Sp.Rg.4, Mumbai : Respondent Ms. Vasanti B. Patel Advocate for Appellant Mr. N.R. Prajpati Advocate for respondent Coram : Dr. S. Radhakrishnan S.J. Kathawalla, JJ. Date : 21.8.2008 P.C. 1. Heard the learned counsel for the appellant and the learned counsel for the respondent. Income Tax Appeal no.503/02 deals with assessment year 1987-88 and Income Tax Appeal no. 504/02 deals with assessment year 1988-89. Both the above appeals have been admitted on the following question of law. Whether on the facts and in the circumstances of the case and in law, the Tribunal with regard to the deductibility of the productivity linked incentives ought to have considered whether the assessee’s case was covered under the second proviso of section 36(1)(ii) of the Income Tax Act? -2_ 2. We have perused the judgment of the Income Tax Appellate Tribunal in both the above Appeals dt. 5.2.2002 specially paragraph no.8 therein. It deals with the above question of law. The above issue was factually considered by the tribunal in the assessment year 1986-87 and wherein the Tribunal has clearly held that the amount was paid under contractual obligations and therefore, the same does not come under the purview of Bonus Act. Accordingly, the Tribunal has allowed the expenditure under section 37(1) of the Income Tax Act. However the Tribunal with regard to the above two assessment years in the impugned order relying on the judgments of Madras High Court and Calcutta High Court and another judgement reported in 237 ITR 628 held that the above deduction u/s 37(1) of the Income Tax Act was not permissible and accordingly deduction was disallowed. 3. Learned advocate for appellant Ms. Patel contends that in the event the deduction was not to be allowed u/s 37(1) of the Income Tax Act, then, the appellant would be alternatively entitled to claim under both the provisos u/s.37(1) and 36(1)(ii) therefore Tribunal has not at all considered the eligibility of the appellant to avail the deduction under the aforesaid proviso u/sec.37(1) and/or section -3_ 36(1)(ii) of the Income Tax Act. 4. Under the aforesaid facts and circumstances Mr. Prajapati learned counsel appearing for the respondent states that the matter may be remanded back to the assessing officer for a fresh consideration so that the appellant assessee can place the relevant material before the assessing officer so that assessee could claim benefit under proviso u/sec. 37(1) and /or section 36(1)(ii) of the Income Tax Act. 5. Under the aforesaid facts and circumstances we set aside the impugned order of the ITR specially with regard to the finding in paragraph 8 and remand back the matter to the assessing officer to consider afresh whether the appellants are entitled to claim the benefit of deduction permissible under both the provisos u/s 37(1) and 36(1)(ii) of I.T. Act. 6. Both the above Appeals stand allowed accordingly. (S.J. Kathawalla,J.) (Dr. S.Radhakrishnan,J.)