Case: Workmen of India Explosives, Limited Vs. India Explosives, Limited

This is an appeal by the workmen of India Explosives, Ltd., Gomla, District Hazaribagh (Bihar), against their employers, which arises out of an award of the industrial tribunal, Patna, dated 18 July, 1961, in Reference No. 31 of 1960. The Government of Bihar made the reference for the decision of the question whether the workmen were entitled to any bonus and, if so, what should be the quantum of bonus. The claim of the workmen was in respect of two years but we are now concerned only with the bonus year ending on 30 September, 1960. By the award impugned here the tribunal held that the claim was not justified because after the deductions according to the Full Bench formula were made from the gross profits there was no available surplus.

Reasoning: The workmen relied upon the report of the directors where it is stated that no income tax was payable on the years results and a total of Rs. 62, 39, 000, made up of income tax and development rebate was being carried forward. The workmen submitted that no deduction under the head "incometax" should be made in arriving at the available surplus. In the application of the formula the deduction of income tax is notional. The gross profits are arrived at by adding back certain items to the net profits and then the gross profits are reduced by making certain notional deduction. One such deduction is under the head "incometax." This deduction is not made on the actual amount payable but what would be nationally payable on the profits determined under the formula. If was accept the argument on behalf of the workmen, we would not be applying the formula.In this view of the matter it is obvious that the suggested addition of Rs. 62, 39, 000 cannot be considered. As there is a deficit and no available surplus, the tribunal was right in rejecting the demand for bonus for the bonus year ending 30 September, 1960.