HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Mysore Kirloskar Limited v. Workers of the Mysore Kirloskar Limited
Civil Appeal No. 233 of 1960
[1962] Supp. 1 SCR 375 ·
Industrial Disputes Act, 1947: historical profit-bonus adjudication · Income-tax deduction in the historical Full Bench bonus formula
Sources & disclosures includedDownload original judgment / order
Three-judge Bench: P. B. Gajendragadkar, A. K. Sarkar and K. N. Wanchoo JJ.; judgment by Wanchoo J. · P. B. Gajendragadkar J. · A. K. Sarkar J. · K. N. Wanchoo J.
Assessment years: Bonus year 1954–55; no Income-tax assessment appeal adjudicated
01 · Facts of the case
The employer challenged the Industrial Tribunal's award dated 29 September 1958 concerning bonus for 1954–55. In the Hon'ble Supreme Court it confined its objections to the income-tax allowance, the return on working capital and rehabilitation charges. The Tribunal had allowed Rs.1.67 lakh for income-tax. Gross profits were Rs.9.46 lakh and full statutory depreciation was Rs.4.30 lakh. The employer had already paid one month's bonus and disputed the additional award.
Source: SCR 376–377; PDF 2–3
02 · Discussion by the Hon’ble Court
Following Associated Cement Companies, the Hon'ble Court calculated the tax prior charge on Rs.5.16 lakh after full statutory depreciation, at seven annas in the rupee, and accepted the reported allowance of Rs.2.25 lakh. It retained the Tribunal's three per cent working-capital rate. Depreciation reserves could qualify if actual business use was proved; a balance sheet alone was insufficient. Of Rs.36.70 lakh actually used, Rs.14.56 lakh comprised borrowed or deposited money on which interest had already been expensed. Giving a further return on that portion would duplicate the allowance. Eligible owned working capital was therefore Rs.22.14 lakh, yielding a reported return of Rs.0.66 lakh. No rehabilitation evidence had been led, and the Court declined a late remand while leaving later years open to proper proof.
Source: SCR 376–380; PDF 2–6
03 · Judicial decision
The corrected bonus calculation deducted normal depreciation of Rs.3.32 lakh, income-tax of Rs.2.25 lakh, return on paid-up capital of Rs.1.33 lakh and working-capital return of Rs.0.66 lakh from gross profits of Rs.9.46 lakh. The resulting surplus was Rs.1.90 lakh. The Court considered total bonus of one and a half months' wages, approximately Rs.0.96 lakh, fair. Since one month had been paid, it partly allowed the appeal and reduced the additional bonus from one month to half a month. Each side bore its own costs.
Source: SCR 380–381; PDF 6–7
04 · Outcome / in whose favour
The employer obtained a reduction in the additional bonus after correction of the tax and working-capital calculations. Its request to raise the return rate to four per cent and its request for a rehabilitation remand failed. Workers retained an additional half-month's bonus. This mixed industrial-dispute result should not be described as a victory for Revenue or an assessee in an Income-tax appeal.
05 · AKHB REVIEW POINT
AKHB analysis: Keep separate the statutory depreciation used to calculate the tax prior charge and the normal-depreciation allowance used in the historical bonus-surplus table. Trace evidence of actual use of owned reserves, then remove borrowed funds whose interest has already reduced profit. These are the particular accounting and evidentiary propositions illustrated by the judgment. Before applying them to any current bonus or tax dispute, check the governing legislation, accounting facts and later authorities. The observation about an expected tax rebate did not quantify or adjudicate an assessment refund.
Source: SCR 376–381; PDF 2–7
Source & verification
Download original judgment / order · Open cited source rendition
Complete seven-page SCR asset and five-page official JUDIS copy read. Mysore Kirloskar ends in the upper portion of SCR 381; the following Bidi Merchants headnote belongs to a separate case. The surplus table and operative order were visually checked.
- The judgment date follows SCR 375–376 and the official JUDIS PDF, which both record 15 November 1961. The Court's 2023 neutral-citation list records 16 November 1961 under Date of Disposal for the same appeal. That metadata discrepancy is preserved; no formal corrigendum is claimed.
- The reported tax allowance of Rs.2.25 lakh and working-capital return of Rs.0.66 lakh are the Court's rounded figures. The statutory depreciation used for tax computation (Rs.4.30 lakh) differs from the normal-depreciation figure (Rs.3.32 lakh) in the final bonus-surplus table.
Statutory scope
Historical industrial-bonus companion concerning the 1954–55 bonus year. The judgment's calculation of income-tax as a prior charge is not a decision allowing a deduction in a taxpayer's assessment, nor a statement of present bonus legislation.
Later treatment
Source checked 2026-10-18. Historical holding only. Subsequent legislation and precedent treatment have not been cleared.
Page references identify the supplied PDF; paragraph references identify the judgment unless stated otherwise.
Identified source links
- reported judgment — PDF 7 pages
SHA-256: 3adf9a047ae0442ba75330aabc9cb31bc4dac1e6dd55fad1c4bb9c39cd4f4a88
- official judgment — PDF 5 pages
SHA-256: 25b406ae9396101584b797933735c57716253e3cfc1e930b5858e0d1040c7934
AI disclosure & professional disclaimer
This AKHB research note was prepared with AI assistance from identified primary judgments. Independent human review is not represented.
General legal and tax research only; not legal or tax advice. Verify the complete judgment, operative order, applicable statutory version and subsequent treatment before reliance. The AKHB REVIEW POINT is editorial analysis, not the Court's holding. No current-law clearance is claimed.