115JB...Urgent Sir!!!

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Rajesh (Querist)
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02 September 2010 Dear Experts,
I have another doubt sir...
Normally business entities follow metchantile accounting system, therefore we ask the client to make provision entries for bonus (however while computing Total Income Statement we are disallowing it as per 43B)
But while calculating book profit for the purpose of 115JB i am of the view bonus provision being an ascertained liability we need not add back to profit. Please tell me am i right in my opinion.
With regards,
Rajesh.

Bhaskaran Chackrapani Warrier

Bhaskaran Chackrapani Warrier (Expert)
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03 September 2010 Bonus ,if provided in the accounts as per Payment of Bonus Act,1965 or as per agreement with the employees, is an ascertained liability and hence no need to add back to net profit for the purpose of 115JB of the Income tax Act,1961.

CA A RAMVEL

CA A RAMVEL (Expert)
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03 September 2010 In addition to Mr.Chackrapani's reply....

Bonus is provided in the books based on the performance of the employees for the year. This will be paid before filing of return and thus it is an ascertained liability and need not be added to profit while computing the book profit u/s 115JB