SECTION 36(1)(ii)

Hi Suneel...

All the revenue generated by an organisation is adjusted with all the expenses to arrive at Net profit. Such PAT is the owners fund. Owners are eligible for Dividend & bonus  out of such remaining PAT-retained earning. As this is in the nature of distribution of share of profit to the members of a company, it will not be allowed as deduction.

Bonus or Commission paid to an employee is allowable as deduction subject to certain conditions u/s.36 (1) (ii). One of the condition is that the amount payable to employees as bonus or commission should not otherwise have been payable to them as profit or dividend. The plain reading of the clause means that the profit of a business will not be allowed to be dwindled by merely describing the payment as bonus or commission, if the payment is in lieu of dividend or profit.

best answer sir.