In calculating bonus under the Full Bench formula, no prior charge is allowable for income tax on income which is not taxable, and notional normal depreciation is to be allowed and not the actual depreciation shown in the profit and loss account.

JUDGMENT :

Gajendragadkar, J.

1. This appeal by special leave arises out of an industrial dispute between the appellant Hamdard Dawakhana Wakf and the respondents, its workmen. On April 20, 1961, the Chief Commissioner, Delhi, referred two items of dispute between the parties to the adjudication of the Industrial Tribunal at New Delhi. These items were in regard to the claim for additional bonus made by the respondents for the year 1959 and in regard to the grievance made by them in respect of the dismissal of Shamsul Zaman. The Tribunal has ordered that the appellant should pay to each and every workman of the Hamdard Dawakhana who worked in the calendar year 1959 additional bonus equivalent to the ?rd of his earnings by way of basic wage for the said year. It has also held that the order of dismissal passed against Shamsul Zaman was unjustified and so, it has directed the appellant to reinstate him in service without break in the continuity of his service. Back wages during the period of his dismissal have, however, not been allowed to the workman. In the present appeal, the appellant challenges the correctness and propriety of both the directions given by the award.

2. Hamdard Dawakhana, the appellant, was originally established in a modest way in 1906 by Hakim Hafiz Abdul Majid. It was then manufacturing and selling indigenous simple and compound medicines. On the death of Hakim Hafiz Abdul Majid, his heirs conducted the said business till 1948. On or about August 28, 1948, the said heirs and successors settled the said business with all its assets, good-will etc. including the trade marks, on an irrevocable Wakf with the object that the income from the said trust should be utilised for the advancement, reform and development of the indigenous system of medicine and for affording medical, educational and social relief to deserving people in the country.

3. Under the terms of the Wakf, the business is to be managed by at least one and no more than two Mutawallis. Provision is made for the remuneration of the said Mutawallis. The said remuneration is in addition to the "khandani" income. These Mutawallis have to be appointed from the heirs and successors of the settlers. The net profits of the appellant are determined under clause 33 of the Wakfnama; the terms and conditions of the Wakf require that the appellant should set apart ?th of the net profits towards the reserve fund; ¼th of the balance is to be spent for the personal and family benefit of the settlers - it is called "khandani" income; the balance of ¾th is to be spent on objects of charity and general and public utility as well as for the individual and collective needs of the community and the country.

4. It appears that in or about 1958, the appellant framed a scheme for the payment of bonus to its employees, and in accordance with the said scheme, about Rs 70,000 have been paid by the appellant to the respondents for the relevant year. The respondents, however, urged that the appellant was an industry within the meaning of the Industrial Disputes Act and that under the Full Bench formula they were entitled to a much larger amount of bonus for the relevant year. That is how the dispute about the bonus arose between the parties.

5. In deciding this dispute, the Tribunal has applied the Full Bench formula, has made deductions in respect of four prior charges and has held that the available surplus for the relevant year is Rs 5,12,698. Out of this available surplus, it has ordered that a lakh of rupees should be paid by the appellant to the respondents by way of additional bonus. In other words, the Tribunal thought that the total amount of bonus to which the respondents were entitled was Rs 1,70,000.

6. On behalf of the appellant, the learned Solicitor-General contended that the Tribunal was in error in awarding to the appellant by way of prior charge Rs 68,000 only under the heading "income tax" for the relevant year. He contends that the amount of Rs 68,000 thus allow