JUDGMENT Per Hidayatullah, J.:-This is an appeal by the workmen of India Explosives, Ltd., Gomla, District Hazartbagh (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. In this appeal by special leave the workmen question the correctness of the above conclusion. After hearing arguments on both sides we are satisfied that the appeal must fail. Although there were some errors in the calculation of the available surplus by the tribunal the resulting position does not alter even after those mistakes are rectified. Those errors were in not adding back two sums on account of travelling expenses (Rs. 1,63,310) and amounts set apart for gratuity and leave travelling (Rs. 91,605). As the company has conceded these two items we shall deal with this case veiy shortly because the controversy now lies within an extremely narrow compass. Both sides agree that the net profits were Rs. 43,76,877 ard also agree to the following additions and deductions in accordance with the Full Bench formula: Untitled Document Rs. Net profits ... ... 43,76,877 Add back- Depreciation ... 22,71,744 Add back- Rs. Travelling expenses ... 1,53,310 Provision for gratuity and leave travelling. ... ... 91,605 ____________ Total gross profits ... 68,93,536 Deduct- Notional depreciation ... 36,76,739 ____________ Balance ... 32,16,797 Income at 45 per cent on gross profits minus statutory depreciation and development rebate, i.e.-(68,93,536-36,76,739 + 4,96,722) = 27,20,075       ... ... 12,24,033 ____________ Balance ... 19,92,764 ____________ up to this point there is no difference between the parties. The company next seeks to deduct a farther sum of Rs. 4,50,000 which represents income-tax at 20 per cent on dividend paid to shareholders. The workmen resist this deduction. Arguments were advanced in support of the rival claims but there is no need to go into them. 19,92,764 ____________ up to this point there is no difference between the parties. The company next seeks to deduct a farther sum of Rs. 4,50,000 which represents income-tax at 20 per cent on dividend paid to shareholders. The workmen resist this deduction. Arguments were advanced in support of the rival claims but there is no need to go into them. Even if this deduction is disallowed, the claim of the workmen for bonus is not in any way battered. This is easily established. We have reached the sum of Rs. 19,92,764 which is an agreed figure. From it must be deducted under the formula a sum of Rs. 18,00,000 representing 6 per cent return on the paid-up capital. This leaves a sum of Rs. 1,92,764. From this amount two more items are yet to be deducted. They are: (a) return on reserves employed as capital in business, and (b) rehabilitation charges. These taken with the ex gratia bonus, equal to one month s basic wage already paid which is a sum of Rs. 1,10,000, does not leave any amount as surplus from which to pay any, further bonus. It was contended that no rehabilitation charges should be allowed as the company was in its first year of production. This Is not correct. The company was formed in 1956 and started production in 1958. In this bonus year rehabilitation will have to be calculated and deducted according to the Full Bench formula. The workmen relied upon the report of the directors where it is stated that no income-tax was payable on the year s results and a total of Bs. 62,39,000, made up of income-tax and development rebate was being carried forward. The workmen submitted that no deduction under the head income-tax " 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 deductions. One such deduction is under the head " income-tax." This deduction is not made on the actual amount payable but what would be notionally payable on the profits determined under the formula. If we accept the argument on behalf of the workmen, we would not be applying the formula. One such deduction is under the head " income-tax." This deduction is not made on the actual amount payable but what would be notionally payable on the profits determined under the formula. If we 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. The appeal is dismissed but we make no order about costs. For Citation : (1966) 17 STC 505 (SC)