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Section 30: Computation of gross profits

The Code on Wages, 2019 (Act No. 29 of 2019) • Official Statutory Text & Plain English Practice Guide

Statutory Mandate
Chapter IV: Payment of Bonus
Competent Labour Forum
Act No. 29 of 2019
Section 29 All 67 Sections of Code on Wages, 2019 Section 31

Legal Commentary & Landmark Judgments: Section 30

Section 30 prescribes the statutory methodology for computing gross profits derived by an employer from an establishment in any accounting year, directing that gross profits shall be calculated in the manner specified in the First Schedule for banking companies and in the Second Schedule for all other establishments.

  • Bifurcated Computational Schedules: Establishes distinct accounting formulas: banking companies compute gross profits under the First Schedule, while non-banking commercial establishments compute gross profits under the Second Schedule.
  • Reconciliation with Audited Accounts: Starts from the net profit shown in the audited profit and loss account prepared under the Companies Act, 2013 or relevant banking regulations, and adds back statutory adjustments.
  • Statutory Add-Back Architecture: Requires adding back bonus provisions, depreciation, direct taxes, reserves, and capital expenditure charged to profit and loss, eliminating discretionary accounting adjustments.
Key Landmark Precedents:
  • Metal Box Company of India Ltd. v. Their Workmen (1969) 2 SCR 255: The Supreme Court established that computation of gross profits must strictly follow the statutory schedules, holding that estimated contingent liabilities cannot be deducted from gross profits unless actuarially valued and statutorily permitted.
  • Workmen of William Jacks & Co. Ltd. v. William Jacks & Co. Ltd. (1971) 1 SCC 786: The Supreme Court held that the statutory schedules for computing gross profits under bonus law are exhaustive, and items not authorized by the schedule cannot be added back or deducted arbitrarily.
Courtroom Practice & Strategic Litigation Guidance:

When preparing financial statements for bonus adjudication, the employer's chartered accountant must compile the Gross Profit Computation Sheet strictly following the Second Schedule format. In tribunal litigation, Section 39 grants a statutory presumption of correctness to audited balance sheets; unions questioning entries must discharge a heavy burden of proving specific mathematical errors or fraud.

Section 29 All 67 Sections of Code on Wages, 2019 Section 31