Dismissing the appeal of the revenue the Court held that, all the four employee directors own identical number of shares i.e. 12.20% aggregating to 49% shares in respect of company. Nevertheless the bonus which has been paid to each of them is different. This is evidence of the fact that the payment of bonus was a performance based payment and entirely dependent on the performance of the employee. This also explains the fact that employee directors were paid at a much higher rate than the other employees of the company as the payment of the bonus is performance based and not designation based. In the above view, it is clear that the payment made to the four employee directors of the company is not a payment made in lieu of dividend as in fact found on facts by the ITAT. When bonus payment made by assessee was entirely dependent on performance basis of its employees, benefit of deduction u/s 36(1)(ii) can be claimed by assessee. Followed CIT v.  Shahzada Nand and Sons (1977 )108 ITR 358(SC)( AY.2009-10)