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Issues:
1. Whether the claim for provision of gratuity was supported by actuarial valuation for the assessment years in question. 2. Whether the deduction towards payment to the approved gratuity fund was admissible under the Payment of Gratuity Act, 1972. 3. Whether the authorities considered the statutory provisions and actuarial valuation requirements in the assessment proceedings. 4. Whether the orders passed by the Deputy Commissioner were valid in light of the statutory provisions. Detailed Analysis: The judgment pertains to two revision cases concerning assessment years 1984-85 and 1985-86 under the Agricultural Income-tax Act and Sales Tax. The issue revolved around the deduction claimed by the assessee towards payment to an approved gratuity fund. The assessing authority allowed the deduction based on the Payment of Gratuity Act, 1972, which mandates payment of gratuity to employees after a specified period of service. However, the authorities raised concerns regarding actuarial valuation of the liability for each year to support the claim for gratuity provision. The assessee contended that the claim was not a mere provision but a contribution to an approved gratuity trust as per statutory requirements. The assessee had established an irrevocable gratuity trust recognized by the Commissioner of Income-tax, making regular contributions in accordance with the Act. The claim was based on actual contributions to the trust rather than a provision for liability under accounting principles. The assessee argued that the Payment of Gratuity Act allowed for deductions, and any payment made under the Act should be considered permissible, as already granted in the assessment proceedings. The Deputy Commissioner focused solely on the absence of actuarial valuation to support the gratuity claim, disregarding the statutory nature of the liability under the Payment of Gratuity Act. The Commissioner of Agricultural Income-tax also upheld this stance, emphasizing the need for actuarial valuation. However, the court highlighted that the Payment of Gratuity Act, 1972, provided a statutory framework for gratuity payments, allowing deductions under section 5(k) of the Act. The court noted that actuarial valuation was necessary only in the absence of a statutory provision, which was not the case here. Consequently, the court set aside the orders of the Deputy Commissioner and remanded the proceedings to reconsider the matter in light of the statutory provisions governing gratuity payments. The judgment emphasized the importance of adhering to statutory requirements and clarified that actuarial valuation was not mandatory when a specific statutory provision, such as the Payment of Gratuity Act, existed. The decision resulted in the disposal of both tax revision cases accordingly.
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