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Issues:
Assessment of gratuity liability deduction based on actuarial valuation, Claim for deduction of gratuity liability under Kerala Payment of Gratuity Act, Disallowance of claim by Income-tax Officer, Appeal before Appellate Assistant Commissioner, Appeal before Income-tax Appellate Tribunal, Consideration of future increments in actuarial valuation, Reassessment of gratuity liability after excluding future increments, Interpretation of earlier orders by Appellate Tribunal, Entitlement to deduct gratuity liability amount. Analysis: The case involves the assessment of a deduction for gratuity liability under the Kerala Payment of Gratuity Act for the assessment year 1971-72. The assessee initially claimed Rs. 7.03 lakhs, but the Income-tax Officer disallowed most of the claim, allowing only Rs. 49,566 based on cash payment. The Appellate Assistant Commissioner later accepted an actuarial valuation of Rs. 2,18,646, directing the Income-tax Officer to allow the balance amount of Rs. 1,69,080. The Income-tax Appellate Tribunal considered two main issues raised by the Revenue: first, the claim for additional deduction based on actuarial valuation after already claiming on a cash basis, and second, the inclusion of future increments in the actuarial valuation. The Tribunal held that the statutory liability to pay gratuity arose during the relevant accounting period, justifying the claim on an accrual basis. It also determined that future increments should not be included in the actuarial valuation. After a remit, the Income-tax Officer assessed the liability at Rs. 3,85,010, but the Appellate Assistant Commissioner allowed a further sum of Rs. 1,66,364 over the earlier allowed amount. The Revenue appealed this decision, arguing that the Appellate Assistant Commissioner exceeded his jurisdiction in granting the additional relief. The Appellate Tribunal clarified that its earlier order directed a reworking of the actuarial valuation by excluding future increments, not a wholesale remit. The Tribunal upheld its decision that the assessee was not entitled to claim a higher sum post-rework. The High Court concurred, stating that the earlier order had become final and conclusive, limiting the deduction to Rs. 2,18,646. The Court held against the assessee, affirming the Tribunal's decision and denying the claim for the additional amount. In conclusion, the High Court answered the question referred by the Income-tax Appellate Tribunal in favor of the Revenue, ruling that the assessee could only deduct the amount of Rs. 2,18,646 allowed by the Appellate Assistant Commissioner. The Court emphasized that the nature of the appellate order precluded the assessee from claiming any further deduction. The judgment was to be forwarded to the Income-tax Appellate Tribunal, Cochin Bench for further action.
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