1989 (2) TMI 10 - HC - Income Tax

Summary

Issues:
1. Whether the entire claim of gratuity liability should be allowed as a deduction while computing the total income of the assessee for specific assessment years.
2. Whether the cost of route permits should be capitalized and allocated to the cost of vehicles for the purpose of allowing depreciation.

Analysis:
1. The court addressed the issue of gratuity liability deduction for various assessment years. The court found that the liability of the assessee to pay gratuity was related to the number of years of service put in by the employees, and the gratuity payment was made to an approved gratuity fund. The court emphasized that the liability for the payment of gratuity should not be bifurcated based on service rendered before or after the takeover. The court held that the entire payment of gratuity was allowable as a deduction, rejecting the Revenue's claim for bifurcation.

2. Regarding the allocation of the cost of route permits for depreciation, the court directed a reference for the second question for the assessment year 1979-80 in specific petitions. The court noted that a similar question had been referred previously and directed the Tribunal to state a case referring the second question for the mentioned assessment year in the respective petitions.

In conclusion, the court dismissed the petitions in other respects and ordered no costs to be imposed.