9911796707
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Issues:
1. Allowability of provision for gratuity based on actuarial valuation in computing total income for the assessment year 1972-73. The judgment deals with the issue of whether a provision for gratuity based on actuarial valuation is an allowable deduction in computing the total income of the assessee for the assessment year 1972-73. The Income-tax Officer initially disallowed the claim, citing that the Gratuity Act came into force after the assessee's accounting year had ended, and there was no statutory liability during that year. However, the Appellate Assistant Commissioner found that the West Bengal Employees' Payment of Compulsory Gratuity Ordinance, 1971, was in force before the close of the accounting year, establishing the liability for payment of gratuity. The actuarial valuation amounting to Rs. 3,70,035 was deemed allowable, with a balance of Rs. 1,61,483 being disallowed. The Tribunal upheld the Appellate Assistant Commissioner's decision, stating that the liability was for the entire amount determined by actuarial valuation and not just the incremental value for that year. The court referenced the decision in CIT v. Steel Rolling Mills of Bengal Ltd. [1988] 169 ITR 430, which had already addressed a similar issue. The Revenue contended that the Supreme Court's decision in CIT v. Vanaz Engineering P. Ltd. [1986] 162 ITR 876 favored their position, suggesting a remand to the Tribunal. However, the court disagreed, stating that the decision in Vanaz Engineering did not alter the precedents set by earlier Supreme Court judgments. Ultimately, the court ruled in favor of the assessee, allowing the provision for gratuity based on actuarial valuation as a deduction in computing the total income for the assessment year 1972-73. In conclusion, the court answered the question in the affirmative and in favor of the assessee, emphasizing that the matter did not warrant a remand to the Tribunal. The judgment was agreed upon by both judges, and no costs were awarded in the case.
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