9911796707
|
Home
Issues:
Interpretation of liability to pay additional salary under an industrial award and subsequent settlement for deduction as business expenditure. Detailed Analysis: The case involved M/s. R. V. Briggs & Co., an assessee conducting business as chemical analysts, who faced a dispute with employees regarding salary enhancements. The dispute was referred to an Industrial Tribunal, which issued an award on July 31, 1970, later modified by a settlement on December 12, 1970. In the assessment year 1972-73, the assessee paid additional salary to employees, claiming it as business expenditure. The Income Tax Officer (ITO) disallowed the claim, stating the payment was not related to the accounting year. The Appellate Assistant Commissioner (AAC) partially allowed the deduction. The assessee appealed to the Income-tax Appellate Tribunal, arguing the liability arose during the relevant assessment year due to the settlement modifying the award. The Tribunal accepted the assessee's contention that the liability for additional salary arose during the relevant assessment year, as the award did not become final in the preceding year. The Revenue contended that the award became final before the assessment year, citing legal precedents. The Revenue's argument was based on the belief that once an award becomes final, parties cannot enter into further disputes or settlements. However, the Tribunal noted that parties can reach a fresh settlement even after an award, as per legal principles. The High Court analyzed the facts and found that the additional salary was paid under the subsequent settlement, not the final award. The Court emphasized that the settlement between parties effectively modified the award, leading to the payment of additional salary during the relevant assessment year. It was established that the settlement superseded the award, and the liability to pay the additional salary accrued during the relevant assessment year. The Court reframed the questions raised by the Tribunal and ruled in favor of the assessee, allowing the deduction of the additional salary as business expenditure. The judgment highlighted the significance of settlements in industrial disputes, emphasizing that parties can resolve disputes and modify awards through settlements even after an award is made. The Court's decision underscored that the liability to pay additional salary was linked to the subsequent settlement, not the final award, allowing the deduction claimed by the assessee as business expenditure.
|
