1984 (4) TMI 99 - AT - Income Tax

Appeal Before AAC, Applied To, Assessment Proceedings, Assessment Year, Mistake Apparent From Record, Provision For Gratuity

Summary

Issues:
- Whether the assessee's claim for deduction of gratuity liability, not claimed during the original assessment, can be considered on merit at the appeal stage.
- Whether the provision for initial contribution to an approved gratuity fund is deductible under section 36(1)(v) of the Income-tax Act, 1961.
- Whether the deduction for provision of gratuity liability can be allowed under section 155(13) of the Income-tax Act, 1961.
- Whether the provision for payment of gratuity for a specific period can be allowed in the assessment for a different period.

Analysis:
1. The original assessment disallowed the assessee's claim of Rs. 81,497 for gratuity payment provision. The AAC directed the ITO to reconsider the claim under section 40A(7)(b) of the Income-tax Act, 1961. The assessee later requested a deduction of Rs. 3,17,911 for gratuity payable up to 31-3-1973, which the ITO rejected citing no initial claim during the regular assessment. The Commissioner (Appeals) allowed the deduction based on actuarial valuation and approved gratuity fund, referring to relevant case law and provisions.

2. The revenue contended that the claim for deduction was not made during the regular assessment, questioning the timing and jurisdiction of the claim. Citing Calcutta High Court decisions, they argued that only claims raised before the AAC could be considered. The assessee argued that the claim was based on audited accounts and actuarial valuation, justifying the deduction under section 155(13). They referenced a relevant Allahabad High Court decision in support.

3. The Tribunal noted that during the regular assessment, the claim was only for Rs. 81,497, not the later claimed Rs. 3,17,911. Referring to a decision by the Allahabad High Court, the Tribunal held that unclaimed deductions do not constitute rectifiable mistakes. The Tribunal also observed that section 155(13) was not applicable to the assessment year under appeal, leading to the reversal of the Commissioner (Appeals) decision and reinstating the ITO's order disallowing the deduction.

4. In conclusion, the Tribunal allowed the revenue's appeal, reversing the Commissioner (Appeals) decision to grant the deduction of Rs. 3,17,911 for gratuity liability, based on the inapplicability of section 155(13) to the relevant assessment year.