9911796707
TMI Blog1997 (1) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... writ petitioner had, sought for a writ of certiorari seeking quashing of Circular No. 146 (F No. 228/2/73-IT (A. II) dated September 26, 1974, issued by the Central Board of Direct Taxes and assessment order if any made by the assessment officer on the basis of the said circular for the assessment year 1972-73 or any subsequent assessments and in prayer (b) of the writ petition the writ petitioner had sought for a writ of prohibition for a direction upon the respondents commanding them to for bear from giving effect to and/or taking any steps in pursuance of the aforesaid Circular No. 146, dated September 26, 1974, for the assessment year 1972-73 or any subsequent assessments. The learned judge passed the order under appeal on the basis o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wing this judgment of the Supreme Court, a circular was issued by the Central Board of Direct Taxes on September 21, 1970, where it was provided that the Board has come to the conclusion, following that judgment of the Supreme Court, that the liability ascertained on account of provision for gratuity on a scientific basis in the form of an actuarial valuation carried out every year, cannot be considered as contingent liability and provision for such gratuity may be treated as an admissible deduction under section 37(1) of the Income-tax Act, 1961. In view of the said circular which is based upon the decision of the Supreme Court in the case of Metal Box Company of India Ltd. [1969] 73 ITR 53, the provision made in the profit and loss accoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ason for distinguishing Standard Mills Co. Ltd.'s case [1967] 63 ITR 470 (SC) was that in Standard Mills Co. Ltd.'s case, the Supreme Court was considering the debt in so far as wealth-tax is concerned and not the liability of an employer accrued during the year on account of gratuity. In that view of the matter, the circular dated September 26, 1974, is in direct conflict with the law laid down by the Supreme Court in Metal Box Co. of India Ltd.'s case [1969] 73 ITR 53. In Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585, the Supreme Court has laid down as to what was the law applicable in the field before section 40A was introduced. While doing so, it took note of the judgment of the Supreme Court in Metal Box's case [1969] 73 ITR 53 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shree Sajjan Mills Ltd.'s case [1985] 156 ITR 585 (SC) and in that view of the matter the High Court should examine whether this provision has been complied with in the present case having regard to what has been laid down in that case. In view of the above we hold that Circular No. 146, dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. of India Ltd.'s case [1969] 73 ITR 53 in so far as the law applicable for the assessment year 1972-73, is of no effect for that particular assessment year. We, therefore, dispose of the present appeal by directing the appellants to make a fresh assessment in accordance with the law for the assessment year 1972-73 as declared by the Supreme Court in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eme Court in the case of D. V. Bapat, ITO [1986] 159 ITR 938. There will be no order as to costs. F. M. A. No. 726 of 1978 : In view of our discussions made in F. M. A. No. 586 of 1976, we hold that Circular No. 146, dated September 26, 1974, being in contravention of the law laid down by the Supreme Court in Metal Box Co. of India Ltd. [1969] 73 ITR 53, in so far as the law applicable for the assessment year 1972-73, is of no effect for that particular assessment year. We, therefore, dispose of the present appeal by directing the appellants to make fresh assessment in accordance with the law for the assessment year 1972-73, as declared by the Supreme Court in Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 ignoring Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X
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