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TMI Blog1993 (8) TMI 33X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Rules, 1957 ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provision for gratuity made by the company was deductible from the assets of the company for computing market value of unquoted shares of the company in accordance with rule 1D of the Wealth-tax Act, 1957 ?" It is not in dispute that the first question is concluded by the decision of this court in CWT v. India Exchange Traders' Association [1992] 197 ITR 356. Accordingly, the first question is answered in the affirmative and against the assessee and in favour of the Revenue. The facts relating to the second question is that the Wealth-tax Officer while computing the value of unquoted shares of Surrendra Overseas Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d such provision is a present direct and minimum liability of the company for the reason that it represents the present discounted value of the employer's commitment as a whole to pay the workmen gratuity and it becomes a liability. Therefore, according to the Madras High Court, Explanation II(ii)(f) to rule 1D will not apply in respect of such provision for gratuity in valuing unquoted shares. Unlike the earlier decision, the Madras High Court took a broader view in the later one. In deciding the issue it has taken notice of Standard Mills Co. Ltd. v. CWT [1967] 63 ITR 470, where the Supreme Court held that gratuity is a contingent liability so long as there is no interposition of the gratuity trust to whom the company is under an obligat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us for the purpose of payment of bonus. As a matter of fact, the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd.'s case [1974] 93 ITR 603 was urged to reconsider the decision in Standard Mills Co. Ltd.'s case [1967] 63 ITR 470 (SC) in the light of Metal Box Co. of India Ltd.'s case [1969] 73 ITR 53 (SC), but the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd.'s case [1974] 93 ITR 603 held that the decision of Standard Mills Co. Ltd.'s case [1967] 63 ITR 470 (SC) was noticed and distinguished by the Supreme Court in Metal Box Co.'s case [1969] 73 ITR 53. The final observation of the Supreme Court in Bombay Dyeing and Manufacturing Co. Ltd.'s case [1974] 93 ITR 603, 604 is : "In our opinion, there is no conflict between th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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