1992 (9) TMI 50

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..... 256(1) of the Income-tax Act, 1961 : "1. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that the assessee, which was following the mercantile system of accounting was entitled to a deduction either under the provisions of section 28 or section 37 of the Income-tax Act, 1961, of its actuarially valued gratuity liability o .....

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..... For this reason and also because the liability to pay gratuity arose as a result of the Payment of Gratuity Act, 1972, the Tribunal held that section 40A(7) did not apply and that the assessee was entitled to claim deduction on ordinary commercial principles. Taking this view, the Tribunal allowed the appeal. The Revenue feeling aggrieved by the said decision, applied to the Tribunal to refer the .....

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..... the computation of income under the head " Profits and gains of business or profession ". In other words, section 40A had effect notwithstanding anything contained in sections 30 to 39 of the Art. The Supreme Court has further held that the right to receive gratuity is a contingent right and the liability to pay gratuity continues to be contingent liability qua the employer. It is further held tha .....

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