9911796707
TMI Blog1991 (3) TMI 98X X X X Extracts X X X X X X X X Extracts X X X X ..... essment year 1970-71, the Tribunal has referred to this court the following two questions of law under section 256(1) of the Income-tax Act, 1961, as applied to surtax by section 18 of the Companies (Profits) Surtax Act, 1964 : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 6,96,000 being retiring gratuity merged in the gene ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question, however, while Dr. Balasubramanian, learned counsel for the Revenue, states that this question is also covered by the Supreme Court decision in the case of Vazir Sultan Tobacco Co. Ltd. v. CIT [1981] 132 ITR 559, Mr. Dalvi, learned counsel for the assessee, contends that it is not so. In this context, Mr. Dalvi fairly admits that, up to the previous year for the assessment year 1965-66, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such liabilities which are not provided for fully or partly. This rule was introduced from April 1, 1975. The effect of the insertion of this rule with effect from April 1, 1975, is that, prior to the assessment year for the assessment year 1974-75 and earlier, if an assessee had not made any provision or created a reserve for gratuity liability, the gratuity liability could not have been taken i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... what could have been done. In the case before us, it is a fact that the assessee had set apart an amount to the credit of the retiring gratuity reserve. In that year, it was admittedly taken to be a provision and not as a reserve. The mere fact that it has been subsequently transferred to the general reserve cannot and should not, in our opinion, make any difference. To say the least, it will be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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