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TMI Blog1991 (6) TMI 60X X X X Extracts X X X X X X X X Extracts X X X X ..... iabilities under the Payment of Gratuity Act, 1972 ; and (2) Rs. 45,906, being the expenditure incurred on payment of salary to the staff engaged for export development. Other claims made by the assessee company in the course of the assessment are not relevant for this reference. So far as the claim for deduction of gratuity provision was concerned, the Income-tax Officer held that the deduction of the amount claimed by the assessee-company was not permissible under section 409A(7)(a) unless and until the conditions laid down in section 40A(7)(b)(ii) are satisfied. He, however, observed that, if the conditions in the said sub-clause (ii) of clause (b) of section 40A(7) are satisfied by the assessee-company, he would allow deduction to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of the assessee-company as employer increased as on December 31, 1972, in comparison to its liability in this regard as on December 31, 1971. In other words, the argument of the Revenue was that deduction for the gratuity amount payable for the past services of the employees was not admissible in the year under consideration. The Tribunal rejected this contention of the Revenue holding that, prior to the coming into force of the Payment of Gratuity Act, 1972, which came into force on September 16, 1972, the assessee-company was not liable to pay any gratuity to its employees. According to the Tribunal, the liability to pay gratuity arose for the first time on the coming into force of the Payment of Gratuity Act on September 16, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee was entitled to deduction of the entire amount of Rs. 1,97,472 in the previous year under consideration even though the employees of the assessee had been in service since long before the commencement of that previous year ? (2) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was right in law in holding that only a portion of the staff expenses amounting to Rs. 45,906 was covered by clause (b)(iii) of section 35B(1) and that that portion on estimate was 25% (sic) of the said expenses ? (3) Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the portion of the staff expenses amounting to Rs. 45,906 was covered by clause (b)(v) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have completed five years of service for the total length of their service, as provided in the said Act. The assessee-company would, therefore, become liable to pay gratuity to its employees for their past services in accordance with the provisions of the Payment of Gratuity Act. It, however, cannot be gainsaid that their liability to pay gratuity to its employees arose for the first time on the coming into force of the Payment of Gratuity Act. In other words, this liability arose for the first time on September 16, 1972, the date on which the Payment of Gratuity Act came into force. It is on the coming into force of the Payment of Gratuity Act that the assessee-company became liable to pay Rs. 1,97,472 by way of gratuity to its employees. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficers of the Income-tax Department in connection with the said decision of the Tribunal was brought to our notice, wherein it is stated to the following effect : "As the Board has accepted the decision in the case of J. Hemchand and Co., it was decided that where a case is decided in favour of the assessee by the Commissioner of Income-tax (Appeals) in conformity with the Tribunal's decision, no second appeal to the Tribunal need be filed. Similarly, where the Tribunal in the appeal pending before it, follows the decision in the case of J. Hemchand and Co., no reference need be recommended. It is expected that the Inspecting Assistant Commissioners/Income-tax Officers will bear in mind the aforesaid decision while dealing with the cla ..... X X X X Extracts X X X X X X X X Extracts X X X X
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