1987 (1) TMI 68

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..... fter referred to as " the Act"), the Income-tax Appellate Tribunal, Indore Bench, has referred the following questions of law to this court: " (1) Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was correct in law in holding that the gratuity payable at Rs. 33,059 to employees of the assessee in the electricity undertaking of Mount Abu Electric Suppl .....

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..... ee was debiting each year in the books of account the amount of liability to pay gratuity on account of the services of the employees for that year. In respect of the assessment year 1975-76, the assessee contended that the accrued liability towards payment of gratuity was Rs. 33,059, which was provided for in the account books and the assessee, therefore, claimed that amount as a deduction out of .....

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..... ons referred to in that section were satisfied. The Tribunal further held that even if the provisions of section 40A(7) of the Act were applicable, the case of the assessee was not covered by the provisions of sub-clause (i) of subsection (7)(b) of section 40A of the Act. Aggrieved by the order passed by the Tribunal, the assessee sought a reference and it is at the instance of the assessee that t .....

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..... by the assessee out of the gross profits of the year of account for payment of gratuity to employees on their retirement or on the termination of their services would not be allowed as deduction in the computation of profits and gains of the year of account. The provision of clause (a) was made subject to clause (b). The embargo is on deductions of amounts provided for future use in the year of a .....

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..... answer to the first question has to be in the affirmative and against the assessee. As regards the second question, the Tribunal, in our opinion, has rightly held that as the take-over of the undertaking of the assessee by the Rajasthan Electricity Board was in the subsequent accounting year, the debits made towards meeting the liability for payment of gratuity could not be held to be actual pa .....

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