9911796707
TMI Blog1985 (1) TMI 30X X X X Extracts X X X X X X X X Extracts X X X X ..... d its employees in respect of the enhancement of the salaries of the latter. The dispute was referred by the Government of West Bengal to the Industrial Tribunal which adjudicated on the dispute and made an award on July 31, 1970. The said award was notified in the State Gazette on August 14, 1970. The assessee and its employees thereafter entered into a settlement in writing on December 12, 1970, modifying the award. In the assessment year 1972-73, relevant to this proceeding (the corresponding accounting year being from October 1, 1970, to September 30, 1971), the assessee paid to its employees an additional salary of Rs. 80,663 and claimed deduction of the same as its business expenditure for the year. The ITO disallowed the claim of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respect of one category of the employees was vague. Instead of preferring an appeal to the Supreme Court, the parties entered into negotiations before the award became final and in fact entered into the settlement on December 12, 1970. It was contended on behalf of the Revenue before the Tribunal that under s. 17(a) of the Industrial Disputes Act, an award became final after the expiry of 30 days from the date of the notification in the Gazette. Therefore, the award became final on September 14, 1970, before the commencement of the relevant assessment year and the assessee was not entitled to claim deduction of the amount paid by way of additional salary. The Tribunal accepted the assessee's contention. It was found that neither the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd accordingly the liability to pay the additional salary as per the said award did not accrue on the same date ? (2) Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in deleting the addition of Rs. 41,274 sustained by the Appellate Assistant Commissioner? " At the hearing, learned advocate for the Revenue submitted that the award had become final thirty days after the same was notified, that is, on September 14, 1970. It was also submitted that no appeal was preferred by any of the parties against the said award before the Supreme Court and that the liability to pay the additional salary arose under the said award and was specifically referable to the same. In support of his contentions, learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed December 12, 1970, modified and clarified the award. He submitted that in view of the facts found, it could not be said that the liability to pay additional salary had arisen in any year other than the assessment year involved. The following decisions were cited in support of the contentions of the assessee. (a) Swadeshi Cotton Mills Co. Ltd. v. CIT [1980] 125 ITR 33 (AU). This decision of the Allahabad High Court was cited for the proposition that where an assessee followed the mercantile system of accounting, disputed contractual amount payable by the assessee could be taken into account only in the assessment year in which the dispute was settled. (b) Sirsilk Limited v. Government of Andhra Pradesh, AIR 1964 SC 160. In this case, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r to enter into fresh settlement. In Sirsilk Ltd., AIR 1964 SC 160, cited on behalf of the assessee, it was accepted by the Supreme Court that even after an award was made by an Industrial Tribunal, the parties could arrive at a fresh settlement which could put an end to the disputes. The preamble to the Industrial Disputes Act lays down that the said Act is " an Act to make provision for the investigation and settlement of the industrial disputes ...... .." It has not been found nor was it the contention of the Revenue at any stage that often when a settlement was arrived at between the parties, the award continued unaffected. The said settlement has been honoured by the parties and it is clear from the facts found that the parties have ..... X X X X Extracts X X X X X X X X Extracts X X X X
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