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TMI Blog1983 (1) TMI 27X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 10,10,453 in the A.Y. 1974-75 ? (2) Whether the deduction of liability for the provision of gratuity arose in the A.Y. 1974-75 relevant to the accounting year ended June 30, 1973, only or in the A.Y. 1973-74 in respect of the provision for liability for the earlier years, when the provisions of the Gratuity Act, 1972, came into force w.e.f. September 16, 1972, and the applicant is maintaining books of account on mercantile basis ? (3) Whether section 40A(7) of the I.T. Act, 1961, does not permit the deduction of gratuity liability under s. 40A(7)(b)(i) for the purpose of payment of gratuity, that has become payable during the previous year on account of the Gratuity Act, 1972, came into force w.e.f. September 16, 1972, in view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame into force on 16th September, 1972, and that as a result thereof, the assessee had become liable for the payment of gratuity amounting to Rs. 10,03,910 for the earlier years and Rs. 6,543 for the year of account. The contention of the assessee was that the provision of Rs. 10,03,910 was not made in the year of account as the provision of Rs. 10,20,739 had already been made in the preceding year and that the said deductions should, therefore, be allowed under s. 37(1) of the Act. On appeal, the Commissioner (Appeals) held that the question of admissibility of the aforesaid deductions had to be considered in the light of the provisions of s. 40A(7) of the Act and that the assessee had admittedly not complied with the requirements of that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ratuity, that has become payable during the previous year; (ii) any provision made by the assessee for the previous year relevant to any assessment year commencing on or after the first day of April, 1973, but before the 1st day of April, 1976, to the extent the amount of such provision does not exceed the admissible amount, if the following conditions are fulfilled, namely: (1) the provision is made in accordance with an actuarial valuation of the ascertainable liability of the assessee for payment of gratuity to his employees on their retirement or on termination of their employment for any reason; (2) the assessee creates an approved gratuity fund for the exclusive benefit of his employees under an irrevocable trust, the applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1980 , and was rejected by Division Bench of this court. We see no reason to take a view different from that taken in Misc. Civil Case No. 263 of 1980. Lastly, it was contended that the claim of the assessee was covered by the provisions of sub-cl. (i) of cl. (b) of sub-s. (7) of s. 40A of the Act. It was urged that the claim of the assessee was based on an actuarial valuation of the liability of the assessee for payment of gratuity arising under the provisions of the Payment of Gratuity Act, 1972, which came into force on 16th September, 1972, i.e., in the relevant accounting year of the assessee, which ended on 30th June, 1973. It is true that before the insertion of sub-s. (7) in s. 40A of the Act, several High Courts had held that wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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