1982 (7) TMI 58

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..... I of the Second Schedule to the Companies (Profits) Surtax Act, 1964 ? " The relevant facts can be very shortly stated. The assessment year with which we are concerned is the assessment year 1964-65. The reference relates to the computation of the capital of the assessee-company for surtax purposes in terms of r. 1 of the Second Schedule to the Companies (Profits) Surtax Act. The capital required to be computed is as on 1st January, 1963, being the 1st day of the relevant previous year, namely, 1st January, 1963, to 31st December, 1963. Out of the profits of the assessee for the year ended 31st December, 1962, the directors had appropriated on 10th May, 1963, a sum of Rs. 1,57,967 by way of transfer to the staff gratuity reserve. The ass .....

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..... ed by death, incapacity, retirement or resignation-an event (cessation of employment) certain to happen in the service career of every employee; moreover, the amount of gratuity payable is usually dependent on the employee's wages at the time of determination of his employment and the number of years of service put in by him and the liability accrues and enhances with the completion of every year of service; but the company can work out on an actuarial valuation its estimated liability (that is, discounted present value of the liability under the scheme on a scientific basis) and make a provision for such liability not all at once but spread over a number of years. It is clear that if by adopting such scientific method any appropriation is .....

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..... n made available, in the interests of justice, the Supreme Court remanded the matter to the taxing authority through the Tribunal to decide whether the concerned amount set apart and transferred to gratuity reserve by the assessee-company was either provision or a reserve, and if the latter, to what extent. It was further observed that this question would be decided by the taxing authority after giving an opportunity to the assessee-company to place additional relevant material before it. On the basis of the observations to the aforesaid effect made by the Supreme Court, it was submitted by Mr. Mehta that in the present case also we should remand the matter with directions similar to those given by the Supreme Court. We are afraid, in view .....

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