9911796707
TMI Blog1981 (11) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... be allowed as a deduction in computing the total income of the assessee for the assessment year 1971-72 ? " The facts bearing on this question may be briefly stated. The assessee-firm was carrying on business in the manufacture and sale of yarn. It had a number of workers on its pay-roll. There was a settlement between the workers and the assessee under which a gratuity scheme was to be formulated and then implemented. In accordance with that gratuity scheme, the assessee made a provision of Rs. 5,80,892 in its account year ended July 31, 1970. This amount was claimed as an admissible deduction in the computation of the assessee's profits for the purpose of assessment to income-tax for the year 1971-72. The ITO held that only some part of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability remains only contingent during the year. Adopting the principle of the Supreme Court decision, we answer the question of law in the affirmative and against the Department. The second question of law, which calls for our decision in this reference is as follows: " Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provision for gratuity is an admissible business expenditure of the assessee under section 37 of the Income-tax Act, 1961, for the assessment year 1971-72 ? " This question arises on the view held by the Department that unless a liability towards gratuity is brought within the four corners of the provisions of s. 36(1)(v) of the I.T. Act 1961, no deductio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Department made an oral application for leave to appeal to the Supreme Court in this case. So far as the first question is concerned, we do not think the Department is entitled to ask for a certificate of fitness to appeal to the Supreme Court, considering that we have merely followed, to the letter, the decision of the Supreme Court on the subject in Vazir Sultan's case [1981] 132 ITR 559 (SC). As for the second question, the learned counsel pointed out that the decision in CIT v. Andhra Prabha P. Ltd. [1980] 123 ITR 760 (Mad), which we have followed, was the subject-matter of an application for leave to appeal to the Supreme Court and this court had granted a certificate as prayed for, in S.C.P.No. 22 of 1981 by order dated March 13, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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