9911796707
TMI Blog1981 (7) TMI 29X X X X Extracts X X X X X X X X Extracts X X X X ..... t year involved is 1972-73. The assessee made a provision for the payment of gratuity to its employees of Rs. 2,95,494 under the provisions of the West Bengal Payment of Compulsory Gratuity Act, 1971, which came into force during the year under consideration and claimed the same as a deduction as business expenses. The ITO did not accept the assessee's claim on the ground that the assessee had failed to produce any actuarial computation of its liability for the payment of gratuity. He, however, observed that the assessee's claim would be reconsidered on the submission of an actuarial certificate. In appeal, the AAC, however, observed that the assessee had not created any fund in respect of the gratuity under s. 36(v) and the assessee's cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of the actuarial certificate before the Tribunal. The learned departmental representative supported the order of the AAC. The Tribunal considered the submissions of the learned representatives of the parties and held as follows : " The West Bengal Payment of Compulsory Gratuity Act, 1971, came into force during the year under consideration. The provision for payment of gratuity under the Payment of Gratuity Act, 1971, has been held to be an allowable expenditure if ascertained on actuarial principles in the case of Tata Iron Steel Co. Ltd. [1975] 101 ITR 292 (Bom) and the liability has been held to be an existing liability. The provisions of the West Bengal Payment of Compulsory Gratuity Act are similar to those of the Payment of Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1981] 130 ITR 174 (Cal), where this court applied s. 40A(7) of the I.T. Act in respect of the year subsequent to the year in which the provision came into effect. That decision in the case of Peoples Engineering Motor Works Ltd. was concerned with the assessment year 1973-74 as mentioned hereinbefore. The present assessment year is the assessment year 1972-73 and the West Bengal Payment of Compulsory Gratuity Act came into operation during the said assessment year, that is to say, 1972-73. We have discussed the effect of the coming into operation of a statutory liability created under the said Act in the decision of on, v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 (Cal). If those principles are attracted, as we find in the facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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