Law:

Section:

Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessee-company's accounting year ended on 31-7-1971 corresponding to assessment year 1972-73 - Daring the said year West Bengal Employees' Payment of Compulsory Gratuity Ordinance. 1971, was promulgated and came into force on 14-6-1971 and same was followed by West Bengal Employees' Payment of Compulsory Gratuity Act, 1971 - Assessee in pursuance of said statutes claimed deduction on account of a provision made for gratuity to its employee on basis of actuarial calculation - Whether claim of assessee was to be accepted - Held, yes Facts For the assessment year i972-73, the relevant accounting year ending on 31-7-1971, the assessee-company claimed deduction on account of a provision made for payment of gratuity to its employees on the basis of actuarial calculation supported by a certificate of an actuary. During the said year, the West Bengal Employees' Payment of Compulsory Gratuity Ordinance, 1971, was promulgated and came into force on 14-6-1971, which was later on replaced by the West Bengal Employees' Payment of Compulsory Gratuity Act. The ITO disallowed the claim of the assessee for deduction on account of the aforesaid provision for gratuity. On appeal, the AAC held that the assessee was entitled to deduction of the said amount on the basis of the said Act as ascertained on actuarial basis. On appeal by the revenue, the Tribunal also upheld the AAC's order. On reference: Held In the instant case, the assessment year involved was 1972-73, the relevant accounting year ending on 31-7-1971. In the said accounting year, the aforesaid Ordinance came into effect followed by the above mentioned 1971 Act. The assessee was, therefore liable to pay gratuity to its employees under the said statutes for the year 1972-73. Such liability being payable in future, had been computed on actuarial principles and the assessee claimed deduction of the amount provided for. Section 40A(7) did not come into force in the relevant assessment year and the said section could not be a bar to the assessee from making a claim for such deduction. Thus, prior to the coming into operation of section…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492