Law: Income Tax Act, 1922

Section: 10(2)

Income-tax act (XI of 1922)---S.10 (2)--Provision of gratuity by assessee under West Pakistan Industrial and Commercial Employment (Standing Orders) Ordinance (VI of 1968), being a trading liability and made on ground of commercial expediency, is allowable. 1985 P T D 413 rel. JUDGMENT SALEEM AKHTAR, J.--This reference relates to assessment year 197273 and 1973-74. For the first time in the year 1971 the applicant assessee debited the accounts of its employees with certain sum and created a provision for gratuity. This step was taken by the applicant in view of the provisions of West Pakistan (Standing Orders) Ordinance, 1968 for benefit of the worker and those who resign from service; or, die. Or whose services are terminated. The Income Tax Officer did not grant allowance for the account of gratuity but in appeal it was allowed by the Appellate Assistant Commissioner. The department then filed an appeal and the order of the Appellant Assistant Commissioner was set aside. The applicant filed an application under section 66 (1) and the following question has been referred:- "Whether, on the facts and in the circumstances of the case the Tribunal was right in dis-allowing the claim for provision for gratuity"? We have heard Mr. Iqbal Naeem Pasha and Mr. Nasrullah Awan, the learned counsel for the parties. Mr. Iqbal Naeem Pasha has referred to Commissioner of Income Tax Central Zone, Karachi v. Pakistan Security Printing Corporation Ltd. 1985 P T D 413. In this judgment although question was differently worded with reference to, a certain notification, the crux of the matter was…

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