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Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of - Assessment year 1972-73 - Whether provision for gratuity liability of employees based on service for earlier years under West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, which came into force with effect from 14-6-1971, was an allowable deduction in working out assessee's business income - Held, yes FACTS The Tribunal held that the provision for gratuity liability of the employees based on the service for the earlier years under the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, which came into force with effect from 14-6-1971, was an allowable deduction in working out assessee's business income. On reference: HELD In view of the decision in the case of CIT v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 (Cal.)the Tribunal was justified in holding that the provision for gratuity liability of the employees based on the service for the earlier years under the West Bengal Employees' Payment of Compulsory Gratuity Act, 1971, which came into force with effect from 14-6-1971, was an allowable deduction in working out assessee's business income. Note: The case was decided in favour of the assessee. CASE REVIEW CIT v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 (Cal.) followed & relied upon. CASES REFERRED TO CIT v. Eastern Spinning Mills Ltd. [1980] 126 ITR 686 (Cal.) .M.S. Mukherjee for the Applicant. A.K. Dey for the Respondent. JUDGMENT Ajit K. Sengupta, J.-At the instance of the Commissioner of Income-tax, Central-I, Calcutta, the following question of law for the…

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