Law:

Section:

Section 145 of the Income-tax Act, 1961 - Method of accounting - Mercantile system - Assessment year 1975-76 - Assessee-company was following a hybrid system of accounting in earlier years - It was following mercantile system of accounting in all matters except casual leave payment to its employees which was on cash basis - For assessment year in question assessee claimed deduction on account of earned leave payment on cash basis as well as on provision basis in respect of casual leave payment not made during year in question - Whether accounting system followed by assessee was bona fide and therefore assessee was not entitled to deduction in respect of provision made by it for payment of casual leave - Held, no Section 40A(7) of the Income-tax Act, 1961 - Business disallowance - Gratuity - Assessment year 1974-75 - Whether gratuity calculated on basis of actuarial valuation, when no provision for gratuity was made in books of assessee, was an allowable deduction - Held, no FACTS Under the First Industrial Tribunal Award 1958, the assessee-company was under the statutory obligation to make the payment to its employees by way of casual leave payment. It was an admitted position that in the years prior to the assessment year 1975-76, the assessee was following a hybrid system of accounting. It was following the mercantile system of accounting in all matters except the aforesaid casual leave payment which was on cash basis. For the aforesaid assessment year the assessee claimed deductions on account of (1) the aforesaid earned leave payment made by it to its employees during the year in respect of the relevant accounting year; and (2) the casual leave payment provided in its books though not paid in the year in question. The assessee also claimed deduction being provision for gratuity on the basis of actuarial valuation, though no such provision was made in the books. The ITO allowed the assessee's claim in respect of the casual leave payment but disallowed the provision for its payment. The ITO also disallowed the assessee's claim made for payment of gratuity on the ground that neither there was any debit for this change in the books of account for this year nor…

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