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Commissioner Of Income-Tax, Madras vs Indian Metal And Metallurgical ... on 12 September, 1962
cites
Section 66 in The Income Tax Act, 1961 [Entire Act]
The Indian Molasses Co. (Private) Ltd vs The Commissioner Of Income-Tax, ... on 5 May, 1959
Mr. S. Ranganathan, learned counsel for the department, is well-founded in his submission that there is no expenditure at all incurred by the assessee by the mere process of putting the amount under the "gratuity reserve fund". The decision of the Supreme Court in Indian Molasses Co. v. Commissioner of Income-tax supports this contention. At page 78, Hidayatullah J. observes :
The Industrial Disputes Act, 1947
Section 25FFF in The Industrial Disputes Act, 1947 [Entire Act]
London Investment And Mortgage Co. Ltd. vs Inland Revenue Commissioners. London ... on 6 December, 1956
Reserves for anticipated losses, contingent liabilities and expenses not actually incurred will be disallowed : Collins v. Commissioners of Inland Revenue; Whimster & Co. v. Commissioners of Inland Revenue; Young v. Commissioners of Inland Revenue Naval Colliery Co. v. Commissioners of Inland Revenue; Ford & Co. v. Commissioners of Inland Revenue.
Rao Bahadur M.S.P. Senthikumara Nadar ... vs Commissioner Of Income-Tax on 1 February, 1957
It is now settled law what a claim for deduction in respect of an anticipated, uncertain or contingent liability is not permissible. The question has been considered fully by this court in Senthikumara Nadar and Sons v. Commissioner of Income-tax. The principle laid down in that case is that only an ascertained liability justifies an entry in the assessees accounts maintained on the mercantile basis and that deductions are not permissible for anticipated losses or contingent liabilities. The following passage extracted from Simons Income Tax II edition, vol. II, page 203, paragraph 230, has been quoted with approval as governing the interpretation of the Indian enactment :
Firestone Tyre And Rubber Co. Ltd vs Lewellin (Inspector Of Taxes) on 13 February, 1956
"In computing the profits of a trade it is the normal accountancy practice to allow as an expense any sum in respect of liabilities which have accrued over the accounting period, and to make a deduction of such sums from the profits. Following the decision in Peter merchant Ltd. v. Stedeford (Inspector of Taxes), however, it appears that the nature of liabilities which may be deducted on business and accountancy principles does not accord with the nature of liabilities deductible for income-tax purposes. For income-tax purposes it was held that a distinction must be drawn between an actual, i.e., legal liability, which is deductible, and a liability which is future or contingent and for which no deduction can be made."
State 0F Bombay & Others vs The Hospital Mazdoor Sabha & Others on 29 January, 1960
In State of Bombay v. Hospital Mazdoor Sabha, the Supreme Court dealing with this provision observes as follows :
Mckenzies Ltd., Madras vs The Presiding Officer, Labour Court, ... on 9 December, 1959
Indeed, the condition of the payment of retrenchment compensation is an essential pre-requisite, which, if not complied with, would render the retrenchment itself illegal and improper : see McKenzies Ltd. v. Labour court, Madras.
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