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1 - 10 of 12 (0.32 seconds)M/S. Dalmia Dadri Cement Co. Ltd vs The Commissioner Of Income-Tax(And ... on 28 April, 1958
26. In the circumstances, considering the body of case law that has been referred to us, the liability under the gratuity scheme must be considered to arise as soon as the scheme is operated. The calculation of the exact liability can be made earlier or later. We note that in the case of Dalmia Dadri Cement Ltd. v. CIT [1980] 126 ITR 851 (Delhi), it was held by this court that the actual amount to be allowed under the scheme should be verified. In the present case, the actual amount has been worked out on an actuarial valuation. Even if this valuation was not available the amount would have to be determined on a proper scientific basis by the ITO, but when the calculation is available, the same, although made later, is the basis for allowing the deduction in the year in question.
Commissioner Of Income-Tax vs Sri Ranilakshmi Ginning, Spinning & ... on 14 November, 1979
7. Reference was made to CIT v. Sri Ranilakshmi Ginning, Spinning & Weaving Mills (P.) Ltd. [1981] 32 ITR 360 (Mad), where there was a dispute regarding a gratuity scheme. An agreement was made on September 7, 1971, between the management and labour by which the scheme was to be implemented with retrospective effect from January 1, 1969. The actuarial valuation was made on December 31, 1970, and the amount was debited in the accounts. It was held that the amount could be allowed as a deduction on the real income principle.
Commissioner Of Income-Tax, Tamil ... vs Sitalakshmi Mills Ltd. on 6 December, 1982
9. Another case referred to, which was also decided by the Madras High Court, was CIT v. Sitalakshmi Mills Ltd, [1983] 141 ITR 415, which was a case of gratuity. It was there observed that where an employer had a gratuity scheme, the employer should obtain a scientific actuarial calculation under which the present discounted value of the gratuity liability is ascertained and then the employer can charge his profit and loss account with the incremental value of the year and make a provision for that amount. It was also observed that a provision for gratuity although charged against current profits, is not an item of expenditure strictly so called, but the deduction is warranted by sound principles of commercial accountancy and such deduction is not prohibited by any of the express provisions relating to business deduction which can be allowed. The principle on which the claim for gratuity could be allowed be deducted was explained.
Vazir Sultan Tobacco Co. Ltd. Etc. Etc vs Commlssioner Of Income-Tax Andhra ... on 25 September, 1981
In the above decision of the Madras High Court, reference was made to the case of Vazir Sultan Tobacco Co. Ltd. v. CIT , where there are valuable observations regarding gratuity. Although that was a surtax case, the question does not appear to be very different under the Income-tax Act. It was help (p. 574 of 132 ITR) :
Tea Estate India (P) Ltd vs Commissioner Of Income-Tax on 26 April, 1976
13. Another judgment which was referred to as a parallel case was the decision in noneuch Tea Estate Ltd. v. CIT [1975] 98 ITR 189, where the Supreme Court was dealing with the reappointment of a managing agent. The Central Government had approved the same in September, 1970, with effect from April 1, 1956, and the question was whether the liability accrued only after the approval. It was there held that the liability did not arise during the accounting period starting from April 1, 1956, in view of the prohibition to appoint or reappoint a managing agent without agent without the approval of the Central Government, and hence, the amount could be deductible in computing the profits for the period ended on June 30, 1958, i.e., though the remuneration related to an earlier period, it was deductible for the late period because the liability arose only after the Central Government gave its approval.
Delhi Flour Mills Co. Ltd. vs Commissioner Of Income-Tax on 8 February, 1974
14. Reference was made to this High Court's decision in Delhi Flour Mills Co. Ltd. v. CIT [1974] 95 ITR 151, which was a gratuity case. The facts of the case were that there was a settlement between the assessed and its employees on February 14, 1956, providing for gratuity to be paid in certain circumstances. A sum of Rs. 55,712 and Rs. 12,001 was transferred to the Employees' Gratuity Fund as payable for the assessment year 1957-58 and 1958-59. Out of this sum, the ITO allowed Rs. 3,078 in the first year and Rs. 425 in the second year and disallowed the balance. The disallowance was confirmed by the AAC as well as the Tribunal. Referring to a number of decided case, the court came to the conclusion that the amount actually transferred to the gratuity fund by the assessed had to be allowed as a deduction. The contention before the court urged on behalf of the Revenue was that the gratuity was not payable unless there was death or voluntary retirement of an employee and hence liability had not accrued. The court came to the conclusion that the amount was an expenditure which could properly be appropriated at an earlier stage. The court appears to have adopted the point that though the gratuity was payable much later, it accrued during each year of service and, therefore, on the mercantile system of accounting, a prudent businessman would appropriate the expenditure to the right year.
E. D. Sassoon And Company Ltd vs The Commissioner Of Income-Tax,Bombay ... on 14 May, 1954
15. In another case of the Delhi High Court, Escorts (Agents) (P.) Ltd. v. CIT [1971] 80 ITR 61, the deduction was not allowed on account of the fact that it was not shown as a debit in the books of the assessed. It was held that the deduction could only be allowed if it had been valued or quantified provisionally and actually paid or entered as a debit according to the system of accounts maintained by the assessed.
Commissioner Of Income-Tax vs High Land Produce Co. Ltd. on 8 July, 1975
In a case decided by the Kerala High Court, CIT v. High Land Produce Co. Ltd. [1976] 102 ITR 803, it was held that the liability towards gratuity was deductible but the liability had to be verified.
Messrs. Calcutta Company Ltd vs The Commissioner Of Income-Tax,West ... on 12 May, 1959
5. The learned counsel for the assessed referred to the Supreme Court's decision in Calcutta Co. Ltd. v. CIT [1959] 37 ITR 1, to submit that it was there held that in the mercantile system of accounting, any liability to be discharged at a future date was an allowable expenditure. It was urged that once the gratuity scheme came into operation, there was an accrued liability which should be determined and debited to the period in question. Hence, the liability under the gratuity scheme should not have been disallowed.