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Jiwajirao Sugar Co. Ltd. Vs. Commissioner of Income-tax - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtMadhya Pradesh High Court
Decided On
Case NumberMiscellaneous Civil Case No. 19 of 1979
Judge
Reported in[1983]144ITR729(MP)
ActsIncome Tax Act, 1961 - Sections 40A(7); Payment of Gratuity Act, 1972; Finance Act, 1975 - Sections 40A(7)
AppellantJiwajirao Sugar Co. Ltd.
RespondentCommissioner of Income-tax
Appellant AdvocateG.M. Chaphekar, Adv.
Respondent AdvocateR.C. Mukati, Adv.
Excerpt:
- indian penal code, 1890.section 306 :[dalveer bhandari & harjit singh bedi,jj] abetment of suicide deceased, a married woman, committed suicide - allegation of abetment of suicide against appellant husband and in-laws - ocular evidence was sketchy - dying declaration recorded by tahsildar completely exonerated all accused in-laws of any misconduct dispelling any suspicion as to their involvement - letter of threat allegedly written by appellant to father of victim was concocted piece of evidence held, though presumption against appellant can be raised, it cannot be said that onus shifts exclusively and heavily on him to prove his innocence. conviction of appellant is liable to be set aside. .....facts giving rise to this reference briefly are as follows :the assessee is a company and the assessment year in question is 1973-74. corresponding accounting period ended on 30th june, 1972.3. the accounts of the assessee are kept on mercantile basis. for the assessment year in question, the assessee claimed deduction of rs. 10,03,920, being the provision for gratuity. the ito, however, held that the provisions of section 40a(7) of the act were attracted and as the conditions prescribed by that provision were not fulfilled, the claim for deduction could not be allowed. aggrieved by the order passed by the ito, the assessee preferred an appeal before the aac. the aac held that as the conditions prescribed by section 40a(7) of the act were admittedly not complied with, the claim for.....
Judgment:

Sohani, J.

1. By this reference under Section 256(1) of the I.T. Act, 1961 (hereinafter referred to as 'the Act'), the Income-tax Appellate Tribunal, Indore Bench, Indore, has referred the following questions of law to this court for its opinion :

'(1) Whether, on the facts and in the circumstances of the case, the Tribunal in law was justified in disallowing the assessee-company's claim for gratuity amounting to Rs. 10,03,920 ?

(2) Whether the assessee was at all liable for payment of interest under Section 215 of the Income-tax Act, 1961 ?'

2. The material facts giving rise to this reference briefly are as follows :

The assessee is a company and the assessment year in question is 1973-74. Corresponding accounting period ended on 30th June, 1972.

3. The accounts of the assessee are kept on mercantile basis. For the assessment year in question, the assessee claimed deduction of Rs. 10,03,920, being the provision for gratuity. The ITO, however, held that the provisions of Section 40A(7) of the Act were attracted and as the conditions prescribed by that provision were not fulfilled, the claim for deduction could not be allowed. Aggrieved by the order passed by the ITO, the assessee preferred an appeal before the AAC. The AAC held that as the conditions prescribed by Section 40A(7) of the Act were admittedly not complied with, the claim for deduction of Rs. 10,03,920 was rightly disallowed by the ITO. The objection raised by the assessee to the charging of interest under Section 215 of the Act was not entertained on the ground that no appeal was competent in that behalf. In this view of the matter, the AAC dismissed the appeal. Aggrieved by the order passed by the AAC, the assessee preferred an appeal before the Tribunal. The Tribunal approved the view of the AAC as regards the applicability of the provisions of Section 40A(7) of the Act. Regarding interest, the Tribunal held that interest was chargeable under the provisions of Section 215 of the Act. In this view of the matter, the Tribunal dismissed the appeal. Hence, at the instance of the assessee, the aforesaid questions of law have been referred to this court for its opinion by the Tribunal.

4. Shri Chaphekar, the learned counsel for the assessee, contended that the assessee's claim for deduction on account of provision for gratuity arose on account of liability of the assessee arising under the provisions of the Payment of Gratuity Act, 1972, and that it was made on the basis of an actuarial valuation, which comprised a sum of Rs. 9,05,907 on account of provision for gratuity up to June 30, 1971, and a sum of Rs. 98,013 on account of gratuity payable up to June 30, 1972, and that the provisionsof Section 40A(7) of the Act were not attracted by virtue of Clause (b)(i) of Section 40A(7) of the Act. It was urged that in so far as the provision for gratuity up to June 30, 1971, was concerned, Section 40A(7) of the Act was in terms not applicable. The learned counsel, therefore, contended that the Tribunal erred in disallowing the entire claim of the assessee on account of provision for gratuity.

5. Now, Sub-section (7) of Section 40A of the Act was inserted by the Finance Act, 1975, with retrospective effect from the assessment year 1973-74. As the claim for deduction on account of provision for gratuity was made by the assessee in the assessment year 1973-74, the Tribunal was right in holding that the provisions of Section 40A(7) of the Act were attracted. The contention that the liability of the assessee to make provision for gratuity arose in the assessment year 1973-74 on account of the provisions of the Payment of Gratuity Act, 1972, cannot be upheld because that Act came into force on 16th September, 1972, that is, subsequent to 30th June, 1972, when the previous year of the assessee in respect of the assessment year 1973-74 had ended. It could not, therefore, be held in the case of the assessee that the liability of the assessee, if any, under the provisions of the Payment of Gratuity Act, 1972, had arisen in the assessment year 1973-74 or that any provision was made by the assessee for the purpose of payment of any gratuity, which had become payable during the relevant previous year. In our opinion, therefore, the Tribunal was justified in disallowing the claim of the assessee on account of provision for gratuity as the conditions prescribed by that provision were not fulfilled and as the provisions of Clause (b)(i) of Section 40A(7) of the Act were not attracted.

6. As regards the second question referred to this court by the Tribunal, the learned counsel for the assessee was unable to point out that the view taken by the Tribunal in that behalf was erroneous.

7. For all these reasons, our answers to the questions referred to this court are in the affirmative and against the assessee. In the circumstances of the case, parties shall bear their own costs of this reference.


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