JOSE T MOOKEN Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) PETITIONER is the accountable person of the Estate of late M.O. Thomakutty, Mooken House, Mission Quarters, Trichur. On the death of M.O. Thomakutty, petitioner filed return in Form ED-IA disclosing the property passed on the death of the deceased. While determining the quantum of goodwill the Asstt. CED rejected the claim of deduction in respect of gratuity liability. In the appeal filed by the petitioner the Appellate CED, Madras, held that provision for gratuity is a statutory liability and, therefore, is an allowable deduction while computing the goodwill. But in appeal the Tribunal, Cochin Bench, held that provision for gratuity being a contingent liability cannot be deducted while computing the value of goodwill. Aggrieved by the order of the Tribunal, petitioner filed a petition under s. 64(i) of the ED Act, 1953, before it seeking reference of the following questions of law :

(2.) COUNSEL for the petitioner relying on CWT and Ors. vs. S. Ram and Ors. (1983) 37 CTR (Mad) 158 : (1984) 147 ITR 278 (Mad) contended that on identical situation the Madras High Court has held that provision for gratuity is liable to be deducted from the value of the assets of the company while determining the value of goodwill. He also relied on a later decision of the Supreme Court in CIT vs. Canning Mitra Phoenix P. Ltd. (1987) 59 CTR (SC) 281 : (1986) 162 ITR 836 (SC). In the above decision the Supreme Court held that the Tribunal was right in affirming the order of the AAC allowing the claim for deduction in respect of the liability towards gratuity.