JOSE T MOOKEN Vs. CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) THIS income-tax reference case is coming before us in view of the direction issued by this court in O. P. No. 11652 of 1991, dated August 10, 1994. The applicant before us is the accountable person of the estate of the late M. O. Thomakutty, Mooken House, Mission Quarters, Trichur. On his death, the appellant filed a return disclosing the property passed on the death of the deceased. While determining the quantum of goodwill, the Assistant Controller of Estate Duty rejected the claim for reduction in respect of the gratuity liability. In appeal, the Appellate Controller of Estate Duty, Madras, held that the provision for gratuity is a statutory liability and therefore, it is an allowable deduction while computing the goodwill. But in appeal the Income-tax Appellate Tribunal held that the provision for gratuity being a contingent liability cannot be deducted while computing the value of the goodwill. The Tribunal disallowed the prayer for reference and the reference case is before us as a result of the compelling reference.

(2.) THE questions referred to us for decision are as follows :

(3.) COUNSEL for the applicant brings to our notice the decision of the Madras High Court in CWT v. S. Ram [1984] 147 ITR 278. The above decision was relied upon by the Appellate Controller. What is laid down in the aforesaid decision is this (headnote) :