COMMISSIONER OF INCOME TAX Vs. AJIT MILLS LIMITED

JUDGEMENT

(1.) THE Income -tax Appellate Tribunal has referred the following two questions at the instance of the Revenue under section 256(1) of the Income -tax Act, 1961 :

(2.) THE point arising for our consideration as a result of question No. 1 is covered by two decisions of this court and the point arising for our consideration as a result of question No. 2 is covered by a decision of the Supreme Court. The facts leading to those questions, therefore, need not be stated.

(3.) AS regards question No. 2, the Supreme Court in Shree Sajjan Mills Ltd. v. CIT : 1986ECR276(SC) has in terms held that whatever is provided for future use by the assessee out of the gross profits of the year of account for payment of gratuity to employees on their retirement or on the termination of their services would not be allowed as a deduction in the computation of profits and gains of the year of account, unless the respective conditions specified in clause (b) were fulfilled. In this case, it is not in dispute that the requisite conditions have not been fulfilled. Therefore, following the Supreme Court judgment, it will have to be held that the Tribunal was wrong in directing the Income -tax Officer to allow that claim.