COMMISSIONER OF INCOME TAX Vs. SHRENO LIMITED

JUDGEMENT

(1.) AT the instance of the Revenue, the Tribunal has referred the following two questions for our opinion :

(2.) THE aforesaid questions of law arise in the background of the following facts : The assessment of the assessee company pertaining to the asst. year 1973 74 was completed by the ITO as per his order dt. 31st Dec., 1974. In the order, he disallowed the deduction for gratuity provision on the ground that it was hit by the prohibition contained in S. 40A(7)(b) of the IT Act, 1961 ("the Act" for short). However, he observed that the said finding would be rectified under s. 155(13) of the Act on fulfilment in time by the assessee of the conditions laid down in cl. (b) of s. 40A(7) of the Act. Before the AAC, with regard to the gratuity provision of a sum of Rs. 62,660, it was contended that the CIT, Gujarat IV, Ahmedabad, had accorded recognition to the gratuity fund retrospectively w.e.f. 31st Dec., 1975, vide his order dt. 3rd March, 1976. A statement was produced showing the computation for provision made in the books for the calendar years 1972 and 1973, the payments actually made during the calendar years 1973, 1974 and 1975 and the amount payable to the trustees as on 31st Dec., 1975. It was pointed out that 50 per cent of the amount payable as on 31st Dec., 1975, was actually paid to the trustees of the fund on 15th March, 1975, and the remaining 50 per cent was handed over to the trustees on 3rd Feb., 1977. In view of the aforesaid facts, the AAC held that all the conditions laid down in S. 40A(7) of the Act had been duly satisfied and directed the ITO to allow a deduction of Rs. 62,660.

(3.) AT the time of hearing of this reference, nothing was pointed out which would indicate that the conditions laid down in S. 40A(7)(b) were not satisfied. It is to be noted that the decision of the Tribunal in the case of CIT vs. Gaskets & Radiators Pvt. Ltd. was confirmed by this Court in its judgment in (1991) 99 CTR (Guj) 139 : (1991) 192 ITR 509 (Guj).