COMMISSIONER OF INCOME TAX Vs. CARBORANDUM UNIVERSAL LIMITED

JUDGEMENT

(1.) THE matter had remained pending for more than a decade to answer the questions : "Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the provision for gratuity to employees amounting to Rs. 8,80,848 should be allowed as a deduction even though it related to the earlier years ?" and "whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee is entitled to the deduction of Rs. 1,74,314 being the provision for incremental liability to pay gratuity to the employees in the assessment year 1972-73 ?" and in the meanwhile, the law has suffered a change by the introduction of section 40A of the Income-tax Act, 1961 (hereinafter referred to as "the Act") and the judgments of the courts have settled the law and it is the position till the provisions of section 40A(7) were inserted in the Act.

(2.) THE facts of the case in this behalf are summarised in the statement of the case by the Tribunal in these words :

(3.) IT is not necessary for us to dilate any further as, in the case of CIT v. Andhra Prabha P. Ltd. [1986] 158 ITR 416, the Supreme Court considered a case similar to the one in hand in which the assessee had adopted the mercantile system of accounting and the liability for payment of gratuity had arisen in the case of working journalists under section 5 of the Working Journalists (Conditions of Service and Miscellaneous Provisions) Act, 1955, and in the case of non-working journalists under an agreement dated March 13, 1968, and held (at page 418) :