BALASUBRAMANIA FOUNDRY Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) AT the instance of the assessee, the Appellate Tribunal has stated a case and referred the following question of law for our opinion under section 256(1) of the Income-tax Act, 1961 :

(2.) THE assessee is a registered firm and during the course of assessment proceedings for the assessment year 1975-76, the assessee had claimed deduction of the gratuity of a sum of Rs. 3,14,614 which included actual payment as well as the provision made towards the gratuity. THE Income-tax Officer in the order of assessment passed for the assessment year 1975-76 allowed the deduction for the gratuity actually paid but disallowed the sum of Rs. 2,98,433 as it was not an actual payment to the employee, but it was only a provision towards a contingent liability.