COMMISSIONER OF INCOME TAX Vs. PULLICAR MILLS LIMITED

JUDGEMENT

(1.) THE question referred to us at the instance of the Revenue is as to whether the Tribunal was right in holding that the assessee's claim for deduction of a total sum of Rs. 61,228 on account of gratuity to the employees for the assessment year 1974-75 was acceptable.

(2.) WE have been taken through the order of the Tribunal. The Tribunal has proceeded on a misconception that the actuarial valuation on the basis of which liability for paying gratuity was allowed for the earlier assessment year ended on December 31, 1972 was Rs. 6,82,088, whereas, the amount actually allowed was Rs. 7,85,730. The actuarial valuation for the year ended December 31, 1973, was Rs. 7,91,992. Incremental liability being the difference between Rs. 7,91,992 and Rs. 7,85,730 being the sum of Rs. 6,264, that sum had been allowed by the Assessing Officer. The Tribunal has chosen to deduct from the sum of Rs. 7,91,992 a sum of Rs. 6,82,088 and, thereby, committed an error in thinking that the incremental liability would be of the order of Rs. 1,09,905 of which the amount paid during the year Rs. 54,964 formed part. The Tribunal has not given any reason for ignoring the figure of Rs. 7,85,730 which was indisputed by the amount allowed for the earlier assessment year as a liability based on the actuarial valuation. The finding of the Tribunal is flawed.