SHEVEROY ESTATES LIMITED Vs. GOVERNMENT OF TAMIL NADU

JUDGEMENT

(1.) THESE two revision petitions have been filed under Section 54(1) of the Tamil Nadu Agrl. I.T. Act, 1955, to revise the orders of the Agricultural Income-tax Appellate Tribunal, Madras, dated 22nd March, 1975, and 1st July, 1976, respectively for the assessment years 1973-74 and 1974-75. The assessee is a public limited company owning an estate measuring 1,028.65 acres in Sheveroy Hills. In the estate coffee is grown. For the assessment year 1973-74, the assessee filed a return of loss of Rs. 52,289. The assessing authority found some inadmissible deductions having been claimed and after adjusting them the loss disappeared and an income of Rs. 32,82-8 was assessed to tax. In computing the income, the Agrl. ITO had not allowed deduction of Rs. 1,60,233 representing the estimated claim for gratuity. The assessee, in fact, did not make the claim for a deduction of the sum of Rs. 1,60,233 at the time of the filing of the return, nor had it debited the said amount in the profit and loss account or in the profit and loss appropriation account. In the balance-sheet for the year ending on 30th June, 1973, the staff pension and gratuity reserve stood at Rs. 7,125 both at the beginning and at the end of the year. The claim for the deduction of Rs. 1,60,233 came to be made for the first time by a letter addressed to the Agrl. ITO on 15th January, 1974. Along with the letter, a revised return was filed, and as regards the claim for gratuity, the assessee's case was that it had become a statutory liability under the Payment of Gratuity Act, 1972, which came into force on 16th September, 1972, which fell during the previous year ending on 31st March, 1973. The Agrl. ITO did not allow this claim observing that the gratuity would be allowed as a deduction as and when payment was made. On appeal, the Asst. Commr. of Agrl. I.T. confirmed the order of the assessing authority. The assessee took the matter on further appeal to the Tribunal, and the Tribunal, after elaborately considering the matter, came to the conclusion that neither the assessee's method of accounting nor its claim that there was a liability during the year were established and that, therefore, the claim was rightly rejected by the Agrl. ITO and the Asst. Commr. of Agrl. I.T.

(2.) FOR the assessment year 1974-75, the facts are more or less similar. The assessee claimed Rs. 11,368 as provision for gratuity liable to be allowed as deduction. The assessing authority as well as the Asst. Commr. of Agrl. I.T. rejected this claim. The Tribunal, following its earlier order, sustained the disallowance as made by the Agrl. ITO and sustained on appeal.

(3.) IN para. 7 the finding is in the following words :