COMMISSIONER OF INCOME TAX Vs. DOONGAJI AND CO

JUDGEMENT

(1.) REVENUE has filed this application under S. 256(2) of IT Act for calling the statement of case from Tribunal, Indore, on the following questions :

(2.) THE assessee is engaged in manufacturing of liquor. It was granted manufacturing licence from 1st April, 1975, to 31st March, 1979. Prior to the expiry of its licence period it issued a notice of retrenchment to its employees on 1st Dec., 1977, and informed them that their employment term was coming to an end by 31st March, 1978, and that, they could claim the retrenchment compensation by 30th March, 1978. It accordingly claimed retrenchment compensation of Rs. 48,941 for asst. yr. 1978-79. But meanwhile assessee's licence was extended on 28th March, 1978, upto 31st March, 1981, and resultantly its employees continued in employment after 31st March, 1978. Noticing this AO disallowed its claim. In appeal CIT(A) concurred with AO by placing reliance on a Supreme Court judgment in CIT vs. Gemini Cashew Sales Corpn. (1967) 65 ITR 643 (SC) : TC 16R.1500. Revenue took appeal to Tribunal and succeeded. The Tribunal drew support from Punjab High Court judgment in Ambala Cantt. Electric Supply Corpn. Ltd. vs. CIT (1981) 25 CTR (P&H) 361 : (1981) 133 ITR 343 (P&H) : TC 16R.1520 held that such retrenchment notices served on the employees created a liability for the assessee and allowed the claim.

(3.) THE Revenue felt dissatisfied and asked for a reference on the stated questions of law extracted hereinabove, but Tribunal rejected the application. That is how we are seized of the present application under S. 256(2) of IT Act.