Commissioner of Income Tax, Andhra Pradesh, Hyderabad vs Warner Hindustan Limited

Punnayya, J.—The Commissioner of Income Tax filed a petition under s. 256(2) of the I.T. Act requesting this court to direct the Income Tax Appellate Tribunal to make a reference to this court questions of Nos. 1 to 3, 9 and 10.

The learned counsel on both sides submitted before us that questions Nos. 1 to 3 are covered by the decision of this court in Income Tax Case No. 64 of 1982, dated December 29, 1982; Commissioner of Income Tax Vs. Warner Hindustan Ltd., . Since it is covered by the aforesaid decision, we decline to refer questions Nos. 1 to 3.

Regarding question No. 9, the devaluation took place on June 6, 1966, and the assessment in question came up for consideration in 1972-73. It is, therefore, clear that four years prior to the assessment order, the machinery was purchased by the assessee at the devaluation rate and its value was ascertained and accepted by the Department. During these four years depreciation is being worked on the basis of ascertained cost. In the circumstances, the question for reference cannot arise now four years after its value is ascertained.

Regarding question No. 10 which deals with the gratuity fund created by the assessee, the Bombay High Court in Tata Iron and Steel Co. Ltd. Vs. D.V. Bapat, Income Tax Officer, Companies Circle I(2), Bombay and Another, following the decision of the Supreme Court in Metal Box Company of India Ltd. Vs. Their Workmen, , held that the amount paid towards an unapproved gratuity fund can be deducted under s. 37 of the I.T. Act, though not under s. 36(1)(v). This is the view which is also taken by the Allahabad High Court in Madho Mahesh Sugar Mills (P.) Ltd. v. CIT [1973] 92 ITR 503 and the Delhi High Court in Delhi Flour Mills Co. Ltd. Vs. Commissioner of Income Tax, . Parliament accepted this view and introduced s. 40A by way of amendment making the payments made to all gratuity funds ineligible for deduction excepting those payments made to approved gratuity funds. During the relevant period, there was also a Board''s circular taking the view that the payments made even to unapproved gratuity funds would be eligible for deduction under s. 37. Hence, we decline to make a reference on this question.

Accordingly, we dismiss the Income Tax case. No costs.