Commissioner of Income Tax vs Central Cottage Industries Association

Arijit Pasayat, C.J.

All these references involve a common question. Pursuant to directions given by this court in IT Case Nos. 116 to 118 of 1977, the Tribunal, Delhi Bench ''D'' has referred following question u/s 256(2) of the Income Tax Act, 1961 (hereinafter referred to as ''the Act''), for opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that the assessed was entitled to a deduction on account of gratuity liability ?''

We have heard the learned counsel for the revenue. None appears for the assessed in spite of notice.

We need not go into the factual aspects in detail as we find that the Tribunal has remitted the matter back to the Appellate Assistant Commissioner for reconsideration of the matter with the following observations :

"On a consideration of the submissions before us, we are of the view that the assessed was entitled to a deduction on account of gratuity liability as the liability arose or accrued in these two years, the method of accounting being mercantile. The only dispute is regarding the quantum. In support of the claims an actuary''s report was put up. This could not be rejected in such a summary manner as has been done by the Appellate Assistant Commissioner for the assessment year 1967-68. The actuary''s report is prima facie acceptable evidence and the Appellate Assistant Commissioner could reject it only if he finds it defective in any way. The matter is, Therefore, restored to the file of the Appellate Assistant Commissioner for ascertaining the quantum of the liability for each of the three years. He may examine the actuary, if he finds it necessary in this regard. (There was no dispute on the following position/ factual page 47 of assessor�s paper book), placed before us on this issue :

Assessment Year

Accounting Year

Provision of gratuity as per profit & loss a/c

Gratuity payable as per actuary''s certificate

1967-68

30-6-1966

19,157

26,173

1968-69

30-6-1967

32,485

35,180

1969-70

30-6-1968

2,20,877

1,58,904

The Appellate Assistant Commissioner should examine the claims in the light of the above position."

In view of aforesaid position, we feel that no question of law arises out of the order of the Tribunal which needs to be adjudicated. We, accordingly, decline to answer the question.

The reference stands disposed of.