Commissioner of Income Tax vs Metal Box India Ltd.

Bhagabati Prasad Banerjee, J.—The following question of law has been referred to this Court by the Tribunal u/s 256 of the income tax Act, 1961 (''the Act''): Whether, on the facts and in the circumstances of the case, the Tribunal was justified in deleting the sum of Rs. 8,47,929 disallowed by the ITO on account of provisions for gratuity ?

The reference relates to the assessment year 1971-72, for which the relevant period of account is the period ending on 31-3-1971.

In this case while making the assessment for the year in question, the ITO disallowed the claim of the assessee for deduction of the sum of Rs. 8,47,929 for liability towards gratuity on the basis of actuarial valuation. Thereafter the Commissioner (Appeals) passed an order u/s 263 of the Act, by which he directed the ITO to redecide the issue in the light of his observations made in his order in respect of the assessee''s claim for deduction of Rs. 8,47,622. Being aggrieved by the order of the Commissioner (Appeals) passed u/s 263, the assessee preferred an appeal before the Tribunal and the Tribunal following the decision of this Court in the case of Budge Budge Amalgamated Mills Ltd. [C.R. No. 5552 (W) of 1975, dated 27-2-1976], set aside the order of the Commissioner vide its order in IT Appeal No. 604 (Cal.) of 1975-76, dated 30-3-1978. From the order of the Tribunal, a reference application was made u/s 256. This was rejected by the Tribunal. Thereafter a reference application was made u/s 256 before this Court and this Court in IT Reference No. 157 of 1982 answered the question in favour of the assessee on 26-6-1989. It is not known whether the revenue has taken the matter before the Supreme Court.

In this case, the ITO passed a consequential order giving effect to the order of the Commissioner passed u/s 263 and out of the order passed by the ITO, the matter came up in appeal before the Tribunal and the Tribunal by its order disallowed the sum of Rs. 8,47,929.

This controversy is now concluded by the decision of this Court in the case of Commissioner of Income Tax (Central-I) Vs. Eastern Spinning Mills Ltd., .

Following the aforesaid decision, the question of law referred to this Court is answered in the affirmative and in favour of the assessee. There will be no order as to costs.

Suhas Chandra Sen, J.

I agree.