Sambhar Salts Ltd. vs Commissioner of Income Tax

S.C. Agrawal, J.—This application has been moved u/s 256(2) of the income tax Act, 1961 (''the Act'') whereby the petitioner has prayed that the Tribunal may be directed to draw a statement of the case and refer the questions of law arising from the order of the Tribunal dated 27-7-1981 in IT Appeal No. 610 (Jp.) of 1978-79. We have heard Shri Ranka, the learned counsel for the petitioner and Shri Surolia, the learned counsel for the non-petitioner.

During the assessment year 1973-74, the petitioner had claimed deduction of a sum of Rs. 853 towards expenses incurred in the Circuit House maintained by the petitioner which amount was disallowed by the ITO. The petitioner further claimed a deduction of Rs. 32,579 on account of provision for gratuity u/s 40A(7) (b) (ii) of the Act, and in pursuance of section 37(1) of the Act. But the said claim of the petitioner was also disallowed. The petitioner claimed a deduction of a sum of Rs. 2,072 for the bonus payable to the employees, but the said deduction was not allowed by the ITO. The petitioner further claimed a sum of Rs. 65,580 on account of provision for payment of leave salary and pension to the employees of the petitioner, out of which the ITO allowed a deduction of Rs. 5,252 and disallowed the claim of Rs. 60,355 was upheld by the Commissioner as well as by the Tribunal.

We have perused the orders passed by the ITO, the Commissioner and the Tribunal as well as the order passed by the Tribunal on the application filed by the petitioner u/s 256(1). In our view, the following question of law arise from the order dated 27-7-1981 passed by the Tribunal:

Whether, the assessee-company is entitled to a deduction of Rs. 853 on account of expenditure incurred by it in connection with the Circuit House u/s 37(4) of the Indian-income tax Act?

Whether, the income tax Appellate Tribunal was right in law in disallowing a sum of Rs. 23,579 on account of gratuity u/s 40A of the income tax Act?

Whether the assessee-company is not entitled to claim deduction of Rs. 2,072 as payment of bonus, which was deducted out of salary of the employees but could not be paid as the employee was not available at the relevant period?

Whether, under the provisions of section 37(i)) of the income tax Act, the assessee-company was not entitled to the deduction of the amount of Rs. 60,355 on account of provision for pension of its employees.

The application is, therefore, allowed and the Tribunal is directed to state the case and refer the questions mentioned above for the opinion of this Court.