https://www.taxtmi.com/caselaws?id=29285 A payment made by a transferor-company to the transferee-company for employees taken over with continuity of service was not deductible as gratuity. Because the employees accepted fresh employment with the transferee-company, no enforceable gratuity claim accrued against the transferor on the date of transfer; the payment was only a voluntary contribution toward a possible future liability. The principle applied was that gratuity is deductible only where it is a real business liability paid in satisfaction of an enforceable employee claim, not where funds are provided to another entity to meet its future obligation. Authorities on actuarial valuation of accrued gratuity liabilities were distinguished, and the deduction was denied. en-us Thu, 30 Apr 1981 00:00:00 +0530 Fri, 12 Mar 2010 10:07:11 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=29285 A payment made by a transferor-company to the transferee-company for employees taken over with continuity of service was not deductible as gratuity. Because the employees accepted fresh employment with the transferee-company, no enforceable gratuity claim accrued against the transferor on the date of transfer; the payment was only a voluntary contribution toward a possible future liability. The principle applied was that gratuity is deductible only where it is a real business liability paid in satisfaction of an enforceable employee claim, not where funds are provided to another entity to meet its future obligation. Authorities on actuarial valuation of accrued gratuity liabilities were distinguished, and the deduction was denied. Case-Laws Income Tax Thu, 30 Apr 1981 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=29285