1986 (5) TMI 4

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....970. The scheme provided that in the case of the retirement or resignation of any employee, he would be eligible to gratuity provided he had put in 15 years of continuous service. In the case of death or permanent physical or mental disablement, an employee was eligible for gratuity at different rates depending upon whether he had put in 10 years of continuous service or more. In the case of termination of service or retrenchment, no gratuity was payable up to 5 years of continuous service, and was payable at rates thereafter depending upon whether the continuous service was from 5 years to 10 years, 10 years to 15 years or more than 15 years. No gratuity was payable if an employee was dismissed for misconduct, for causing loss to the compa....

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.... court in Metal Box Company of India Ltd. [1969] 73 ITR 53 (SC), of the Allahabad High Court in Madho Makesh Sugar Mills P. Ltd. v. CIT [1973] 92 ITR 503 and of the Delhi High Court in Delhi Flour Mills Co. Ltd. v. CIT [1974] 95 ITR 151, had been considered, came to the conclusion that the Appellate Assistant Commissioner was right and the entire amount had to be allowed as charge against the profits. The appeal filed by the Revenue was dismissed. A similar question was considered at length by the Bombay High Court subsequently in Tata Iron and Steel Co. Ltd. v. D. V. Bapat, Income-tax Officer [1975] 101 ITR 292, in which a corresponding view was taken by the High Court. At the instance of the Revenue, a reference was sought from the Appe....

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....e back to the High Court and directing it to call for a statement of the case and thereafter to answer the question of law, it would be appropriate to dispose of the case on the merits itself inasmuch as the question is one which has engaged the attention of this court in a number of cases already. Learned counsel for the parties are also agreed that the case should be disposed of in the same terms as D. V. Bapat, ITO v. Tata Iron & Steel Co. Ltd. (C. A. No. 1247 of 1980) decided on January 8, 1986-[1986] 159 ITR 938 (SC). It is urged by learned counsel for the appellant that the provisions of section 40A(7)(b)(ii) of the Income-tax Act, 1961, have not been satisfied and, therefore, the respondent was not entitled to the deduction of the g....