1998 (4) TMI 44

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....ee, Coimbatore Premier Corporation (P.) Ltd., Coimbatore, for the assessment year 1977-78 claimed deduction for gratuity to the extent of Rs. 57,889 under "engineering works section" and to the extent of Rs. 10,000 under "head office". Out of the former claim, the Income-tax Officer allowed relief of Rs. 31,609 as gratuity paid by the assessee to its employees, who retired from service. The balanc....

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....(I. T. A. No. 2215/Mds. of 1979), held that such gratuity payment is an expenditure laid out for the purpose of business and that, therefore, it is allowable under section 37 of the Income-tax Act, 1961. From the foregoing facts, the following question is referred to this court for its opinion under section 256(2) of the Income-tax Act, 1961 : "Whether, on the facts and in the circumstanc....

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....ecision emerging from the apex court in the case of Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585, inasmuch as the issue involved in the question under reference had been categorically settled by the said decision. The apex court held therein that for gratuity to be deductible, the conditions laid down in section 40A(7) had to be fulfilled. The deduction could not be allowed on general princip....