1998 (11) TMI 54

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....as to whether the provision made for gratuity in accordance with section 40A(7)(b)(ii) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), is allowable only in the first year relevant to the assessment year in which the liability for gratuity was incurred after the amendment to the Gratuity Act came into force on 16-9-1972. The assessee carries on business in tiles and potteries....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

.... claimed that amount as a deduction for the assessment year 1975-76. That was refused by the Income-tax Officer, but was allowed by the Commissioner and the Commissioner's order was upheld by a Full Bench of tile Income-tax Appellate Tribunal. In this reference at the instance of the Revenue, the question before us is as to whether the provision of Rs. 1,06,889 has to be allowed as an admissible d....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e (ii) of clause (b) of this sub-section, 'admissible amount' means the amount of the provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason, to the extent such amount does not exceed an amount calculated at the rate of eight and one-third per cent. of the salary (as defined in clause (h) of rule 2 of Par....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....year in which the provision was first made, provided such employees were still in tile service of the employer and it is only for the subsequent years the Provision based on actuarial valuation was required to be made for the year relevant to the assessment year. Section 40A(7)(b)(ii) of the Act is a special provision designed to protect the employee during the transition period and giving to t....