1996 (11) TMI 11

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....sputed factual position. The final assessments for the assessment years 1984-85 and 1985-86 were completed by two separate orders dated January 31, 1990. At that time for the assessment year 1984-85, the total agricultural income and the net income were fixed at Rs. 28,29,249 and Rs. 18,89,390, respectively. Similarly, for the assessment year 1985-86 it was fixed at Rs. 26,88,130. For these two assessment years the assessee claimed deduction towards payment to the approved gratuity fund and it was allowed by the assessing authority as it worked out to the employees at 15 days' wages in accordance with the provisions of the Payment of Gratuity Act, 1972. The assessee remitted the amount in regard to which deduction was claimed for the gra....

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...., Agricultural Income-tax and Sales Tax, Ernakulam, on November 4, 1992 (annexure A), proceeded under section 75 of the Agricultural Income-tax Act, 1991. As far as the question under consideration is concerned the notice concentrated on the following defects : "While completing both the original and revised assessment orders for the above years the claim for provision of gratuity was not supported by actuarial valuation of the liability for each year and in the absence of actuarial valuation of the liability the allowance given was not admissible." The assessee filed a reply dated November 23, 1992 (annexure B). The assessee specifically contended that the proposal to disallow the claim as it was not supported by actuarial valuation,....

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....ch was already granted in the completed assessment proceedings. It was contended that either the ascertainment of the amount of payment of gratuity has to be in accordance with liability or in the absence thereof has to be on scientific and actuarial basis. The Deputy Commissioner, Agricultural Income-tax and Sales Tax, Ernakulam, concentrated on only one aspect as has been emphasised in the notice itself. In this order (annexure C at page 16), it is observed as follows : "The first contention is that the claim of gratuity is not a provision but a contribution to an approved gratuity trust based on statutory liability and hence the gratuity claimed is an allowable deduction. This contention is not acceptable since it is necessary that....