1978 (4) TMI 47

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....es of the case, the payment of gratuity of Rs. 24,000 by the assessee-company to its ex-manager is deductible in computing its business income ? Is the question referred by the Income-tax Appellate Tribunal under s. 256(1) of the Income-tax Act, 1961, to this court for answer. The facts of the case, in a nutshell, may be stated as follows: The assessee is, a private limited company and de....

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....ed the appeal. The assessee then preferred a further appeal before the Appellate Tribunal. It was contended on behalf of the assessee that Mr. Hallen was in the service of the company for the last 20 years when he retired, that the payment of gratuity to him was not doubted by the department and that as he was appointed about 20 years ago, the letter of appointment could not be traced. It was a....

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....venue, by placing reliance on the decision of the Supreme Court in the case of Gordon Woodroffe Leather Manufacturing Co. v. CIT [1962] 44 ITR 551. The proper test for the payment of gratuity as said by the Supreme Court is whether the payment was made as a matter of practice which affected the quantum of salary or was there an expectation by the employee of getting a gratuity or was the sum of mo....