Udaipur Mineral Development Syndicate (P) Ltd. Vs. Commissioner of Income Tax - Court Judgment

Excerpt:
- labour & servicesappointment: [shiv kumar sharma, ashok parihar & k.s. rathore, jj] merit list rajasthan secondary education act (42 of 1957), section 28 & rajasthan board of secondary education rules, rule 20 - held, improved marks obtained by candidate after re-appearing in examination can be considered for drawing the merit list of candidate for appointment to post of teacher. circular issued by the director of primary & secondary education ousting such candidate from consideration in merit list is illegal and without jurisdiction. - 1,75,955 to the gratuity fund account by 31st march, 1977. as assessee has failed to satisfy the conditions laid down in section 40a(7) of the it act, 1961, the assessee is not entitled to any deduction in regard to the provisions of gratuity.1. on an application under section 256(1) of the it act, 1961, the tribunal has referred the following question for the opinion of this court. 'whether, on the facts and in the circumstances of the case, the tribunal was right in deleting the disallowance of rs. 83,662 representing the gratuity claim of the assessee only to the extent of rs. 38,688 ?' 2. the assessee has declared an income of rs. 72,990. the relevant assessment year is 1974-75. during the course of assessment, ao has noticed that assessee has made the provision on account of the gratuity liability and claimed deduction of rs. 83,662. the ao further noticed that the assessee's liability for gratuity on the basis of actuarial valuation certificate as on 31st dec., 1973, and 31st dec., 1972, was rs. 2,65,850 and rs. 1,82,155 respectively. the difference of that amount comes to rs. 83,662 that was the provision to be made in this year. the provision for gratuity liability up to the asst. yr. 1975-76 came out of rs. 3,51,909,50 per cent of that amount he was supposed to deposit in the gratuity fund account by 31st march, 1976. but the assessee has paid only rs. 46,000 in the said account by 31st march, 1976. therefore, the payment in gratuity fund is only about 13 per cent of rs. 83,622 i.e., rs. 10,876 can be considered for allowing the deduction. the balance can be considered for maximum to the tune of 50 per cent of rs. 83,662 i.e., rs. 41,831 provided by the assessee and assessee was expected to pay 50 per cent of the amount of rs. 3,51,909 i.e., rs. 1,75,955. 3. the ao has also noticed that the fund has not been recognised by the git, no deduction can be allowed. if the gratuity fund is recognised, rs. 10,876 would be allowed under section 154 and rs. 41,831 also be allowed under section 154 provided the assessee makes the payment amounting to rs. 1,75,955 to the gratuity fund account by 31st march, 1977. as assessee has failed to satisfy the conditions laid down in section 40a(7) of the it act, 1961, the assessee is not entitled to any deduction in regard to the provisions of gratuity. thus, the ao has negatived the claim of the assessee regarding deduction on account of provision made for gratuity liability. 4. in appeal before the cit(a), cit(a) has also concurred with the view taken by the ito. in appeal before the tribunal, the tribunal has given the relief on the basis of surplus amount rs. 19,344 which was found on the basis of contribution till 31st march, 1976, made by the assessee to the fund after giving the benefit of that amount, the tribunal has deducted that allowed deduction of rs. 38,688, 5. heard, learned counsel for the parties. the fact found by the tribunal that for asst. yr. 1974-75 (1973-74) year ended as on 31st dec., 1972, and for asst. yr. 1974-75 accounting year ended on 31st dec., 1973. in para 4, the tribunal has given its finding that from the scrutiny of paper-book, it appears that up to 31st march, 1976, the assessee has deposited the amount of rs. 1,10,420 in the gratuity trust fund for the period upto 31st dec., 1972. he made the provision for payment of gratuity to the tune of rs. 1,82,153,50 per cent of that amount is rs. 91,076. therefore, after adjusting the amount of deposit against the provision made for asst. yr. 1973-74 there was a surplus of rs. 19,344 in the account of the assessee and if 50 per cent of the amount of provision is deposited, the assessee is entitled for deduction of 100 per cent. therefore, double of the amount of rs. 19,344 is rs. 38,688 if he takes this surplus to adjust against the contribution in the fund for the year in hand the assessee is entitled for deduction of rs. 38,688 and that relief has been given by the tribunal. no further relief is warranted in the facts and circumstances of the case. in the result we answer the question in affirmative i.e., in favour of the revenue and against the assessee. the reference, so made, is disposed of accordingly.