| Case ID |
1e2d7917-2b7c-45ca-b35c-b9eccf32c024 |
| Body |
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| Case Number |
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| Decision Date |
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| Hearing Date |
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| Decision |
The Tribunal allowed the assessee's claim for gratuity liability notwithstanding the fact that the assessee did not have an approved gratuity fund. However, based on the precedent set by the Supreme Court in Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585, the Tribunal was not justified in allowing the claim. The final ruling was in favor of the Revenue, indicating that for claims regarding gratuity liability to be accepted, there must be an approved gratuity fund in place as stipulated by the Income-tax Act, 1961. |
| Summary |
In this case, the Bombay High Court addressed the issue of whether a claim for gratuity liability could be allowed when the assessee did not possess an approved gratuity fund. The Tribunal had initially permitted the claim, but the Revenue contested this decision based on established Supreme Court precedents. The judges ruled that the absence of an approved fund meant the claim could not be justified, emphasizing the necessity of compliance with the Income-tax Act. This ruling highlights crucial aspects of tax law regarding business disallowances and the importance of adhering to legislative requirements for gratuity claims, making it a significant case for tax practitioners and businesses alike. |
| Court |
Bombay High Court
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| Entities Involved |
Commissioner of Income tax,
Petroleum & Minerals P. Ltd.
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| Judges |
S.P. Bharucha,
T.D. Sugla
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| Lawyers |
Dr. V. Balasubramanian,
S.V. Naik,
K.C. Sidhwa,
V.J. Pandit,
I.P. Pandit
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| Petitioners |
Commissioner of Income tax
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| Respondents |
Petroleum & Minerals P. Ltd.
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| Citations |
1991 SLD 1273,
(1991) 187 ITR 560
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| Other Citations |
Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585 (SC)
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| Laws Involved |
Income-tax Act, 1961
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| Sections |
40A(7)
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