9911796707
TMI Blog1996 (2) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... unting year 1969-70, relevant to the assessment year 1970-71, an Ordinance had been issued, known as The Kerala Industrial Employees' (Payment of Gratuity) Ordinance, which made it obligatory for employers to set aside particular amounts for payment as gratuity to their employees. It is not in dispute that the liability in respect of the accounting year 1969-70, and for the earlier years, did arise in that accounting year, but the appellant chose not to make any entry in his books of account towards the discharge of that liability. In the following accounting period, i.e., April 1, 1970, to October 14, 1970, when his proprietorship came to an end, the assessee debited the amount in his books of account and claimed deduction of the gratuity ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit he would have got in the books of the firm would have increased by the said amount, i.e., his capital account would have gone up to that extent. The firm had not given him this credit and, therefore, according to the Tribunal, the entries made in the books of the appellant towards the gratuity had been taken over by the firm as its liability and, as far as the appellant was concerned, the amount had been paid off by him. On an application under section 256(1) of the Income-tax Act, 1961, the Tribunal referred the following question to the High Court : "Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is right in law in holding that for the assessment year 1971-72 the assessee is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of 15 days' wages for every year. Both the Appellate Assistant Commissioner as well as the Tribunal came to the conclusion that the liability had accrued in the accounting year 1969-70 and not in the following accounting year, with which we are here concerned. The High Court was right in holding that no claim for a deduction could have been allowed for the assessment year 1971-72 merely because the appellant chose to debit his profit and loss account with the aforesaid amount of Rs. 56,485 during its course. In fact, no payment was made by the appellant to any of the employees; this was merely an accounting entry. This entry could not and did not represent any disbursement of money by the appellant and, therefore, neither on the principl ..... X X X X Extracts X X X X X X X X Extracts X X X X
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