TMI Blog2005 (9) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... rt was delivered by V.C. Daga J.- By this reference under section 256 of the Income-tax Act, 1961 ("the Act" for short), the Income-tax Appellate Tribunal has referred the following questions of law for the opinion of this court: "1. Whether, on the facts and in the circumstances of the case, the Tribunal being the custodian of the Income-tax Act, was right in law in holding that the provisions of the Income-tax Rules 87 and 88 and the Board's notification issued in exercise of the powers conferred under section 36(1)(iv) of the Income-tax Act should be ignored as being in conflict with the provisions of section 36(1)(iv)? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in allowing as a deduction under section 37 of the Income-tax Act the entire initial contribution to the superannuation fund in respect of liability as on the last day of the accounting year in respect of the entire service of the employees of the company, who were for the first time admitted to the benefits of the superannuation fund, as representing the assessee's liability for the assessment year 1977-78? 3. Whether, on the facts and in the circumstances of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue. Question No. 3: Learned counsel for the parties also agreed that this question is also covered by the judgment of this court in the case of the assessee itself reported in Mahindra and Mahindra Ltd. v. CIT [2003] 261 ITR 501. Accordingly, question No. 3 has to be answered in the affirmative, i.e., in favour of the assessee and against the Revenue. We answer the said question accordingly. Question No. 4: So far as question No. 4 is concerned, the amount involved is only Rs. 38,100. Learned counsel for the Revenue, at whose instance the question has been referred, does not press the question considering the negligible amount involved. The said question is, thus, returned unanswered. Question No. 5: Learned counsel for the assessee fairly submitted that this court in the assessee's own case reported in Mahindra and Mahindra Ltd. v. CIT [2003] 261 ITR 501 had occasion to answer a similar question, wherein this court, relying upon the judgment of the apex court in the case of CIT v. Gwalior Rayon Silk Manufacturing Co. Ltd. [1992] 196 ITR 149, has held that the road constructed within the factory premises of the company is not a plant but is a building. In this view o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (AP) was also not approved by the Full Bench of the Andhra Pradesh High Court in the case of CIT v. Rayalaseema Mills Ltd. [1997] 228 ITR 477. Per contra, Mr. Dastur, senior counsel appearing for the respondent-assessee submits that so far as the judgment of Vazir Sultan [1980] 122 ITR 251 (AP) is concerned, the said judgment, to the extent it holds that section 216 requires that the Income-tax Officer must record a finding, at the time of regular assessment; that the assessee, under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 211, has underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments, still holds good. He submits that so far as necessity of recording of finding by the Income-tax Officer is concerned, none of the High Courts have taken any view contrary to the view taken in the case of Vazir Sultan [1980] 122 ITR 251 (AP) on this count. He submits that in the case on hand, no finding as required under section 216 has been recorded by the Income-tax Officer in the assessment order dated September 5, 1980. Based on this he submits that no fault can be found with the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on January 1, 1976 whereas services of 8 more officers were terminated during the year ended October 31, 1976. The Tribunal, thus, found that the claim for deduction claimed on the basis of accrual of liability could not be rejected merely on the ground that the assessee did not pay the liability or deferred its payment during the year under reference. The Tribunal having noticed and the mercantile method of accounting followed by the respondent-assessee under which, if a business liability has definitely arisen in the accounting year, a deduction could be claimed. The provision in the books of account in respect of special pension had been made on the basis of liability which was accrued and quantified actuarially. The Tribunal was, thus, pleased to allow deductions of liabilities in respect of staff retired on January 1, 1976 amounting to Rs. 30,57,740, and in respect of 8 officers whose services were terminated during the accounting year, the liability of which was in the sum of Rs. 8,52,913. Learned counsel for the Revenue submitted that the amount has not been actually paid and, therefore, the respondent-assessee was not entitled to claim deduction on actuarial basis unless ..... X X X X Extracts X X X X X X X X Extracts X X X X
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