TMI Blog2001 (1) TMI 53X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that the transfer of the assessee's rights as allottee's stood completed on January 5, 1971, and not on April 13, 1971, when the lease dated March 22, 1971, was got registered and thus the assessee was not liable to capital gains tax ? 2. Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal is correct in law in holding that the assessee's claim for deduction of Rs. 3,74,738 on account of the provisions for staff gratuity was admissible under section 37(1) of the Income-tax Act, 1961?" The dispute relates to the assessment year 1972-73 for which the previous year ended on October 31, 1971. The factual position, filtering out unnecessary details are as follows : The assessee is a limited c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Learned counsel for the Revenue submitted that there was no actual payment of gratuity. In fact, section 37 had no application to the facts of the case and only when the circumstances enumerated in section 36(1)(v) are fulfilled the deduction can be allowed. Similarly, it was submitted that the date which had to be reckoned was the date of registration of the document, i.e., April 13, 1971, and not any anterior date. Therefore, according to him, the Tribunal's views on both the aspects were erroneous. So far as the first question is concerned, a few dates need to be noted. On October 1, 1970, the assessee wrote a letter to Harsha Tractors Limited (in short "HTI,") offering to sell three contiguous plots of land identified as plots 1, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 of the Indian Registration Act, 1908, provides that a registered document shall operate from the date it would have commenced to operate if no registration thereof had been required or made and not from the date of its registration. That being the position, the deed of transfer is operative from March 22, 1971. Therefore, section 47(iv) of the Act has to be applied with effect from March 22, 1971, when the lease deed was executed and not from April 13, 19711, when it was in fact registered. That being the position, the Tribunal was justified in its conclusion that capital gains tax was not leviable though it erroneously took the view that the effective date was January 5, 1971, when the agreement between the assessee and HTL was executed. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion 37. He might, if he followed the mercantile system, provide for the payment of gratuity which became payable during the previous year and claim it as an expenditure on accrued basis under section 37 of the said Act. Since the amount of gratuity payable in any given year would be a variable amount depending upon the number of employees who would be entitled to receive the payment during the year, the amount being a large one in one year and a small one in another year, the employer often finds it desirable and/or convenient to set apart for future rise, a sum every year, to meet the contingent liability as a provision for gratuity or a fund for gratuity. He might create an approved gratuity fund for the exclusive benefit of his employee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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