TMI Blog2000 (1) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... ning of s. 57(iii) of the IT Act, 1961 and in that view deleting the addition of the said amount ?" 2. The assessee carried on business in generation and supply of electricity till 1975 which was taken over by the Bihar Government under the Bihar Electricity Supply Undertaking (Acquisition) Ordinance, 1975. The compensation was paid in term of the Ordinance, 1975. Thereafter the assessee has continued the employment of some of the employees for earning the interest income assessable under the head 'Income from other sources". During the previous year in addition to the salary assessee has also paid gratuity to Sri Subrata Mitra and Ranjit Kumar Banerjee totalling Rs. 89,572 and claimed the deduction of the salary as well as gratuity to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firm which stood dissolved and its business was taken over and continued by the surviving partner could be allowed as a business expenditure in computing the income of the firm for the asst. yr. 1958-59. It was hold that the liability to pay retrenchment compensation arose for the first time after the closure of the business and not before. It was further held that the liability arose not in the carrying on the business but on account of the transfer of the business. In the Allahabad High Court case also the point for consideration was whether litigation expenses incurred by a clearing house in defending civil suits which had been filed by its members while it was carrying on its business could be allowed deduction under s. 19(2)(xv) of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on expenses etc. should not be allowed while assessee earned only the interest income. 4. It is true if the services of the employees are not for the purpose of earning the income assessable under the head income from other sources then neither salary nor gratuity should be allowed, But in the case in hand, CIT(A) has allowed the salary and that is not in dispute. When the salary was allowed in the case of this assessee against the income assessable under the head 'income from other sources', there is no justification to deny the claim of the assessee regarding payment of gratuity which he has paid to two employees who retired in the previous year. When the finding of the Tribunal that the employees were employed for the purpose of earnin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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