TMI Blog1981 (9) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... on is as follows: " Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that the reserve for gratuity should be included in the computation of capital under the Second Schedule to the Companies (Profits) Surtax Act, 1964 ? " This relates to the assessment year 1970-71 for which the previous calendar year was 1969 ending on the 31st December, 1969. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied in holding that the reserve for gratuity was a free reserve. On behalf of the assessee, it was urged that Rs. 1,43,000 was transferred from the general reserve to the staff gratuity and it was a free reserve and was not a provision and thus the order of the AAC was supported by the assessee. The Tribunal referred to the several decisions dealing with this aspect of the matter and after discus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee, that there was no scheme as such, and there was no statutory obligation for making any payment as staff gratuity, but having regard to the nature of the reserve and having regard to the fact that this reserve had been made specifically by those who were competent to take a decision and also read in conjunction with the finding of the Tribunal that the company was in the habit of making t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cts the observations of the Bombay High Court in the case of CIT v. Forbes Forbes Campbell Co. Ltd. [1977] 107 ITR 38 perhaps would not be strictly applicable. In the premises we are of the opinion that this was not a reserve which was freely available to the company for future use and, therefore, we would answer the question in the negative and in favour of the revenue. In the facts and circu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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