TMI Blog1975 (11) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... estimate was revised under section 212(2) on 12th March, 1973, and income of Rs. 63,12,880 was disclosed. On this income an advance tax amounting to Rs. 36,44,078 was paid. Later, the petitioner filed a return under section 139(1) of the Act for the assessment year 1973-74, on September 4, 1973, declaring a loss of Rs. 1,14,35,090. In computing the loss, the following two amounts were claimed as deductions : Rs. (a) Liability for gratuity ... 1,67,34,000 (b) Unabsorbed depreciation and development rebate carried forward from the assessment years 1970-71, 1971-72 and 1972-73 ... 96,94,121 The claim for gratuity was made in accordance with the actuarial valuation report of an actuary. Section 141A(1) provides that where a retu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer on both these points is patently erroneous. As regards the claim in respect of the liability for payment of gratuity, the Income-tax Officer has recorded the following finding : " The assessee who follows the mercantile system of accounting has charged the accounts with actual payment of gratuity for the year provided for in the accounts the accrued liability for gratuity for the year as per actuarial report, and has further claimed the estimated liability of Rs. 1,34,42,000 for payment of gratuity under its own gratuity scheme as per actuarial valuation ; however, it has made no provision for the same in the accounts. In the circumstances the estimated liability of Rs. 1,34,42,000 is found to be not prima facie allowable. " Now, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... actuary's report was not on the record he could have easily asked for it. The view taken by the Income-tax Officer that unabsorbed depreciation and development rebate amounting to Rs. 96,94,121 could not be allowed as regular assessment had not been made in respect of the year to which the claim pertained is also erroneous. But we are not expressing any final opinion on this point, because if the claim for gratuity is held admissible, the return filed by the assessee would become a loss return and the entire advance tax paid by the assessee would be refundable. It may be mentioned here that the respondents have sought to justify the impugned order on the basis of the amendment in section 40A of the Act. Sub-section (7) has been added t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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