TMI Blog1983 (3) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 1,89,633 being liability for gratuity as per actuarial valuation over and above the gratuity liability on the ground that incremental liability accrued and arose in the accounting year as per r. 103 of the IT Rules. The ITO found that the assessee had not made any provision in respect of this claim in the books of account. He, therefore, rejected the assessee's submission that in view of the Supreme Court decision in the case of Kedarnath Jute Mfg. Co. Ltd. vs. CIT (1971) 82 ITR 363 (SC) the provision in the accounts was not necessary to the assessee was following the mercantile system of accounting. He held that the claim of the assessee could only be admitted u/s 464(7)(3)(4) according to which for payment of contribution to an approve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Payment of Gratuity Act and in the Income-tax Act that the statutory liability is allowable if the gratuity fund is approved by the Commissioner. Section 40A(7) restricts this deduction in respect of any provision for the payment of gratuity to the employees under certain circumstances, and even this restriction is not applicable in respect of the circumstances mentioned in section 40A(7)(b). Thus section 40A (7) is not the section authorising and deduction but is a restrictive section and the authorising section for the deduction of liability for gratuity is section 36(1)(v). The incremental liability for the gratuity is the amount paid within the meaning of section 43(2) by way of contribution towards an approved gratuity fund an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wrong in his finding. The ld. counsel for the assessee, on the other hand highlighted the reasons given by the CIT (Appeal) for the allowance of deduction claimed by the assessee in respect of incremental liability to gratuity. He urged that in view of r. 103 of the IT Rules and clear provisions of s. 36(1)(v) the CIT (Appeals) was justified in allowing the assessee's claim for deduction of Rs. 1,89,633 when the assessee was admittedly following the mercantile system of accounting. 5. We find merit in the submissions of the ld. departmental representative. As has been held by the Calcutta High Court in the case of Peoples Engineering Motor Works Ltd. vs. CIT (1981) 130 ITR 174 (Cal): "The payment of gratuity is a statutory liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y observing that the bridges in the tea gardens used for the purpose of transportation of labour, raw materials and finished goods constituted buildings and entitled to depreciation. Hence this appeal by the revenue. 8. Before us, the ld. departmental representative vehemently argues that the bridges in the tea gardens could not be said to be buildings and, therefore, the CIT (Appeals) was wrong in directing the ITO to allow depreciation on bridges. Alternatively, he urged that even if it was held that bridges constituted assets like buildings depreciation should be allowed at the rates applicable to buildings. The ld. counsel for the assessee, on the other hand, supported the order of the CIT (Appeals) and relied on the order of the Tri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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