Sabyasachi Mukharji, J. - (1.) The question referred to us under Section 256(1) of the I.T. Act, 1961, is as follows " Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the assessee was entitled to the deduction of the provision of gratuity, if ascertained on actuarial principles, in computing the profit and gains of the assessee's business for the assessment year 1972-73?"
(2.) The assessment year involved is 1972-73. The assessee made a provision for the payment of gratuity to its employees of Rs. 2,95,494 under the provisions of the West Bengal Payment of Compulsory Gratuity Act, 1971, which came into force during the year under consideration and claimed the same as a deduction as business expenses. The ITO did not accept the assessee's claim on the ground that the assessee had failed to produce any actuarial computation of its liability for the payment of gratuity. He, however, observed that the assessee's claim would be reconsidered on the submission of an actuarial certificate.
(3.) In appeal, the AAC, however, observed that the assessee had not created any fund in respect of the gratuity under Section 36(v) and the assessee's claim was not allowable. He also observed that the provisions of the West Bengal Payment of Compulsory Gratuity Act did not compel the assessee to make a provision for gratuity. According to him, the liability under the said Act was a contingent one and was not allowable under Section 37(1) of the IT. Act. He, therefore, affirmed the order of the ITO disallowing the assessee's claim in respect of the provision for gratuity.;