D.K.Seth, J. - (1.) The appeal was admitted on the following two questions : "(a) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in directing to recompute the cost of the assets treating the gratuity liability as part of the actual cost of the assets and allow depreciation accordingly ? (b) Whether, on the facts and in the circumstances of the case the, Tribunal was justified in law in holding that the consideration of Rs. 2 crores shown in the agreement is not the real consideration unless liability towards payment of gratuity is spread over the consideration shown ?"
(2.) Pursuant to the agreement between the parties, the undertaking was taken over by the assessee. The agreement dt. 24th March, 1988, contains the following clauses : "1. (A) The vendor shall sell and the purchaser shall purchase the said industrial undertaking w.e.f. 26th day of March, one thousand nine hundred and eighty-eight hereinafter called 'the date of sale' as a going concern and full benefit of industrial licences, permits, entitlements, tenancies including tenancy of Jute Corporation of India in respect of carpet backing shed and all other rights and benefits in connection with and appertaining to the said industrial undertaking free from all encumbrances, charges, attachments and lien whatsoever at the price of Rs. 2 crores (rupees two crores only).............. 5. The vendor shall pay and discharge all liabilities towards all junior, senior officers, factory staff and workers of those who have been discharged or superannuated on or before the date of sale. All accrued leave dues, gratuity, liability on account of provident fund and bonus dues unpaid on the date of transfer in respect of such workmen will be on account of the vendor. 6. In addition to the consideration as mentioned in 1(A), the accrued and future gratuity liability of the taken over workers, junior and senior officers, on their retirement or otherwise on termination of their services payable under the Payment of Gratuity Act or otherwise including for the entire period of service with the vendor shall be on the purchaser's account and shall be met by the purchaser."
(3.) It is clear from Clause 6 of the agreement that the accrued gratuity liability for the entire period of service of the employees with the vendor would be on the purchaser's account in addition to the said Rs. 2 crore being the consideration mentioned in Clause 1(A) above. Pursuant to those conditions, the actual cost of the liability accrued till the date of the transfer of the mill, on account of gratuity was assessed at Rs. 3,44,58,852. In the asst. yr. 1989-90, the learned Tribunal had held that in addition to the amount of Rs. 2 crore, the assessee-company had taken over the liability towards gratuity in respect of the existing employees accrued till the date of the transfer of the mill and this liability as on that date was arrived at on actuarial valuation at Rs. 3,44,58,852.;