SENGUPTA, J. - (1.) IN this reference under S. 256 (1) of the IT Act, 1961 ('the Act') for the asst. yr. 1972-73, four questions of law have been referred to this Court. We shall first deal with the second, third and fourth questions. 2. "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in admitting fresh evidence in the form of certificate from an actuary which was neither produced before the ITO nor admitted by the CIT (A) ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in allowing the assessee's claim on account of liability for gratuity while the same was ascertained long after the completion of the assessment ? 4. Whether, on the facts an in the circumstances of the case and having regard to the fact that the assessee-company had not created an approved gratuity fund the Tribunal was justified in allowing the assessee's claim on account of its liability for gratuity ?"
(2.) THE facts relating to these questions shortly stated are that the assessee did not provide any amount in its account for the assessment year under consideration, on account of its liability under the West Bengal Employees Payment of Compulsory Gratuity Act, 1971. In the original return no claim for liability on account of gratuity was also made by the assessee. In the revised return filed the assessee claimed a sum of Rs. 30 lakhs as deduction on account of its liability for gratuity. The ITO disallowed the claim on the ground that it was an ad hoc provision and not an ascertained liability inasmuch as the claim was not made on a scientific basis nor it was supported by a certificate from an actuary. The ITO also found that the gratuity fund of the assessee was not approved as required under S. 36 (1) (v) of the Act. Being aggrieved the assessee preferred an appeal before the CIT (A) and filed before him a certificate dt. 15th Jan., 1979 from an actuary claiming liability on account of gratuity amounting to Rs. 11,89,943. As the liability was not ascertained at the time when the revised return was filed or during the assessment proceedings before the ITO, the CIT (A) held that the assessee was not entitled to the deduction. Against the said order of the CIT (A) , the assessee filed a second appeal before the Tribunal and reliance was placed on the decision in the cases of Madho Mahesh Sugar Mills (P) Ltd. vs. CIT (1973) 92 ITR 503 (All) , and India United Mills Ltd. vs. CIT (1975) 98 ITR 426 (Bom) etc. On behalf of the Revenue, the order of the CIT (A) was supported. The Tribunal decided the issue in favour of the assessee by observing as under : "We have heard the rival submissions. In our opinion the provision for payment of gratuity upto the asst. yr. 1972-73, if ascertained by actuarial calculation in which all contingencies are taken into consideration, is a liability 'in praesenti' and, therefore, is an allowable business expenditure when the assessee is following mercantile system of accounting in view of the decisions cited above, as also the decision of the Supreme Court in the case of Metal Box Co. of India Ltd. (73 ITR 53) ."
(3.) THE claim of the assessee for deduction on account of the liability for gratuity ascertained by actuarial valuation has to be allowed. In our view, the Tribunal was justified in admitting fresh evidence in form of certificate from an actuary which was not produced before the ITO. So long as it has not been disputed that the certificate issued was on the basis of actuarial valuation, there was no reason why the assessee should be deprived of deduction. In view of the decision of this Court in the case of CIT vs. Eastern Spg. Mills Ltd. (1980) 19 CTR (Cal) 94 : (1980) 126 ITR 686 (Cal), the third and fourth questions are answered in the affirmative and in favour of the assessee. In view of our answer to the third and fourth question in favour of the assessee, we answer the second question also in the affirmative and in favour of the assessee as we do not find any infirmity in the order of the Tribunal in allowing the certificate from the actuary where correctness has not been disputed at any stage of the proceeding.;