- (1.) BY the Court On an application filed under Sec. 256(1) of the Income Tax Act, 1961, the Tribunal has referred the following question : "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 25,875 paid as gratuity to Shri G.P. Periwal, former sales manager of the assessee was not admissible as business expenditure -
(2.) DURING the course of assessment the assessing officer noticed that the assessee has paid Rs. 25,875 as gratuity to one Shri G.P. Periwal, sales manager of the assessee, and claimed deduction. The assessing officer, rejected the claim on the ground that there is no practice nor there is any law nor there is any justification for making payment of gratuity to Mr. Periwal. The view taken by the assessing officer has been affirmed by the Commissioner (Appeals) and the Tribunal has also affirmed the view taken by the Commissioner (Appeals).
(3.) HEARD learned counsel for the parties. Mr. Agarwal, learned counsel for the assessee, submits that in view of clause (xxiii) of memorandum and articles of association of Rajasthan Central Stores (P) Ltd. the payment made to the ex -employee of the assessee should be allowed. The relevant clause (xxiii) reads as under : "To grant pension, allowances, gratuities and bonuses to employees or ex -employees of the company or its predecessors in business or the dependants of such person and to support or subscribe to any charitable or other institution, clubs, societies or funds.";