The respondent proceeded in appeal to the Income tax Appellate Tribunal.
At the instance of the Revenue, the Appellate Tribunal referred the following question to the High Court for its opinion Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the assessee was entitled to the deduction of the estimated gratuity payable to number working journalists if it is established that the provision for payment of gratuity is based on legal and scientific basis ?
It claimed that the amount had been debited to the profit and loss account of the relevant accounting year.
The claim was made before the Appellate Assistant Commissioner in an appeal against the assessment order for the assessment year 1969 70.
For the assessment year 1969 70, for which the relevant accounting period ended April 30, 1968, the respondent claimed a deduction of Rs.
The High Court has answered the question in the affirmative, in favour of the assessee and against the Revenue.
Accordingly, it directed the Income tax Officer to inquire into the claim and allow the gratuity provision as a deduction if he was satisfied that the provision for payment of gratuity was calculated on a legal and scientific basis.
In disposing of the appeal, the Appellate Tribunal took into regard the circumstance that the respondent had adopted the mercantile system of accounting and that the liability for payment of gratuity arose in the case of working journalists under Section 5 of the Working Journalists Conditions of Service and Miscellaneous Provisions Act, 1955, and in the case of number working journalists under an agreement dated March 13, 1968.
The Appellate Assistant Commissioner disallowed the claim.
The respondent carries on the business of printing the Vijayavada Edition of the daily newspaper Indian Express as well as its Sunday Edition for the Indian Express Madurai Private Limited, and for that purpose employs a substantial staff and labour force.
S. Pathak, J. This appeal by certificate is directed against the judgment dated February 27, 1979, of the Madras High Court disposing of a reference made by the Income tax Appellate Tribunal.
