1971 JTR(SC) 433
1975 AIR(SC) 756 ; 1974 1 ITJ 128 ; 1974 93 ITR 603 ; 1974 1 SCJ 215 ; 1975 KHC 881
SUPREME COURT OF INDIA
K.S. HEGDE AND A.N. GROVER, JJ.
The Bombay Dyeing and Mfg. Co. Ltd., Appellant
Versus
The Commissioner of Wealth Tax, Bombay, Respondent.
Civil Appeal No. 1989 of 1968, D/-25-8- 1971.
The liability of a company in respect of gratuity for the benefit of its employees may not be allowed as a deduction in computing 'net wealth' under the Wealth Tax Act.
Act
Referred
:INCOME TAX ACT : S.36(1)(v), S.87
WEALTH TAX ACT : S.2(m), S.7(2)
Wealth Tax Act - Liability of Company for Gratuity - Deduction in Computing Net Wealth
Fact of the Case:
The High Court was asked to opine on whether the liability of a company in respect of gratuity for the benefit of its employees should be allowed as a deduction in computing 'net wealth' under the Wealth Tax Act.
Finding of the Court:
The High Court, following the decision in Standard Mills Co. Ltd. v. Commr. of Wealth Tax, Bombay, answered the question in favor of the department. The Supreme Court upheld the decision, stating that there was no conflict between the decisions in Standard Mills Co. Ltd. and Metal Box Co. of India Ltd. v. Their Workmen.
Issues: The issue was whether the liability of a company in respect of gratuity should be allowed as a deduction in computing 'net wealth' under the Wealth Tax Act.
Ratio Decidendi: The court found no conflict between the decisions in Standard Mills Co. Ltd. and Metal Box Co. of India Ltd. and upheld the decision in favor of the department.
Final Decision: The appeal was dismissed, and the decision of the High Court was upheld, with costs.
Wealth Tax Act - Liability of Company for Gratuity - Deduction in Computing Net Wealth
Fact of the Case:
The High Court was asked to opine on whether the liability of a company in respect of gratuity for the benefit of its employees should be allowed as a deduction in computing 'net wealth' under the Wealth Tax Act.
Finding of the Court:
The High Court, following the decision in Standard Mills Co. Ltd. v. Commr. of Wealth Tax, Bombay, answered the question in favor of the department. The Supreme Court upheld the decision, stating that there was no conflict between the decisions in Standard Mills Co. Ltd. and Metal Box Co. of India Ltd. v. Their Workmen.
Issues: The issue was whether the liability of a company in respect of gratuity should be allowed as a deduction in computing 'net wealth' under the Wealth Tax Act.
Ratio Decidendi: The court found no conflict between the decisions in Standard Mills Co. Ltd. and Metal Box Co. of India Ltd. and upheld the decision in favor of the department.
Final Decision: The appeal was dismissed, and the decision of the High Court was upheld, with costs.
Judgment
HEGDE, J. :- The question referred for the opinion of the High Court under Section 27 (1) of the Wealth Tax Act, 1957 is:
"Whether in the circumstances of the case, in computing "net wealth" as defined in Section 2 (m) of the Wealth Tax Act or in assessing the net value of the assets under Section 7 (2) of the said Act, the liability of the Company in respect of gratuity in terms of the Industrial Court Awards for the benefit of its employees in respect of their periods of service upto the valuation date, should be allowed as a deduction."
2. The High Court following the decision of this Court in Standard Mills Co. Ltd. v. Commr. of Wealth Tax, Bombay, (1967) 63 ITR 470 answered that question in favour of the department. It is not disputed that the said decision governs the facts of this case, but we are asked to have that decision reconsidered by a larger bench in view of the decision of this court in Metal Box Co. of India Ltd. v. Their Workmen (1969) 73 ITR 53
3. Metal Box Co. case (1969) 73 ITR 53 was a decision rendered under the Bonus Act. In that decision the learned Judges referred to the decision of Standard Mills Co. Ltd., (1967) 63 ITR 470 and distinguished the same. In our opinion there is no conflict between the two decisions.
4. For the reasons mentioned above, we see no justification for referring this case to a larger bench for reconsideration of the decision in Standard Mills Co. Ltd., (1967) 63 ITR 470. In the result this appeal fails and the same is dismissed with, costs.
Appeal dismissed.
For Citation : AIR 1975 SC 756