M/S W.T. SUREN AND CO. LTD versus COMMISSIONER OF INCOME TAX, BOMBAY

M/S W.T. SUREN AND CO. LTD versus COMMISSIONER OF INCOME TAX, BOMBAY

The payment of gratuity by the assessee to the transferee-company, in respect of employees whose services were terminated in the assessee company and taken over by the transferee with continuity of service, is an expenditure wholly laid out for the purpose of business and thus an allowable deduction under Section 10(2)(xv) of the Income Tax Act, 1922.

Parties
Appellant/assessee: W.T. Suren and Co. Ltd.; Respondent/revenue: Commissioner of Income Tax, Bombay
Jurisdiction
India
Judgment Date
23 February 1998
Procedural Posture
Civil Appeal / Supreme Court Appeal From Judgment and Order Dated 29.4.81 of the Bombay High Court in I.t.r. No. 146 of 1971
Outcome
Appeal allowed
Legal Topics
Business Expenditure, Allowable Deduction, Gratuity Payment
Income Tax Business Expenditure Allowable Deduction Gratuity Payment

Case Brief

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Parties

W.T. Suren and Co. Ltd.

Appellant/assessee

Commissioner of Income Tax, Bombay

Respondent/revenue

Procedural Posture

Civil Appeal / Supreme Court Appeal From Judgment and Order Dated 29.4.81 of the Bombay High Court in I.t.r. No. 146 of 1971

Legal Issues

  1. 1 Whether payment of gratuity by the assessee to the transferee-company is an allowable deduction under Section 10(2)(xv) of the Income Tax Act, 1922

Ratio Decidendi

The payment of gratuity by the assessee to the transferee-company, in respect of employees whose services were terminated in the assessee company and taken over by the transferee with continuity of service, is an expenditure wholly laid out for the purpose of business and thus an allowable deduction under Section 10(2)(xv) of the Income Tax Act, 1922.

Court Disposition

Appeal allowed

Orders

  • Judgment of the High Court set aside
  • Deduction for payment of gratuity amount of Rs. 4,08,622 permitted