Suhrid Geigy Limited vs Commissioner of Income Tax

G.T. Nanavati, J.—The following two questions have been referred to this Court by the Tribunal under s. 256(1) of the IT Act, 1961 at the instance of the assessee :

"(1) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was not entitled to claim deduction of gratuity of Rs. 3,17,572 under s. 28 and/or s. 37 of the Act ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that the assessee was not entitled to claim depreciation of capital expenditure on scientific research when such expenditure was given special treatment under s. 35(2) and 100% depreciation was already allowed in earlier year ?"

In view of the decision of the Supreme Court in Shree Sajjan Mills Ltd. Vs. Commissioner of Income Tax, M.P., Bhopal and Another, it will have to be held that the assessee was not entitled to claim deduction of gratuity and thus, the Tribunal was justified in holding like that.

In Escorts Limited and Others Vs. Union of India and others, the Supreme Court has held that the assessee would not be entitled to claim depreciation of capital expenditure on scientific research when such expenditure was given special treatment under s. 35(2) and 100% depreciation was already allowed in earlier years. We, therefore, answer question No. 1 in the affirmative, that is against the assessee and in favour of the Revenue. Question No. 2 is answered in the affirmative, that is against the assessee and in favour of the Revenue. Reference is disposed of accordingly with no order as to costs.