Metal Box Co. of India Ltd. v. Their Workmen

73 ITR 53Supreme Court of India1969#286 most cited

What is Metal Box Co. of India Ltd. v. Their Workmen authority for?

A provision for gratuity liability, calculated on an actuarial basis and spread over a number of years, is an allowable business expense. Such a provision is considered a charge against profits rather than a reserve.

276

judgments rely on this decision, according to BharatTax’s citation analysis of 367,154 Indian tax judgments — from 1996 to 2026.

Also referred to as

Metal Box Co. of India Ltd. v. Their Workmen · 73 ITR 53 · gratuity provision · actuarial valuation · allowable expense · charge against profits · commercial accountancy · provision vs reserve · Section 37(1)

Sections most often in play

Section 37(1)Section 143(3)Section 115JBSection 40(a)(ia)Section 44Section 147Section 148Section 14A

Issues it is cited on

recognised provident fundsection 50bsection 43b(f)approved gratuity fundsection 211section 40a(9)wholly and exclusively for businesssection 35dsection 32(1)(ii)slump salesection 21domestic company

Judgments citing Metal Box Co. of India Ltd. v. Their Workmen

DCIT, New Delhi vs. M/S. Ntpc Ltd., New Delhi

In the result, the appeal of the Revenue is dismissed

ITA 4867/DEL/2014[2005-06]Status: DisposedITAT Delhi19 Sept 2017AY 2005-06

Bench: Shri N.K. Saini & Shri K.N. Charry

Section 143(3)Section 263Section 32(1)(iia)

…ized after tariff finalization. 22. There is authority, in the form of Supreme Court judgments in Shree Sajjan Mills Ltd v. CIT, (1985) 156 ITR 585, Bharat Earth Movers Ltd v. CIT, (2000) 245 ITR 428 and Metal Box Company of India Ltd v. Their Workmen, (1969) 73 ITR 53, that a provision made on a reasonable basis, it would be in the nature of an ascertained liability and that in a mercantile system of accounting, provision for liability ascertained during the course of the relevant accounting period, which is payable at a future is permissible. 6 23. The expression "error of law" resulting in prejudice to the in…

CIT vs. Jagdish Prasad Gupta

ITA/933/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

CIT vs. Jagdish Prasad Gupta

ITA/935/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

Pr. Commissioner of Income Tax-10 vs. Jagdish Prashad Gupta

ITA/424/2016HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

CIT vs. Jagdish Prasad Gupta

ITA/787/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

CIT vs. Jagdish Prasad Gupta

ITA/1535/2010HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

CIT vs. Jagdish Prasad Gupta

ITA/711/2011HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

Jagdish Prasad Gupta

ITA/695/2010HC Delhi18 Aug 2017

Bench: HON'BLE DR. JUSTICE S.MURALIDHAR,HON'BLE MS. JUSTICE PRATHIBA M. SINGH

Section 260A

…ged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” 44. The Supreme Court referred to an earlier decision in Metal Box Company of India Ltd. v. Their Workmen (1969) 73 ITR 53 (SC) in which inter alia it was explained as under: “(i) For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted principles of commercial practice…

DCIT, New Delhi vs. M/S. Ajay Enterprises Pvt. Ltd., New Delhi

In the result, the appeals of the assessee for A

ITA 1348/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09
Section 41(1)

…on the date of drawing the accounts has to be accounted for and are legally allowable, following judgments are relied upon: 1. Supreme Court in the case of Bharat Earth Movers (2004) 245 ITR 428 (SC). 2. Metal Box Company of India Ltd. V. Their Workmen (1969) 73 ITR 53 (SC). 3. Calcutta Co. Ltd. V. CIT (1959) 37 ITR 1 (SC). 4. CIT V. Insilco Ltd. 179 Taxman 5 (Delhi) Thereafter, the Assessing Officer required the assessee to explain the basis of computation of loss which was furnished. Similarly, other details as required by the AO in respect of total salable area, total area actually sold and agreed sales realiz…

Ajay Enterprises Pvt. Ltd., New Delhi vs. DCIT, New Delhi

In the result, the appeals of the assessee for A

ITA 898/DEL/2013[2008-09]Status: DisposedITAT Delhi31 Jul 2017AY 2008-09

Bench: : Shri I.C. Sudhir & Shri L.P. Sahu

For Appellant: A.Y. 2008-09For Respondent: A.Y. 2008-09
Section 41(1)

…on the date of drawing the accounts has to be accounted for and are legally allowable, following judgments are relied upon: 1. Supreme Court in the case of Bharat Earth Movers (2004) 245 ITR 428 (SC). 2. Metal Box Company of India Ltd. V. Their Workmen (1969) 73 ITR 53 (SC). 3. Calcutta Co. Ltd. V. CIT (1959) 37 ITR 1 (SC). 4. CIT V. Insilco Ltd. 179 Taxman 5 (Delhi) Thereafter, the Assessing Officer required the assessee to explain the basis of computation of loss which was furnished. Similarly, other details as required by the AO in respect of total salable area, total area actually sold and agreed sales realiz…

Addl CIT 3(2), Mumbai vs. Mangalore Refiner & Petrochemicals Ltd, Mumbai

The appeal of the assessee is partly allowed

ITA 1826/MUM/2010[2006-07]Status: DisposedITAT Mumbai17 May 2017AY 2006-07

Bench: S/Sh.Rajendra & C. N. Prasadआयकर अपील अपील संसंसंसं./I.T.A./1240/Mum/2010,िनधा"रण िनधा"रण वष" वष" /Assessment Year:2006-07 आयकर आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Mangalore Refinery & Petrochemicals Ltd. Addl. Cit-Range-3(2) Maker Tower-F Wing, 16Th Floor, Mumbai. Vs. Cuffe Parade, Mumbai-400 005. Pan:Aaacm 5132 A (अपीलाथ" /Appellant) (""यथ" / Respondent) आयकर अपील अपील संसंसंसं./I.T.A./1826/Mum/2010,िनधा"रण िनधा"रण वष" वष" /Assessment Year:2006-07 आयकर आयकर आयकर अपील अपील िनधा"रण िनधा"रण वष" वष" Addl. Cit-Range-3(2) Vs. Mangalore Refinery & Petrochemicals Ltd. Mumbai. Mumbai-400 005. (अपीलाथ" /Appellant) (""यथ" / Respondent) राज"व क" ओर से / Revenue By: Shri Jasbir Chohan-Cit-Dr अपीलाथ" क" ओर से /Assessee By:S/ Shri S.E. Dastur & Madhur Aggarwal सुनवाई क" तारीख / Date Of Hearing: 30/03/2017 घोषणा क" तारीख / Date Of Pronouncement:17/05/2017 लेखा सद"य सद"य, राजे"" राजे"" केकेकेके अनुसार अनुसार/ Per Rajendra A.M.- लेखा लेखा लेखा सद"य सद"य राजे"" राजे"" अनुसार अनुसार Challenging The Order,Dated 15/12/2009,Of Cit (A)-7,Mumbai, The Assessing Officer (Ao) & The Assessee Have Filed Cross Appeals For The Above-Mentioned Assessment Year.Assessee- Company, Engaged In The Business Of Refining Of Crude Oil, Selling Of Petroleum Products & Captive Generation & Distribution Of Power, Filed Its Return Of Income On 25/10/2006, Declaring Total Income Of Rs.Nil. The Ao Completed The Assessment On 18/12/2008, Under Section 143 (3) Of The Act, Determining Its Income At Rs.Nil.

For Appellant: S/ Shri S.E. Dastur and Madhur AggarwalFor Respondent: Shri Jasbir Chohan-CIT-DR
Section 143Section 40A(9)

…e difference between arising of the liability of Customs duty and its payment. Before us, the learned representative for the assessee had justifiably placed reliance on the judgments of the Hon'ble Supreme Court in the case of Metal Box Company of India Ltd., 73 ITR 53 (SC) and Bharat Earth Movers, 245 ITR 428 (SC) to emphasise that the point of arisal of a liability is not the same as the point of time prescribed for its payment. Notably, in the present case, assessee, at the time of obtaining clearance of raw material without payment of duty complied with the conditions prescribed by the Customs Department by f…

Income Tax Officer-Ward-12(3), Kolkata vs. M/S Khol Bros Communications Pvt. Ltd, Kolkata

In the result, the appeal of the revenue is dismissed

ITA 2759/KOL/2013[2006-2007]Status: DisposedITAT Kolkata28 Apr 2017AY 2006-2007

Bench: Him Found That An Amount Of Rs.39.24 Lacs & Rs. 11.87 Lacs Towards Sales Tax Liability & Vat Were Not Paid On Or Before The Specified Date. For Non Submission Of Any Evidence Or Explanation For Such Payment, The Ao By Invoking The Provisions Of Section 145A R.W.S 43B Of The Act Added The Sum Of Rs. 51,11,000/- (Rs.39.24 Lacs + Rs.11.87 Lacs) Being Outstanding Sales Tax & Vat Liability To The Total Income Of The Assessee.

Section 145Section 145ASection 43B

…IN THE INCOME TAX APPELLATE TRIBUNAL,‘C’BENCH, KOLKATA Before: Shri J.Sudhakar Reddy, Accountant Member and Shri S.S.Viswanethra Ravi, Judicial Member A.Y 2006-07 Income Tax Officer Vs. M/s. Khol Bros. Communi- Ward 12(3), Kolkata cations Pvt.Ltd PAN: AABCK6938R (Appellant) (Respondent) Appearances by: Shri Pinaki Mukherjee, JCIT, ld.Sr. DR for the Revenue None appeared on behalf of assessee, Adj. Petition not filed Date of hearing : 01-03-2017 Date of pronouncement : 28-04-2017 O R D E R Shri S.S. Viswanethra Ravi, JM :- This appeal by the Revenue is against the order dt: 20-09- 2013 passed by the C…

ACIT, Jaipur vs. Mayura Infrastructure Development Company, Kishangarh

In the result, both the appeals of the revenue are dismissed

ITA 873/JPR/2016[2011-12]Status: DisposedITAT Jaipur25 Apr 2017AY 2011-12
For Appellant: Shri Nikhlesh Kataria (CA)For Respondent: Shri Mukesh Verma (CIT) fu/kZkfjrh dh vksj ls@
Section 132(1)Section 139(1)Section 153A

…Minerals P Ltd (supra). It is pertinent to mention here that the Hon'ble Apex Court, in Om Metal and Mineral Pvt. Ltd (Supra) after considering the judgment ITA 873 & 874/JP/2016 5 rendered in the case of Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 (SC) culled out following principles for a claim like this (430 245 ITR): For an assessee maintaining his accounts on mercantile system, a liability already accrued, though to be discharged at a future date, would be a proper deduction while working out the profits and gains of his business, regard being had to the accepted Principles of Commercia…

Dy.C.I.T., Bangalore vs. Lenovo India Pvt. Ltd., Bangalore

In the result, the assessee's appeal for the Assessment Years 2007-08 as well

ITA 511/BANG/2015[2010-11]Status: DisposedITAT Bangalore31 Mar 2017AY 2010-11

Bench: Shri Vijay Pal Rao & Shri S. Jayaraman

For Appellant: Shri P. Pardiwala, Senior AdvocateFor Respondent: Ms. Neera Malhotra, CIT (DR) (ITAT)-2, Bengaluru
Section 143(3)Section 154Section 250Section 36(1)(v)Section 40A(9)

…tification may not be possible then. Its requirements are satisfied the liability is not a contingent one. The liability is in praesenti though it will be discharged at a future date. 19. Likewise in case of Metal Box Co. of India Ltd. v. Their Workmen [1969] 73 ITR 53 (SC), the Apex Court examined the question whether it is legitimate in such a scheme of gratuity to estimate the liability on an actuarial valuation and deduct the same in profit and loss account while working out the net profit of a company and further whether such appropriation amounts to a reserve or provision. The Supreme Court held that an ass…

Mangalore Refinery and Petrochemicals Ltd, Mumbai vs. DCIT 3(2), Mumbai

In the result, the appeal filed by the assessee is treated as allowed

ITA 2630/MUM/2013[2003-04]Status: DisposedITAT Mumbai23 Mar 2017AY 2003-04

Bench: Shri B.R. Baskaran (Am)& Shri Ravish Sood (Jm)

Section 143(3)Section 41(1)Section 43B

…THE INCOME TAX APPELLATE TRIBUNAL “B” Bench, Mumbai Before Shri B.R. Baskaran (AM)& Shri Ravish Sood (JM) I.T.A. No. 2630/Mum/2013 (Assessment Year 2003-04) M/s. Mangalore Refinery & DCIT 3(2) Petrochemicals Limited Vs. Mumbai 16th Floor, Maker Tower F Wing, Cuffe Parade Mumbai-400 005. (Appellant) (Respondent) PAN No. AAACM5132A Assessee by Shri Jehangir D. Mistry & Shri Ronak D. Doshi Department by Shri N.P. Singh Date of Hearing 22.3.2017 Date of Pronouncement 22.3.2017 O R D E R Per B.R. Baskaran (AM) :- The appeal filed by the assessee is directed against the order dated 29.1.2013 passed by the le…

Molson Coors Cobra India P.Ltd, Mumbai vs. DCIT 3(1), Mumbai

Accordingly, Ground no.2 with its sub-grounds raised by the assessee are allowed for statistical purposes

ITA 7576/MUM/2013[2008-09]Status: DisposedITAT Mumbai15 Mar 2017AY 2008-09
For Appellant: Shri Riaj Thingna and Ms.Vaishali Mane-ARFor Respondent: Shri Saurabh Deshpande-DR
Section 254(1)

…an army of items of sophisticated (specialised) goods manufactured and sold by the assessee whereas the case of Indian Molasses Co. [1959] 37 ITR 66 (SC) was restricted to an individual retiree. On the other hand, the case of Metal Box Company of India [1969] 73 ITR 53 (SC) pertained to an army of employees who were due to retire in future. In that case, the company had estimated its liability under two gratuity schemes and the amount of liability was deducted from the gross receipts in the profit and loss account. The company had worked out its estimated liability on actuarial valuation. It had made provision fo…

ITO 16(2)(4), Mumbai vs. Surya Gems, Mumbai

The appeal of the Revenue is dismissed

ITA 292/MUM/2014[2009-10]Status: DisposedITAT Mumbai08 Mar 2017AY 2009-10

Bench: Shri Joginder Singh & Shri N.K. Pradhanassessment Year: 2009-10 Income Tax Officer-16(2)(4), M/S Surya Gems, बनाम/ 02Nd Floor, Matru Mandir, Flat No.4, 02Nd Floor, Tardeo Road, Bhaveshwar Sgar Patel Vs. Mumbai-400007 Compound 20 Napean Sea Road, Mumbai-400020 (याजस्व /Revenue) (यनधाारयती /Assessee) P.A. No. Aakfs6513Q याजस्व की ओर से / Revenue By Shri B.S. Bist-Dr यनधाारयती की ओर से / Assessee By None ुनवाई की तायीख / Date Of Hearing : 14/02/2017 आदेश की तायीख /Date Of Order: 08/03/2017

…one. The liability is in praesenti though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain. 5. In Metal Box Co. of India Ltd. vs. Their Workmen (1969) 73 ITR 53 (SC) the appellant company estimated its liability under two gratuity schemes framed by the company and the amount of liability was deducted from the gross receipts in the P&L a/c. The company had worked out on an actuarial valuation its estimated liability and made provision for such liability not all at once but spread over a number of years. The…

The ACIT, 1(1), Bhopal vs. M/S. Andritz Hydro Pvt. Ltd., Raisen

In the result, grounds taken by the assessee in all the years with respect to provision of warranty are allowed

ITA 349/IND/2016[2011-12]Status: DisposedITAT Indore28 Feb 2017AY 2011-12

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 143(3)Section 144C

…s relied on the case of Rotork Control (P) India Ltd. 314 ITR 62(SC)/(2009-TIOL-64-SC) but as held in the said case this provision can be allowed if made after scientific method for its quantification. The AO has relied in the case of Metal Box vs. Workman 73 ITR 53 (SC) to contend that contingent liability cannot be allowed as deduction. Further, in CIT vs. Kalinga Tubes 218 ITR 164(SC) it was held that only such expenditure, which accrues in a year under mercantile system of accounting, is allowable only from the profits of that year. Hence, the AO has proposed to disallow the same in draft assessment orde…

M/S Andritz Hydro Private Limited (Earlier Known As V A Tech Hydro Indai Pvt. Ltd.), Mandideep vs. The ACIT 1(1), Bhopal

In the result, grounds taken by the assessee in all the years with respect to provision of warranty are allowed

ITA 316/IND/2016[2011-12]Status: DisposedITAT Indore28 Feb 2017AY 2011-12

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 143(3)Section 144C

…s relied on the case of Rotork Control (P) India Ltd. 314 ITR 62(SC)/(2009-TIOL-64-SC) but as held in the said case this provision can be allowed if made after scientific method for its quantification. The AO has relied in the case of Metal Box vs. Workman 73 ITR 53 (SC) to contend that contingent liability cannot be allowed as deduction. Further, in CIT vs. Kalinga Tubes 218 ITR 164(SC) it was held that only such expenditure, which accrues in a year under mercantile system of accounting, is allowable only from the profits of that year. Hence, the AO has proposed to disallow the same in draft assessment orde…

The DCIT, 1(1), Bhopal vs. M/S. Andritz Hydro Pvt. Ltd., Raisen

In the result, grounds taken by the assessee in all the years with respect to provision of warranty are allowed

ITA 265/IND/2015[2010-11]Status: DisposedITAT Indore28 Feb 2017AY 2010-11

Bench: Shri D.T. Garasia & Shri O.P. Meena

Section 143(3)Section 144C

…s relied on the case of Rotork Control (P) India Ltd. 314 ITR 62(SC)/(2009-TIOL-64-SC) but as held in the said case this provision can be allowed if made after scientific method for its quantification. The AO has relied in the case of Metal Box vs. Workman 73 ITR 53 (SC) to contend that contingent liability cannot be allowed as deduction. Further, in CIT vs. Kalinga Tubes 218 ITR 164(SC) it was held that only such expenditure, which accrues in a year under mercantile system of accounting, is allowable only from the profits of that year. Hence, the AO has proposed to disallow the same in draft assessment orde…