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 366,470 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 115JB Section 40(a)(ia)Section 44 Section 147 Section 148 Section 14A

Issues it is cited on

recognised provident fund section 50b section 43b(f)approved gratuity fund section 211 section 40a(9)wholly and exclusively for business section 35d section 32(1)(ii)slump sale section 21 domestic company

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

Commissioner of Income Tax vs. Eicher Limited

In the result, we are of the opinion that no substantial question

ITA/958/2008HC Delhi22 Jul 2010

Section 115JSection 143(1)Section 143(3)Section 148Section 37(1)

…on of income u/s 115JA, the same is allowable as the same was made on the basis of actuarial valuation and is, therefore, an ascertained and accrued liability as held by the Hon‟ble Supreme Court in the case of Metal Box Company of India Vs. Their Workmen 73 ITR 53. 2010:DHC:3634-DB 2. While calculating effect of newly inserted section 145A, no addition on account of excise duty in valuation of inventory as on 31.03.1998 was done resulting in excess deduction of Rs.3,53,56,437/- claimed by the assessee. No disallowance on above account is being done as the aforementioned amount has not bee…

M/S. Rotork Controla India (P) Ltd vs. Commnr. of Income Tax, Chennai

Appeals stand allowed in favour of the assessee with no order as to

C.A. No.-003506-003510 - 2009Supreme Court12 May 2009

…996) 222 ITR 697 (PC). Learned counsel also placed reliance on the judgments of the Supreme Court in the case 1 of Bharat Earth Movers v. Commissioner of Income-tax – (2000) 245 ITR 428 (SC) and Metal Box Company of India Ltd. v. Their Workmen – (1969) 73 ITR 53 (SC). 7. Learned counsel next submitted that assuming for the sake of argument that the liability for warranty claim is a contingent liability, the amount claimed by the appellant as deduction was still allowable if deduction claimed is equal to the warranty expenses actually incurred and the deductibility of such expenses viewed ov…

Commissioner of Income Tax vs. Insilco Ltd

In the result, the question of law framed by us is answered in favour

ITA/873/2008HC Delhi27 Feb 2009

Bench: The Tribunal Against The Order Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred To As The „Cit(A)‟] Allowing Deduction On Account Of Provision Made By

For Appellant: Ms Prem Lata Bansal, Mr Sanjeev Rajpal & Mr MohanFor Respondent: Mr V.P. Gupta & Mr Basant Kumar

…ate. The CIT(A), after taking into account the judgments of the Supreme Court in the case of Shree Sajjan Mills Ltd vs CIT; (1985) 156 ITR 585, Bharat Earth Movers Ltd vs CIT; (2000) 245 ITR 428 and Metal Box Company of India Ltd vs Their Workmen; (1969) 73 ITR 53, and, upon perusing the provisions of the CBDT Circular No. 47 dated 21.09.1970, came to the conclusion, that a provision for „long service award‟ is akin to a provision for gratuity, and if such a provision is made on a scientific basis, it would be in the nature of an ascertained liability and not a contingent liability as contended by the R…

Commissioner of Income Tax-IV, New Delhi vs. Insilco Limited

In the result, the question of law framed by us is answered in favour

ITA-1156/2008HC Delhi27 Feb 2009

Bench: The Tribunal Against The Order Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred 2009:Dhc:678-Db

For Appellant: Ms Prem Lata Bansal, Mr Sanjeev Rajpal & Mr MohanFor Respondent: Mr V.P. Gupta & Mr Basant Kumar

…ate. The CIT(A), after taking into account the judgments of the Supreme Court in the case of Shree Sajjan Mills Ltd vs CIT; (1985) 156 ITR 585, Bharat Earth Movers Ltd vs CIT; (2000) 245 ITR 428 and Metal Box Company of India Ltd vs Their Workmen; (1969) 73 ITR 53, and, upon perusing the provisions of the CBDT Circular No. 47 dated 21.09.1970, came to the conclusion, that a provision for „long service award‟ is akin to a provision for gratuity, and if such a provision is made on a scientific basis, it would be in the nature of an ascertained liability and not a contingent liability as contended by the R…

Commissioner of Income Tax-IV, New Delhi vs. Insilco Limited

In the result, the question of law framed by us is answered in favour

ITA-873/2008HC Delhi27 Feb 2009

Bench: The Tribunal Against The Order Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred 2009:Dhc:679-Db

For Appellant: Ms Prem Lata Bansal, Mr Sanjeev Rajpal & Mr MohanFor Respondent: Mr V.P. Gupta & Mr Basant Kumar

…ate. The CIT(A), after taking into account the judgments of the Supreme Court in the case of Shree Sajjan Mills Ltd vs CIT; (1985) 156 ITR 585, Bharat Earth Movers Ltd vs CIT; (2000) 245 ITR 428 and Metal Box Company of India Ltd vs Their Workmen; (1969) 73 ITR 53, and, upon perusing the provisions of the CBDT Circular No. 47 dated 21.09.1970, came to the conclusion, that a provision for „long service award‟ is akin to a provision for gratuity, and if such a provision is made on a scientific basis, it would be in the nature of an ascertained liability and not a contingent liability as contended by the R…

Commissioner of Income Tax vs. Insilco Limited

In the result, the question of law framed by us is answered in favour

ITA - 1156 / 2008HC Delhi27 Feb 2009

Bench: The Tribunal Against The Order Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred 2009:Dhc:678-Db

For Appellant: Ms Prem Lata Bansal, Mr Sanjeev Rajpal & Mr MohanFor Respondent: Mr V.P. Gupta & Mr Basant Kumar

…ate. The CIT(A), after taking into account the judgments of the Supreme Court in the case of Shree Sajjan Mills Ltd vs CIT; (1985) 156 ITR 585, Bharat Earth Movers Ltd vs CIT; (2000) 245 ITR 428 and Metal Box Company of India Ltd vs Their Workmen; (1969) 73 ITR 53, and, upon perusing the provisions of the CBDT Circular No. 47 dated 21.09.1970, came to the conclusion, that a provision for „long service award‟ is akin to a provision for gratuity, and if such a provision is made on a scientific basis, it would be in the nature of an ascertained liability and not a contingent liability as contended by the R…

Commissioner of Income Tax vs. Insilco Ltd

In the result, the question of law framed by us is answered in favour

ITA - 873 / 2008HC Delhi27 Feb 2009

Bench: The Tribunal Against The Order Of The Commissioner Of Income Tax (Appeals) [Hereinafter Referred 2009:Dhc:679-Db

For Appellant: Ms Prem Lata Bansal, Mr Sanjeev Rajpal & Mr MohanFor Respondent: Mr V.P. Gupta & Mr Basant Kumar

…ate. The CIT(A), after taking into account the judgments of the Supreme Court in the case of Shree Sajjan Mills Ltd vs CIT; (1985) 156 ITR 585, Bharat Earth Movers Ltd vs CIT; (2000) 245 ITR 428 and Metal Box Company of India Ltd vs Their Workmen; (1969) 73 ITR 53, and, upon perusing the provisions of the CBDT Circular No. 47 dated 21.09.1970, came to the conclusion, that a provision for „long service award‟ is akin to a provision for gratuity, and if such a provision is made on a scientific basis, it would be in the nature of an ascertained liability and not a contingent liability as contended by the R…

Commissioner of Income Tax vs. Hewlett Packard (India) Ltd

The appeal is dismissed

ITA - 943 / 2007HC Delhi31 Mar 2008

…![](_page_0_Picture_1.jpeg) #### HIGH COURT OF DELHI: NEW DELHI + ITA No. 943 of 2007 **a** - { Judgment reserved on: February 19, 2008 % Judgment delivered on: March 31, 2008 Commissioner of Income Tax Bangalore-I, Bangalore ...Appellant Through Mrs. Prem Lata Bansal, Adv. Versus M/s Hewlett Packard India (P) Ltd. (now merged with Hewlett Packard India Sales (P) Ltd.) 24, Salarpuria Arena Hosur Main road, Adugodi Bangalore – 560 030 ....Resp ...Respondent Through Mr. Kaanan Kapur with Mr. Y.K. Kapur, Advs. Coram: # HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE V.B. GUPTA 1. Whether the Re…

Commissioner of Income Tax vs. Hewlett Packard (India) Ltd

The appeal is dismissed

ITA - 934 / 2007HC Delhi31 Mar 2008

…![](_page_0_Picture_1.jpeg) HIGH COURT OF DELHI : NEW DELHI + ITA No. 934 of 2007 Judgment reserved on: February 19, 2008 % Judgment delivered on: March 31, 2008 Commissioner of Income Tax Bangalore-I, Bangalore ...Appellant Through Mrs. Prem Lata Bansal, Adv. Versus M/s Hewlett Packard India (P) Ltd. (now merged with Hewlett Packard India Sales (P) Ltd.) 24, Salarpuria Arena Hosur Main road, Adugodi Bangalore – 560 030 ....Respondent Through Mr. Kaanan Kapur with Mr. Y.K. Kapur, Advs. Coram: # HON'BLE MR. JUSTICE MADAN B. LOKUR HON'BLE MR. JUSTICE V.B. GUPTA 1. Whether the Reporters of local papers…

Commissioner of Income Tax vs. Woodward Governor India Pvt. Ltd

The appeal is dismissed

ITA-49/2005HC Delhi30 Apr 2007

…ure date on which the liability shall have to be discharged is not certain.” 22. In restating the above settled position, the Supreme Court summarised the principles earlier laid down in Metal Box Company of India Ltd. -vs- Their Workmen, [1969] 73 ITR 53 (SC) as under: “(i) For an assessee maintaining his accounts on the 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 and accountancy. It…

Commissioner of Income Tax vs. India Pvt. Ltd

The appeal is dismissed

ITA/49/2005HC Delhi30 Apr 2007

…ure date on which the liability shall have to be discharged is not certain.” 22. In restating the above settled position, the Supreme Court summarised the principles earlier laid down in Metal Box Company of India Ltd. -vs- Their Workmen, [1969] 73 ITR 53 (SC) as under: “(i) For an assessee maintaining his accounts on the 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 and accountancy. It…

Commissioner of Income Tax, Kolkata vs. M/S. Hooghly Mills Co. Ltd

The appeal is allowed

C.A. No.-005149-005149 - 2006Supreme Court22 Nov 2006

For Respondent: M/s. Hoogly Mills Co. Ltd

Section 32Section 4(1)

…No doubt, qua the vendor, the gratuity liability is a revenue expenditure, which is allowable as revenue expenditure in the year in which it has accrued (if the assessee maintained its account on mercantile basis) vide Metal Books Co. of India Vs. Workmen (73 ITR 53 [62-67]), Bharat Earth Vs. CIT (245 ITR 428), Sassoon David Vs. CIT (118 ITR 271), etc. However, qua the vendee the position would be different. In the present case, in the agreement dated 24.3.1988 between the vendor (Fort Gloster Industries Ltd.) and the assessee, it is mentioned that the vendor shall purchase the Industrial Undertaking w…

Commissioner of Income Tax, Kolkata vs. M/S. Hooghly Mills Co. Ltd

The appeal is allowed

C.A. No.-005149-005149 - 2006Supreme Court22 Nov 2006

For Respondent: M/s. Hoogly Mills Co. Ltd

Section 32Section 4(1)

…No doubt, qua the vendor, the gratuity liability is a revenue expenditure, which is allowable as revenue expenditure in the year in which it has accrued (if the assessee maintained its account on mercantile basis) vide Metal Books Co. of India Vs. Workmen (73 ITR 53 [62-67]), Bharat Earth Vs. CIT (245 ITR 428), Sassoon David Vs. CIT (118 ITR 271), etc. However, qua the vendee the position would be different. In the present case, in the agreement dated 24.3.1988 between the vendor (Fort Gloster Industries Ltd.) and the assessee, it is mentioned that the vendor shall purchase the Industrial Undertaking w…

Commnr. of Income Tax, Trivandrum vs. M/S Tranvancore Titanium Products Ltd

C.A. No.-003825-003825 - 1999Supreme Court07 Dec 2000

For Respondent: M/S. TRANVANCORE TITANIUM PRODUCTS LTD

Section 18Section 256(1)

…http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 5 CASE NO.: Appeal (civil) 3825 1999 PETITIONER: COMMISSIONER OF INCOME TAX, TRIVANDRUM Vs. RESPONDENT: M/S. TRANVANCORE TITANIUM PRODUCTS LTD. DATE OF JUDGMENT: 07/12/2000 BENCH: Y.K.Sabharwal, D.P.Mohapatro, S.P.Bharucha JUDGMENT: L.....I.........T.......T.......T.......T.......T.......T..J J U D G M E N T Y.K.Sabharwal, J. This appeal has been filed by the revenue to challenge the correctness of the judgment and order of the High Court of Kerala dated 18th August, 1998. The case relates to assessment year 1985-86.…

Bharat Earth Movers vs. Commr. of Income Tax

C.A. No.-009271-009271 - 1995Supreme Court09 Aug 2000

For Respondent: COMMISSIONER OF INCOME TAX, KARNATAKA

…http://JUDIS.NIC.IN SUPREME COURT OF INDIA Page 1 of 4 CASE NO.: Appeal (civil) 9271 of 1995 PETITIONER: BHARAT EARTH MOVERS Vs. RESPONDENT: COMMISSIONER OF INCOME TAX, KARNATAKA DATE OF JUDGMENT: 09/08/2000 BENCH: R.C.Lahoti,N.S.Hegde JUDGMENT: R.C. Lahoti, J. L.....I.........T.......T.......T.......T.......T.......T..J Relevant to the assessment year 1978-1979 the following question of law was stated, at the instance of the Revenue, by the Income Tax Appellate Tribunal for the opinion of the High Court of Karnataka under Section 256 (1) of the Income-tax Act, 1961:-…

2Tate Bank of Patiala, Patiala vs. Commissioner of Income Tax, Patiala

The appeals are allowed

C.A. No.-004270-004273 - 1996Supreme Court15 Mar 1996

For Respondent: THE COMMISSIONER OF INCOME-TAX,PATIALA

…(emphasis supplied) 11. We are of the view that the learned judges of the High Court misunderstood and misapplied the ratio laid down in the decisions of this Court, referred by it. In Metal Box Co. of India Ltd. vs. Their workmen (73 ITR 53) at pp. 67-68 this Court laid down the law thus:- "The next question is whether the amount so provided is a provision or a reserve. The distinction between a provision and a reserve is in commercial accountancy fairly well known. Provisions made against anticipated losses…