HON’BLE SUPREME COURT · SOURCE-REVIEWED NOTE
Gordon Woodroffe Leather Manufacturing Co. v. Commissioner of Income-tax, Madras
Civil Appeal No. 62 of 1961
[1962] Supp 2 SCR 211 ·
Indian Income-tax Act, 1922: section 10(2)(xv)
Sources & disclosures includedDownload original judgment / order
5-judge bench; unanimous judgment delivered by J. L. Kapur, J. · B. P. Sinha, C.J. · J. L. Kapur, J. · M. Hidayatullah, J. · J. C. Shah, J. · J. R. Mudholkar, J.
Assessment years: 1950-51
01 · Facts of the case
The company paid Rs.40,000 to a retiring managing director for long and faithful service. There was no gratuity scheme, established practice or prior expectation, and the payment was recorded in the appropriation rather than profit-and-loss account (SCR pp.211-214; PDF pp.1-4).
Source: Primary judgment: facts
02 · Discussion by the Hon’ble Court
A retirement payment may be deductible where a practice affects remuneration, an employee expects it, or commercial expediency links it to future business. Here the evidence showed a voluntary reward for past service, not a payment facilitating the business or made under a recurring scheme (SCR pp.214-217; PDF pp.4-7).
Source: Primary judgment: discussion
03 · Judicial decision
The Court held section 10(2)(xv) unsatisfied and dismissed the company's appeal with costs (SCR p.217; PDF p.7).
Source: Primary judgment: decision
04 · Outcome / in whose favour
In favour of Revenue: the isolated voluntary gratuity was not deductible on the proved facts (SCR pp.216-217; PDF pp.6-7).
Source: Primary judgment: outcome
05 · AKHB REVIEW POINT
AKHB analysis: document the scheme, employee expectation, remuneration effect and prospective business purpose when claiming discretionary retirement payments. Current employee-benefit and specific-disallowance provisions require separate checks (based on SCR pp.215-217; PDF pp.5-7).
Source: Primary judgment: review point
Source & verification
Download original judgment / order · Open cited source rendition
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Statutory scope
The case applies the repealed 1922 Act's general business-deduction provision; current statutory restrictions and employment-benefit rules were not checked.
Later treatment
Source checked 2026-10-11. Later judicial treatment and current statutory applicability have not been comprehensively checked; no current-law or citator clearance is represented.
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