Law:

Section:

Fourth schedule of the income-tax act, 1961 read with rule 101 of the income-tax rules, 1962-Gratuity funds-Approval from commissioner-Whether printing machinery embedded to earth and used as press was immovable property and not movable property, so that loan granted by trustees of gratuity fund on security of such property does not contravene rule 101, and approval could be granted to gratuity fund-Held, on facts, yes Facts The petitioner-company created, on 26-8-1970, a gratuity fund for provision of gratuity to its employees and applied to the Commissioner under rule 2(1) of Part C of the Fourth Schedule for grant of approval to the said fund. As the Commissioner required several rectifications to be made in the deed of trust, the petitioner executed a fresh deed of trust dated 2-1-1975 and applied afresh to the Commissioner on 27-10-1975 for approval of the fund. The trustees of the fund had granted a loan to another company on the security of registered mortgage of two pieces of printing machinery embedded to the earth and used as a press. The Commissioner granted approval to the fund created by the deed of trust dated 2-1-1975 with effect from that date and not from 26-8-1970 on the ground that for the period prior to 2-1-1975 approval could not be granted as the trust had granted a loan to a company on hypothecation of movable properties contrary to rule 101. On writ: Held As held in the case of Md. Ibrahim v. Northern Circars Fibre Trading Co. AIR 1944 Mad. 492, if a movable property is directly attached to the earth, it will be immovable property for the purpose of the Registration Act, though the attachment is not direct. Dealing with the definition 'things attached to the earth' occurring in the Transfer of Property Act, the Court took the view that it refers to a mediate and not a direct attachment and for the purpose of determining whether a movable attached to an immovable property is an immovable property, the enquiry should be not whether the attachment is direct or indirect but what is the nature of the attachment and what is its object and purpose, that the degree and nature of the attachment is no doubt a consideration, that the more…

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