Law: Income Tax Act, 1961

Section: 40,31,40A(7),40A(7)(b),154

(a) Income-tax----Business expenditure---Company---Surtax---Surtax is levied on profits of a company---Surtax is not deductible---Indian Income Tax Act, 1961, S.31. (b) Income-tax--- ----Business expenditure---Contribution to approved gratuity fund---Trust deed executed on 26-8-1970---Amendment of trust deed on 2-1-1975---Order of Commissioner granting approval for fund with effect from 26-8-1970-=­Amendment of trust deed valid and no fresh deed of trust came into existence---Contribution to gratuity fund before 1-1-1976, as required by S.40A(7)(b)---Tribunal justified in holding that assessee was entitled to deduction of provision for gratuity provided other conditions laid down in S.40A(7) are satisfied---Indian Income Tax Act, 1961, S.40A(7)(b). Held, that the Tribunal was right in law in holding that the assessee was . not entitled- to deduction, in computing its total income for the assessment year 1973-74, of the amount of surtax payable for the year. Smith Kline and French (India) Ltd. v. CIT (1996) 219 ITR 581 (SC) fol. For the assessment year 1973-74, the assessee made a provision in its account for the payment of gratuity amounting to Rs.10,58,521 and claimed the same as deduction in the computation of the business income of the assessee. The Income-tax Officer disallowed the claim and held that the gratuity fund established by the assessee was not approved by the Commissioner of Income-tax and the matter would be reviewed by taking appropriate action under section 154 of the Income Tax Act, 1961, as soon as the relevant conditions prescribed, under section 40A(7) were satisfied. On appeal, the Appellate Assistant Commissioner upheld the order of the Income-tax Officer and also held that as soon as the assesssee complied with the requisite provisions, it should bring the same to the notice of the Income­ tax Officer who would verify the same and allow the appropriate relief. On further appeal, the Tribunal held that there was an earlier deed of trust, dated August 26, 1970, which was created even before the commencement of the relevant accounting period for the assessment ,year 1973-74. There was a fund under the Scheme and the fund was also in…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492