Law: Income Tax Act, 1961

Section: 40,40A,40A(7),40A(7)(b),40A(7)(b)(ii),40 A(7)(b)(ii)(1)(2)(3)

Income-tax--Business expenditure---Gratuity---Conditions laid down in S.40A(7) must be fulfilled---Remittance of amount less than that required statutorily---Assessee cannot claim lesser benefit ---Assessee not entitled to any deduction---Indian Income Tax Act, 1961, S.40A. Section 40A(7) of the Income Tax Act, 1961, in clause (a) prohibits any deduction being allowed in respect of any provision made by the assessee for the payment of gratuity to its employees. Clause (b) of subsection (7) removes that prohibition only subject to compliance by the assessee with all the conditions laid down therein. The conditions are spelt out in section 40A(7)(b)(ii) (1), (2) and (3), sub-clause (3) of clause (ii) of section 40A(7)(b), requires that a sum equal to at least 50 per cent. of the admissible amount or where any amount utilised out of such provision for the purpose of payment of any gratuity is paid before April 1, 1976, the balance of the admissible amount reduced by the amount so utilised, is paid by the assessee by way of such contribution before April 1, 1977. There is no scope for holding that remittance of an amount which falls for short of the amount required to be remitted would amount to compliance in part. The compliance should be compliance with all the requirements laid down in the section and it is impermissible for the assessee to bargain and claim that it will take a lesser benefit by merely reducing the level of its compliance. The provisions of taxation laws are required to be complied with and cannot be a matter of bargain with the assessee offering compliance in the manner convenient to him and yet claiming the benefit which is not permissible except in case of full and proper compliance. THIS JUDGMENT DELIVERED BY R. JAYASIMHA BABU, J.---The question referred to us at the instance of the Revenue is, as to whether the assessee, a manufacturer of textiles which had failed to fulfil the conditions laid down in section 40A(7)(b)(ii) of the Income Tax Act, 1961, is entitled to the benefit of the deduction of the amount actually remitted which fell far short of the amount required to be remitted to the approved gratuity fund, as a deduction. It is not…

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