Law:

Section:

Section 40A(7) of the Income-tax Act, 1961 - Business disallowance - Gratuity - Assessment year 1979-80 - Assessee-company claimed deduction under section 40A(7)(b)(i) on account of gratuity actually deposited in fund created by it - Whether such a claim could only have been disallowed if it had been proved that gratuity, in respect of which said payment had been made, had not become payable during previous year - Held, yes - Whether in absence of such a case made out by revenue, Tribunal was right in holding that grant of approval to gratuity fund was not relevant for purpose of instant case as said deduction was not being claimed on account of any provision and amount of gratuity was an allowable deduction - Held, yes FACTS The Assessing Officer disallowed the assessee-company's claim of deduction under section 40A(7)(b)( i) on the ground that the gratuity fund created by it was not approved during the relevant previous year when it made a provision for it and, thus, the conditions of said section were not fulfilled by it. On appeal, the Commissioner (Appeals) deleted the same on the ground that similar disallowances were deleted in earlier years. On revenue's appeal, the Tribunal, inter alia, observing that in view of the fact that the payment had actually been made, the absence of approval was immaterial, upheld the deletion. On reference : HELD As per clause (b ) of section 40A(7), the provision for gratuity can be allowed: (i) if it had been made for payment by way of contribution towards an approved gratuity fund or (ii) if the provision is for the purpose of payment of any gratuity that has become payable during the previous year. The Tribunal in the instant case had found that the deduction had not been claimed on the basis of any provision made in the books of account of the assessee but had been claimed on account of the gratuity actually deposited in the fund. Thus, the deduction was not claimed in respect of a provision. Such a claim could only have been disallowed if it had been proved that the gratuity, in respect of which, the said payment had been made, had not become payable during the previous year relevant to assessment year 1979-80. No such…

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