Delayed approval of gratuity scheme cannot defeat deduction where the assessee applied in time and Revenue caused the delay.

Where an assessee had timely applied for approval of an employees' group gratuity scheme and the application remained pending for years, the Tribunal held that deduction could not be denied merely because formal approval was granted later. Since the Revenue did not show that the delay was attributable to the assessee, the assessee could not be made to suffer for administrative inaction. Following the jurisdictional High Court's approach in a similar situation, the Tribunal deleted the disallowance of the contribution to the LIC Group Gratuity Scheme and allowed relief to the assessee on that issue.

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Issues: Whether the disallowance of contribution made to LIC Group Gratuity Scheme was sustainable where the assessee had applied for approval of the gratuity scheme long earlier and the approval was ultimately granted later.

Analysis: The assessee had shown that it had applied for approval of the employees' group gratuity scheme in 1992 and again pursued the matter in 2015, and that the competent authority eventually granted approval with effect from 05.08.2015. The Revenue did not show that the delay in grant of approval was attributable to the assessee. Relying on the jurisdictional High Court decision in a similar situation, the Tribunal held that an assessee cannot be made to suffer for inaction on the part of the Revenue when the application for approval had been filed and remained unattended for years. In these circumstances, the contribution to the gratuity scheme could not be denied merely because approval was not granted earlier.

Conclusion: The disallowance of contribution to LIC Group Gratuity Scheme was deleted and the issue was decided in favour of the assessee.

Final Conclusion: The appeal succeeded on the gratuity contribution issue, while the remaining grounds did not alter the overall partial relief granted to the assessee.

Ratio Decidendi: Where an assessee has timely applied for approval of a gratuity fund and the delay or non-disposal of that application is attributable to the Revenue, the assessee cannot be denied deduction solely because formal approval was granted later.

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