1982 (1) TMI 119

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....9 being the provision for gratuity given in computing the total income of the asst. yr. 1976-77. 2. The assessee is a private limited company. For the asst. yr. 1976-77, the assessee made a provision of Rs. 1,09,973 in the accounts towards liability to pay gratuity to the employees. But the ITO found that the liability on actuarial basis came to Rs. 89,849 and restricted the deduction to that a....

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....7. The assessee had created a gratuity fund by trust deed dt. 28 December, 1975 and approval was accorded by the CIT w.e.f. that date by his letter dt. 25th July, 1977. The assessee had also paid a sum of Rs. 89,849 into the fund on 31st March, 1976. The provisions of s. 40A(7) introduced in 1975 applied with retrospective effect for the asst. yrs. 1973-74 to 1975-76 only and, therefore, the speci....

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....tribution to the gratuity fund which was approved by the CIT. The only objection of the revenue which may survive is that the gratuity fund itself was created after the end of the previous year. But, we cannot sustain this objection because there is nothing in the section which requires that the fund should exist during the previous year or that the contribution should be given to the fund during ....

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....xecution of which depended also on the machinery of the revenue to approve the funds which were to be created by the assessee. This is because when the amendment which was made by the Finance Act, 1975 just before the end of the previous year of the assessee, being the year ended 31st May 1975 it would be asking the assessee to perform an impossible condition if the fund should have been set up an....