2017 (9) TMI 1585

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....s. 143(3)of the Act on 28/12/2011 determ -ining its income at Rs. (-)88 24 967/-. During the course of hearing before us the Authorised Representative(AR)stated that considering the smallness of tax effect the assessee would not like to press Grounds no. 2-4 for the year under consideration. Hence same stand dismissed. 3. Effective Ground of appeal is about disallowance of contribution of Rs. 19. 30 lakhs towards Gratuity Fund(GF)maintained by Life Insurance Corporation (LIC). During the assessment proceedings the AO found that expenses amounting to Rs. 19 30 895/-were claimed on account of contribution made towards GF. He directed the assessee to explain as to whether the GF was approved and also to justify the allowability of deduction....

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....ted by it that there was no doubt about incurring of expenditure towards GF. He relied upon the cases of Bitoni Lamps Ltd. (277ITR396) and Baroda Gujarat Gramin Bank (ITA/1479/Ahd. /2010- AY. 06-07)Dtd6. 8. 2010. The Departmental Representative (DR) supported the order of the FAA. 6. We have heard the rival submissions and perused the material before us. We find that the assessee was making payment to LIC towards Employees Group cum Life Assurance Scheme after creating a trust deed that it had made an application to the CIT for approval. Thus there is no doubt that payments had been made by the assessee to LIC in a particular Scheme. The granting of approval for a GF is not in the hands of the assessee. It could only make an application ....

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....sidering the order of ITAT Ahmedabad Bench in the case of Crystal Solvent Pvt. Ltd. (ITA No. 655/ Ahd/ 2005) allowed the appeal of the assessee in which it was held that disallowance u/s 40 A(7) of the IT Act cannot be made on the ground of absence of approval of gratuity fund as the deduction was not claimed on account of any provision. 3. The learned DR relied upon the order of the AO and submitted that approval of the Commissioner of Income Tax was not obtained. Therefore contribution towards gratuity cannot be allowed as deduction u/s 40A (7) of the IT Act. On the other hand the learned Counsel for the assessee reiterated the submissions made before the authorities below and also relied upon the order of ITAT Ahmedabad Bench in the c....