1998 (9) TMI 10

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....enue is aggrieved by the order of the Tribunal holding that notwithstanding the absence of such approval, the contribution made to the scheme which remains unapproved till today is allowable as an item of expenditure under s. 37 of the IT Act, 1961. 2. The assessment year is 1976-77. The assessee had adopted the group gratuity scheme formulated by the Life Insurance Corporation of India and it had paid premium to the said Corporation is a sum of Rs. 62,556 during the relevant previous year, The deduction sought for that payment was disallowed by the ITO under s. 36(1)(v) r/w s. 40A(7) of the Act. The CIT to whom the assessee preferred an appeal as also the Tribunal to whom the ITO carried the matter in further appeal were of the view tha....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....s to be an approved gratuity fund, the trustees of the fund shall nevertheless remain liable to tax on any gratuity paid to any employee. The conditions for approval are set out in r. 3. The approval is to be granted by the Chief CIT or the CIT, who has been vested with that power under r. 2(1) of Part C of Sch. IV. The statutory position, therefore, is that the provision made for gratuity payments to employees in future years is not to be allowed as deduction at all, unless it is by way of contribution made to an approved gratuity fund created under an irrevocable deed of trust. It is therefore not sufficient to have made a provision or to have made a payment by way of premium to a scheme of gratuity, even if it is under an irrevocable ....