TaxTMI 
TaxTMI 
1990 (11) TMI 27
X X X X Extracts X X X X
X X X X Extracts X X X X
....the contribution to the gratuity fund in excess of 81 per cent. of the salary of the employees ? " Shortly stated the facts are that in the assessment years 1977-78 to 1979-80, the Income-tax Officer disallowed the amounts of Rs. 10,389, Rs. 21,902 and Rs. 13,819, respectively, being contribution paid to the gratuity fund in excess of 8 per cent. of the salary of the employees. On appeal, the Appellate Assistant Commissioner was of the opinion that rule 103 of the Income-tax Rules was not applicable and the entire amount was allowable under section 40A(7)(b)(i) of the Act. As such, he deleted the disallowance for all the three years. On further appeal by the Department, the Tribunal held that section 40A(7) of the Act does not apply to the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ection 40A(7) will not apply in relation to any provision made by the assessee for the purpose of payment of a sum by way of any contribution towards an approved gratuity fund. It will appear from the aforesaid provisions that deduction is allowed in respect of any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by the employer for the exclusive benefit of its employees under an irrevocable trust. Under section 2(5) of the Act, " approved gratuity fund " means gratuity fund which has been and continues to be approved by the Commissioner in accordance with the rules contained in Part " C " of the Fourth Schedule. There is no dispute in this case that the gratuity fund has been approv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....exceed 8 per cent. The Income-tax Officer in making the assessment allowing the deduction for contribution towards the approved gratuity fund is concerned with whether the conditions laid down in section 36(1)(v) have been satisfied or not. In other words, whether the contribution is to the approved gratuity fund or not. Section 36(1)(v) does not contain any condition regarding any restriction regarding ordinary annual contribution to the gratuity fund. He cannot take into account any fact other than the fact of compliance with the conditions made in section 36(1)(v), that is to say, that the payment has been made to the contribution towards the approved gratuity fund created for the exclusive benefit of the employees under an irrevocable t....