TaxTMI 
TaxTMI 
1987 (4) TMI 57
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....artered accountants of the company. The case of the petitioner as disclosed in the complaint is that accused Nos. 1 to 5 created an approved gratuity fund and named it as "Associated Traders and Engineers Employees' Gratuity Fund " and in compliance with the provisions of section 40A(7) of the Income-tax Act, opened an account with the Andhra Bank, Asaf Ali Road, New Delhi. Accused Nos. 1 to 6, however, never deposited the amount of the fund in the post office savings bank account or as prescribed under rule 67(1) and (2) of the Income-tax Rules. The accused thus knowingly and intentionally contravened the terms of the irrevocable trust. It is his further case that the gratuity amount deposited in the approved gratuity fund belongs to th....
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....he rules framed thereunder. Furthermore, the gratuity fund amount shown in the balance-sheet only indicates the liability of the company towards its employees to that extent. It is not a circumstance to prove that the accused have either violated the provisions of the trust or the obligations arising under the Income-tax Rules. On these findings, the complaint was dismissed. It is against this order that the complainant has filed the present petition. The first and the foremost contention of learned counsel for the petitioner is that at the stage of consideration whether or not to issue process, the court below was required to see, as to whether the facts disclosed in the complaint as well as the evidence led in support of the same are s....
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....accused must have misappropriated that property or converted it to its own use ; or (b) used or disposed of that property in violation of any direction of law prescribing the mode in which such trust is to be discharged; or (c) used or disposed of the property in violation of any legal contract (express or implied) which he has made touching on the discharge of such trust; or (d) wilfully suffered any other person so to do. 3. Such misappropriation or user or disposal must be dishonest or such sufferance must be wilful." In the absence of proof of entrustment of property or dominion over the property of another, this section will not apply. Similarly, in the absence of proof of dishonest intention, the rigour of this section ....
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....is a dispute in this regard, the controlling authority has to decide it. The Gratuity Act is a complete code by itself. The liability to pay the gratuity arises only after retirement or death and it is the responsibility of the employer to find the money and pay the same. The employer is within its right to create a fund or take out an insurance policy with a view to lessen its burden for arranging funds at the time the gratuity is to be paid to its employees. In this fund, if created, the money is contributed by the company only and no person has any right or interest in it : there is no entrustment at all. For claiming deductions of gratuity amount out of the income, the provisions of section 40A(7) of the Income-tax Act and rule 10....