1988 (5) TMI 65

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....revious year of the assessee ended on 30th Sept., 1975. Thereafter, the assessee filed an application on 14th Nov., 1975 before the CIT for approval of the gratuity fund constituted under the Trust Deed dt. 14th Nov., 1975. The said approval was granted by the Commissioner by order dt.24th May, 1977 w.e.f. 14th Nov., 1975. The assessee made provision for the gratuity on the basis of actuarial valuation of Rs. 16,36,205 and paid the said sum said approved gratuity fund on 17th Nov., 1975. The claim of deduction of the said sum to the was negatived by the ITO on the ground that there was no gratuity fund in existence within the accounting period of the instant year and as such there was no contribution within the year towards an approved grat....

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.... Pvt. Ltd., order dt.1st May, 1981 of the Calcutta Bench of the Tribunal in the case of M/s Alkali and Chemical Corporation of India Ltd. In I.T.A No. 2523/ Cal/1979 and order dt. 30th Sept., 1983 of the Tribunal in Mopeds India Ltd. vs. IAC (1984) 7 ITD 324 (Hyd). 9. Learned departmental representative, on the other hand, made analysis of these provisions. According to him, sub-cl. (ii) is a special provision for the asst. yrs. 1973-74, 1974-75 & 1975-76 since the said sub-s. (7) of s. 40A was inserted in 1975 with retrospective effect from 1st April, 1973. Further, according to him, sub-cl.(i) is applicable to the asst. yr. 1976-77 onwards. Because of the retrospective operation, special concessions were given for the earlier years upt....

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....be extended to the other asst. yrs. There cannot be any dispute that sub-cl.(i) of cl. (b) is applicable to the instant case. Deduction is permissible only when provision is made by the assessee for the purpose of payment of sum by way of any contribution to an approved gratuity fund. Such contribution to an approved gratuity fund must necessarily be during the year of account. In this connection, the following observations of Hon'ble Supreme Court in the case of Shree Sajjan Mills Ltd. at page 601 are pertinent: "On a plain construction of cl. (a) of sub-s. (7) of s. 40A of the Act, what it means is that whatever is provided for future use by the assessee out of the gross profits of the year of account for payment of gratuity to employe....