2012 (7) TMI 1059 - AT - Income Tax

Summary

Issues involved: The judgment deals with the disallowance of deduction claimed by the assessee towards gratuity fund under section 36(1)(v) of the Income Tax Act, and the applicability of section 37 for such deductions.

Summary:

Issue 1: Disallowance of deduction claimed towards gratuity fund under section 36(1)(v):
The Revenue appealed against the order of the Commissioner of Income-tax(Appeals) disallowing the deduction of &8377; 9,32,697 claimed by the assessee towards gratuity fund for the assessment year 2008-09. The Assessing Officer (AO) disallowed the deduction on the grounds that the assessee did not satisfy the conditions of section 36(1)(v) of the Act. However, the CIT(A) allowed the claim by relying on a Tribunal decision in a similar case. The Tribunal noted that the issue had been previously considered in the assessee's own case for other assessment years, where the Tribunal had ruled in favor of the assessee. The Tribunal upheld the CIT(A)'s decision based on the precedent and dismissed the Revenue's appeal.

Issue 2: Applicability of section 37 for deduction towards unapproved gratuity fund:
The main contention was whether the payment made by the assessee towards an unapproved gratuity fund could be allowed under section 37 of the Income Tax Act. The Revenue argued that since the group gratuity scheme was not approved by the Commissioner of Income Tax, it could not be allowed. However, the assessee cited judgments of the Madras High Court and the jurisdictional High Court to support their claim. The Tribunal examined the judgments and held that even if a payment is made to an unapproved gratuity fund, it should be allowed under section 37. By following the binding judgment of the jurisdictional High Court, the Tribunal upheld the CIT(A)'s decision to allow the deduction under section 37.

In conclusion, the Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s decision to allow the deduction towards the gratuity fund and confirming the applicability of section 37 for such deductions.