9911796707
TMI Blog1982 (1) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... had deducted the contributions amounting to Rs. 1,71,701 to the gratuity fund for the employees and Rs. 6,50,000 as initial contribution to the Non-Executive Employees Gratuity Fund. This assessee, along with certain other companies, which were wholly-owned subsidiaries of Brooke Bond Liebig Ltd. (BBL), UK, for administrative convenience, set up a common fund in the name of Tea Estates India (P.) Ltd. Non-Executive Employees Gratuity Fund. Under the rules of that fund, the fund was deemed to be created by the contributing companies within the meaning of section 36(1)(v) of the Act. Applications for approval of the gratuity fund having been filed by the several companies, the Commissioner, West Bengal, by his Memo No. Assmnt./74-31-32/CT/GF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot contemplate a common fund and, therefore, section 36(1)(v) referred to a fund for exclusive benefit of the employees, a contribution to a fund which entered to the benefit of other employees also will not qualify for deduction (sic). It was, therefore, submitted that the order of the Commissioner should be confirmed. 4. On consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed, on more than one ground. Firstly, section 36(1)(v) allows a deduction of any sum paid by the assessee as an employer by way of contribution to an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust. The Fourth Schedule lays down the rules for the approval of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rpose. The very fact that rule 3 merely states that the employer shall be a contributor to the fund means that the fund need not be confined to the employees of the assessee only and it could be any fund the sole purpose of which is the provision of gratuity to the employees and to which several assessees whose employees will be benefited may be contributors. It is obvious that the revenue has understood this provision to mean only that because approval had been given to this fund which is a common fund catering to the benefit of the employees of several companies deeming such fund to be created by each of those companies (sic). We are unable to agree with the Commissioner that the expression "for the exclusive benefit of the employees" s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance with the rules in the Fourth Schedule, there is no warrant for the view that there cannot be a common fund with exclusive object of providing gratuity benefit for the employees of other employers who contribute to that fund. Therefore, we are of the opinion that the approval originally given to the gratuity fund was correct and the deductions given in the original assessment for the contributions to such an approved gratuity fund was also correct and the Commissioner was in error in withdrawing the allowance. 5. Secondly, the deduction had been given in the original assessment on the basis that the same was paid by the assessee by way of contribution towards an approved gratuity fund. The fund could be approved only if it conforms to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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