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TMI Blog1978 (12) TMI 103X X X X Extracts X X X X X X X X Extracts X X X X ..... ions were satisfied. 2. The assessee appealed to the AAC. The AAC stated that in view of the specific provisions of s. 40-A (7)(a) of the IT Act, 1961, the amount of provision could not be allowed as a deduction. He went on to observe that he was informed that the assessee had taken steps to comply with the requisite provisions and while he upheld the disallowance made by the ITO he stated that as soon as the assessee complied with the requisite provisions they should bring to the notice of the ITO who would verify the same and allow appropriate relief. 3. The assessee is aggrieved with the decision of the AAC. It was submitted by the learned counsel for the assessee that the gratuity fund was constituted under a deed of trust dt. 26th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the fund, the mortgage was one of immovable property because it was secured on the printing machinery embedded in the earth. But the Commissioner was of the view that in effect the parties had not treated the printing machinery as part of the land to which it was attached and was hence movable property and, therefore, the investment of Rs. 75,000 made by the fund did not satisfy the requirements of r. 101 of the I.T. Rules as it then existed. 5. According to the learned counsel, the trust deed of 26th Aug., 1970 was only amended by the Trust deed of 2nd Jan., 1975 and both the deeds have to be read together and there was no separate fund constituted by the deed of 2nd Jan., 1975. He stated that the latter deed of 2nd Jan., 1975 had to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irectors by means of a resolution passed at a meeting of the Board of Directors of the Company and (c) there should be the prior approval of the CIT. According to him, condition (a) and condition (c) were not satisfied though there was a meeting of the Board of Directors on 24th Dec.,1973 who approved the revised trust deed. 7. In reply to the objections of the learned Departmental Representative, the submissions of the learned counsel for the assessee were that the trustees under the deed of 26th Aug., 1970 were the same three trustees as in the deed of 2nd Jan., 1975 and, therefore, since the three trustees had signed the fresh deed the requirement of the resolution in writing signed by all the trustees were satisfied, i.e., item (a) re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to 31st Aug., 1972. A fund under the scheme was, therefore, in existence in the accounting period under consideration. We have set out the terms of the trust deeds, i.e., cl. 16 which enumerates the manner in which the trust deed can be amended. In as much as the trust deed of 2nd Jan., 1975 has been signed by the same three trustees who are trustees under the deed of 26th Aug., 1970 we consider, that the condition that a resolution in writing signed by all the trustees required for amendment can be deemed to have been satisfied. The resolution of Board of Directors exists. The CIT has granted approval to the fund by his order dt. 30th March, 1978 w.e.f. 2nd Jan., 1975. This is the date of execution of the latter deed. We could, therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... PQR(1) for the asst. yr. 1971-72. The AAC disallowed the expenditure stating that no material was produced before him to show that the guest house was used only by the employees. Even if it was used only by the employees and directors, still, according to the AAC, the expenditure would fall within the meaning of the expression under s. 37(4) of the IT Act. The learned counsel submitted that the issue as to who occupied the guest house etc. was examined by the AAC in his order dt. 13th Feb., 1978 for the asst. yrs. 1971-72 and 1972-73 when the matter was restored to him by the Tribunal. He pointed out from the order of the AAC that the log-book showed that some non-employees had used the flat though the expenditure on such user was not much ..... X X X X Extracts X X X X X X X X Extracts X X X X
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