9911796707
TMI Blog1982 (1) TMI 119X X X X Extracts X X X X X X X X Extracts X X X X ..... . yr. 1976-77. 2. The assessee is a private limited company. For the asst. yr. 1976-77, the assessee made a provision of Rs. 1,09,973 in the accounts towards liability to pay gratuity to the employees. But the ITO found that the liability on actuarial basis came to Rs. 89,849 and restricted the deduction to that amount in making the assessment on 19th March 1979. The CIT was of the view that thi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pproval was accorded by the CIT w.e.f. that date by his letter dt. 25th July, 1977. The assessee had also paid a sum of Rs. 89,849 into the fund on 31st March, 1976. The provisions of s. 40A(7) introduced in 1975 applied with retrospective effect for the asst. yrs. 1973-74 to 1975-76 only and, therefore, the special provisions have been made for creating a fund paying the amount in instalments for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he revenue which may survive is that the gratuity fund itself was created after the end of the previous year. But, we cannot sustain this objection because there is nothing in the section which requires that the fund should exist during the previous year or that the contribution should be given to the fund during the previous year. The section itself relates to a mercantile system of accounting wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were to be created by the assessee. This is because when the amendment which was made by the Finance Act, 1975 just before the end of the previous year of the assessee, being the year ended 31st May 1975 it would be asking the assessee to perform an impossible condition if the fund should have been set up and also approved before the end of the month when the approval shall be at the pleasur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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