9911796707
TMI Blog1983 (2) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... conditions laid down u/s 40A (7)(b)(ii)(3) of the Act. Later, at the instance of the assessee by its letter dt. 10th April 1977 the ITO passed an order u/s 155(13) of the Act, dt. 23rd May 1977 allowing deduction in respect of provision for gratuity of Rs. 1,65,354. Again, latter there was a reassessment u/s 147(b) for withdrawing depreciation allowed on trade marks. The assessment was made on 15th Feb 1977. In an order dt. 21st April 1981 the ITO after referring to his order u/s 155(13) dt. 23rd May 1977 allowing provision for gratuity of Rs. 1,65,354 and the reassessment and a further revision on 4th February 1980 of the total income at Rs. 8,19,140, stated that the assessee has not complied with the provisions of s. 40A(7) and the allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has transferred as much as Rs. 38,951 to the approved gratuity fund before 31st March 1976 and Rs. 90,775 before 31st March 1977. According to the CIT(A) it is enough if the assessee transfers 50% of Rs. 29,748, the liability relating to the concerned previous year on or before 31st March 1976 and the remaining 50% on or before 31st March 1977. In view of the payment noticed by him,as stated above, he considered that the assessee has fulfilled the conditions to be respect of the asst. yr. 1973-74. He, however, disallowed the balance of the claim and aggrieved by his order, the assessee is in further appeal before the Tribunal. 3. On the above stated facts, the contentions of the assessee before us are firstly that there is no mistake in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... departmental authorities. He contended that the conditions prescribed u/s 40A(7)(b)(ii) apply to the entire amount of provision made by the assessee in respect of gratuity and as undisputedly the assessee has not made payment of 50% of the total liability by 31st March 1976 and the remaining 50% by 31st March 1977, the assessee was not entitled to deduction and the ITO was, therefore, justified in withdrawing the allowance. At any rate, it is submitted that the assessee is not entitled to the deduction of the provision reliable to earlier years in regard to which it could not be said that the assessee had complied with the conditions of s. 40A(7)(b)(ii). It was further submitted that even assuming that the requirements of the said condition ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tuity Act in Sep 1972 and, therefore, the first year in which the liability under the Act was imposed on the assessee is the asst. yr. 1973-74. Sec. 40A(7) provides for the purpose of allowance of any provision relating to the asst. yrs. 1973-74 to 1975-76 for the creation of an approved gratuity fund for the exclusive benefit of his employees and application for approval thereof to be made on or before 1st Jan 1976. It also provides for payment to such fund 50% of the admissible amount of liability by way of contribution to such fund before 1st April 1976 and the balance before 1st April, 1977. Thus, the provisions of s. 40A(7) of the Act contemplate that even though an approved gratuity fund was not in existence during the relevant previo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment by way of contribution to an approved gratuity fund was not covered by any of the provisions of s. 36. Sec. 36(1)(v) allowing deduction in respect of gratuity contemplates actual payment of any sum to an approved gratuity fund and not any provision for the purpose of such payment. The distinction between cl. (i) and cl. (ii) of s. 40A(7)(b) appears to us to be that the provisions of cl.(ii) are confined to the allowance for the three asst. yrs. 1973-74 to 1975-76 only and in respect of provision for liability for all the other years it is cl. (i) which will apply. It is the contention of the assessee, in which we find some force, that the provision contemplated in cl. (ii) is the provision referable to the asst. yrs. 1973-74 to 1975-76 ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
