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TMI Blog2017 (9) TMI 1585X X X X Extracts X X X X X X X X Extracts X X X X ..... nal referring to the case of Bitoni Lamps Ltd. (2004 (9) TMI 74 - PUNJAB AND HARYANA High Court) as held that if payments towards funds were made no disallowance should be made even if approval was pending and had decided the issue in favour of the assessee - I. T. A. /4350/Mum/2016 - - - Dated:- 27-9-2017 - Sh. Rajendra Accountant Member Ravish Sood Judicial Member Revenue by: Shri Tufail Ahmed Khan-DR Assessee by: Shri Harsh Shah-AR ORDER PER Rajendra AM Challenging the order dated 01. 04. 2016 of the CIT (A)-54 Mumbai the assessee has filed the present appeal. Assessee-company functioning as a sub-agent of M/s. Hanjin Shipping India Pvt. Ltd. filed its return of income on 29/09/2009 declaring total income at R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT-Central-III Mumbai for approval. After considering the assessment order and submission order the FAA held that till the date of disposal of the appeal the GF had not been approved by the CIT concerned though the assessee had filed an application for approval. He referred to section 36(1) (v) 40A(7) and 2 (5)of the Act and held that any GF could be treated as approved GF only when same had been approved by the PCCIT/CCIT/PCIT/CIT that the assessee had submitted and appliaction for approval of its GF that mere filing of application would not meet the requirement as stipulate -ed u/s. 2(5) of the Act. Finally he upheld the order of the AO. 5. Before us the AR argued that the assessee had already made an application that the granting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund u/s 40A(7) of the Act. 2. The AO observed that contribution towards gratuity of LIC of ₹ 26 53 000/- was claimed u/s 40 A(7) of the IT Act. It was stated by the assessee that application for recognition of group gratuity scheme was pending for approval before the Income Tax Authorities. Accordingly claim of payment of ₹ 26 53 000/- to LIC was not allowable u/s 40A (7) of the IT Act. It was submitted that contribution to LIC towards gratuity was allowable in the light of the decision of Hon ble Punjab Haryana High Court in the case of CIT Vs Bitoni Lamps Ltd. 277 ITR 396. The AO however held that gratuity liability cannot be allowed when the assessee did not have any approved gratuity fund. The claim was accordingly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is clear from the above provision that section 40A (7) of the IT Act would apply in respect of the provision only. However in the case of the assessee the assessee claimed deduction of the expenditure on account of actual expenses claimed under the head gratuity contribution. ITAT Ahmedabad Bench in the case of New Bharat Engineering Works (Jam) Ltd. (supra) held Disallowance under s. 40A(7) Gratuity Actual payment of funds to LIC and not mere provision Not hit by s. 40A(7) CIT vs Gujarat Machine Tools (ITA 666/Ahd/1985) followed . Hon ble Punjab Haryana High Court in the case of CIT Vs Bitoni Lamps Ltd. 144 Taxman 33 held that Section 40A(7) of the Income-tax Act 1961 Business disallowance Gratuity Assessment year 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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