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TMI Blog2004 (9) TMI 74X X X X Extracts X X X X X X X X Extracts X X X X ..... unt of gratuity paid to the gratuity trust, is an allowable deduction in the absence of approval of gratuity fund?" The assessee is a resident limited company and its method of accounting is mercantile. The accounting period for the relevant assessment year 1979-80 ended on December 31, 1980. The assessment was framed by the Assessing Officer on October 31, 1981. The assessee's claim for deduction of Rs. 10,428 on account of gratuity was rejected with the following observations: "The assessee-company has claimed a sum of Rs. 10,428 as deduction under section 40A(7)(b)(i) on account of contribution to gratuity fund created by it and approved by the Commissioner of Income-tax with effect from August 18, 1980. The claim is not in order becau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... proval was ultimately accorded on September 23, 1980, with effect from August 18, 1980. In view of the fact that the payment had actually been made, the absence of approval is not materially relevant. It is also seen that during other years in similar circumstances, the disallowance was either not made by the learned Income-tax Officer nor such disallowance was deleted by the first appellate authority and such actions are said to have been accepted by the Revenue. In the given circumstances, we are of the opinion that the learned Income-tax Officer was not justified to disallow the assessee's claim and the learned Commissioner of Income-tax (Appeals) rightly vacated a wrong finding. For such a conclusion, we find support from the Tribunal's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction in respect of any provision for payment of gratuity is admissible. Clause (b), however, provides for two exceptions to the general rule contained in clause (a). As per clause (b), the provision for gratuity can be allowed: (i) if it had been made for payment by way of contribution towards an approved gratuity fund; or (ii) if the provision is for the purpose of payment of any gratuity that has become payable during the previous year. The Tribunal, in this case, has found that the deduction has not been claimed on the basis of any provision made in the books of account of the assessee. The deduction had been claimed on account of the gratuity actually deposited in the fund. Thus, the deduction was not claimed in respect of a provis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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