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TMI Blog1998 (9) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... ding that notwithstanding the absence of such approval, the contribution made to the scheme which remains unapproved till today is allowable as an item of expenditure under s. 37 of the IT Act, 1961. 2. The assessment year is 1976-77. The assessee had adopted the group gratuity scheme formulated by the Life Insurance Corporation of India and it had paid premium to the said Corporation is a sum of Rs. 62,556 during the relevant previous year, The deduction sought for that payment was disallowed by the ITO under s. 36(1)(v) r/w s. 40A(7) of the Act. The CIT to whom the assessee preferred an appeal as also the Tribunal to whom the ITO carried the matter in further appeal were of the view that the deduction was allowable under s. 37 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fund shall nevertheless remain liable to tax on any gratuity paid to any employee. The conditions for approval are set out in r. 3. The approval is to be granted by the Chief CIT or the CIT, who has been vested with that power under r. 2(1) of Part C of Sch. IV. The statutory position, therefore, is that the provision made for gratuity payments to employees in future years is not to be allowed as deduction at all, unless it is by way of contribution made to an approved gratuity fund created under an irrevocable deed of trust. It is therefore not sufficient to have made a provision or to have made a payment by way of premium to a scheme of gratuity, even if it is under an irrevocable deed of trust. What is required further is the approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, and we answer that question accordingly. 6. Counsel for the assessee submitted that as the scheme adopted by the assessee is one which has been found by the CIT in respect of other assessees, who have adopted similar schemes, to be one which merits approval, as the scheme satisfies all the conditions required to be met for securing such approval, the assessee may be permitted to apply to the authorities concerned for approval, and if such approval is granted, to have the benefits of the approval for this assessment year also. We cannot direct the CIT to either grant or withhold the approval. We, however, permit the assessee to apply for such approval and depending upon the result of its application, it will become entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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