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TMI Blog1997 (11) TMI 17X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 256(1) of the Income-tax Act, 1961: "Whether the Tribunal was right in law in holding that in view of the provisions of section 40A(7) of the Income-tax Act, 1961, the applicant is not entitled to the deduction of the sum of Rs. 3,14,614 being the gratuity liability that has arisen under the provisions of the Payment of Gratuity Act, 1972 ?" The assessee is a registered firm and dur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted which had been recognised by the Commissioner and actual transfer of the funds had not also been effected. The Appellate Assistant Commissioner, therefore, held that the assessee had not complied with all the three conditions provided in section 40A(7) of the Act and, therefore, the provision made towards the gratuity cannot be allowed as a deduction in the computation of income under the Inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... counsel for the assessee is untenable. The Appellate Assistant Commissioner as well as the Income-tax Appellate Tribunal have found that the assessee had not complied with the requirements of section 40A(7) of the Act. Since the assessee had failed to fulfil the three statutory conditions prescribed under section 40A(7) of the Act, we are of the view that the assessee is not entitled to claim dedu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... question refers to the disallowed sum as Rs. 3,14,614. But the actual amount which was disallowed by the Income-tax Officer is only Rs. 2,98,433. Accordingly, the sum of Rs. 2,98,433 shall be substituted as the correct sum for the figure of Rs. 3,14,614 in the question of law referred to us. Following the decision of the Supreme Court, we answer the question of law referred to us in the affirmativ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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