9911796707
TMI Blog1991 (2) TMI 75X X X X Extracts X X X X X X X X Extracts X X X X ..... to the fund in the years relevant to earlier assessment years ?" Earlier, during the assessment year 1973-74, the assessee had claimed deduction towards estimated gratuity liability, but this was not allowed. At that time, there was no fund established by the assessee. In October, 1975, the assessee created a trust and established a fund towards its gratuity liability with effect from October 1, 1975. The fund required approval. This approval was granted during the assessment year in question with retrospective effect. The assessee thereafter contributed to this fund as part of the initial fund. The Income-tax Officer disallowed this on the ground that a similar claim made by the assessee in the year 1973-74 had been disallowed and it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithin the permitted category of deductions. The Supreme Court was not concerned with the provisions of section 40A(7) which were inserted in the Act in the year 1973. However, the Supreme Court has pointed out that an estimated liability under a gratuity scheme, even if it amounted to a contingent liability, if properly ascertainable and its present value was fairly discovered, was deductible. Mr. Chanderkumar is right that the said principle is not applicable here. But, at the same time, it will have to be noted that the instant case is covered by section 40A(7)(b) of the Act. By virtue of this provision, the bar against deduction is taken away, if the contribution is towards an approved gratuity fund. Under section 36(1)(v), it is clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar in this regard permits the contribution of initial fund in five annual instalments. This is referred to in the third edition of Income-tax Law by Chaturvedi page 1213. The Tribunal also refers to the availability of five instalments. Therefore, even if the fund was established with effect from October 1, 1975, the contribution made thereto as initial contribution after the approval was obtained cannot be held as outside the purview of rule 104 ; it will be a valid contribution. In Triplicane Permanent Fund Ltd. v. CIT [1989] 179 ITR 492, the Madras High Court held that any contribution to the approved fund is deductible and in case the statutory requirements are contravened, it is for the authority concerned to take action and it would ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
