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2014 (5) TMI 14 - RAJASTHAN HIGH COURTEntitlement for deduction on gratuity u/s 40A(7) of the Act – Held that:- The assessee is a limited company - By virtue of the Gratuity Act of 1972, gratuity was deductible in three cases only as to where it is paid or has become payable during the accounting year or where a contribution is made towards an approved gratuity fund or provision is made for such contribution and where a contribution is made towards an unapproved gratuity fund and under a trust - after considering Section 40A(7) when the assessee has complied with all the conditions laid down, the assessee was certainly entitled to the entire deduction of the gratuity paid/payable or provision made by the assessee. Under the Gratuity Act, 1972, the assessee company is liable to pay gratuity to its employees who have completed five years of service for the total length of their service as provided under the said Act - The assessee company would become liable to pay gratuity to its employees for their past services rendered in accordance with the provisions of the Payment of Gratuity Act - On coming into force of the Gratuity Act, the assessee company became liable to provide an amount of ₹ 48,17,760/- by way of gratuity to its employees which included current as well as past liability for which provision was made - the liability to pay the said amount arose in the previous year, relevant to the assessment year 1973-74 and all the conditions laid down in the sub-clause (ii) of clause (b) of Sec. 40A(7) have been fulfilled, the Tribunal has rightly upheld the claim – Decided against Revenue.
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