9911796707
TMI Blog1979 (5) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... herry. Attingal branch became a separate concern w.e.f. 17th Aug., 1973 and Changanacherry branch became a separate concern w.e.f. 1st July, 1975. 4. In the aforesaid background we first take up ITA No. 510/Coch/77-78 that is the appeal of the Changanacherry concern. There was an agreement between Parthas Textile Trust and one M. Srinivasa Reddiar, K.L. Veeriah Mohanraj, K.L. Parthasarathy, Radharani, Seematti, S. Varadarajulu, S. Arjuna and S. Rajakrishnan dt. 21st June, 1975 whereby Parthas Textile Trust was to sell the Changanacherry branch to the aforesaid eight persons. Immediately, thereafter on the 1st July, 1975 an instrument of partnership was drawn up between the aforesaid eight persons whereby the business bought from Parthas T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant. The provision has been funded with a fund created by a sister concern of the appellant. In order to claim the benefit of the deduction of gratuity provision the fund should be created by the assessee and not by others. In view of this, I hold that the disallowance was rightly made." 9. The assessee is in appeal. The learned counsel for the assessee submitted that the contention of the assessee had not been correctly appreciated by the authorities below. He stated that a trust deed dt. 23rd Dec., 1975 had been drawn up between Parthas Trust on the one hand and three trustees on the other to constitute a gratuity fund, the trust deed mentioned that the employer was desirous of providing benefits to the employees and the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the benefit of his or its employees, being -(i) HUF, company, firm or other association of persons or (ii) an individual engaged in a business or profession the profits and gains where of are assessable to IT under the head "Profits and gains of business or Profession". He stated that inasmuch as the Changanacherry concern on 15th March, 1975 was a part of the Parthas Trust, the Changanacherry concern fell within the definition of "employer" and the concern had entered into an agreement dt. 23rd Dec., 1975 with the trustees as contemplated. According to the learned counsel, therefore, the Parthas Trust Fund should be construed in terms of s. 40-A to be a trust which had been created by the assessee. He also submitted that since in te ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parthas Trust on 15th March, 1975 but had ceased to be their employees on 23rd Dec., 1975. The next submission of the Departmental Representative was that the agreement between the assessee and the trustees executed on 23rd Dec., 1975 could not be construed as part of the trust deed. 12. Finally, he urged that since the trust was not created by the assessee and even if created by the assessee it was not for the exclusive benefits of its employees, the deduction would not be permissible as the requirements of s.40A (7)(b) (ii) (2) were not satisfied. 13. We have considered the submissions of the parties. Mention of the documents, on which the learned counsel for the assessee placed reliance and which would go to show how the assessee ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the appeal by Attingal concern, it was stated that the said concern was separated from Parthas Textile Trust on 17th Aug., 1973. The arguments advanced by the learned counsel, in respect of the Changanacherry concern, would not be applicable to the Attingal concern because the aforesaid trust deed even according to the learned counsel for the assessee had retrospective effect only from 15th March, 1975 and the Attingal concern had separated before the date i.e. from 17th Aug.,1973. We have already set out the definition of the term "employer" in the rules and in our view the definition does not cover those concerns which had already separated prior to the coming into force of the trust deed. The definition can at best apply only to thos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clearly governed by this exception. This clause, no doubt, provides that the provision should be made in accordance with the actual valuation of ascertainable liability and the assessee should create an approved gratuity fund. It lays down some further conditions, but all these conditions have to be fulfilled in future. Sub-sec.(7), therefore, creates no bar so far as the present case is concerned." 16. Having heard the learned Departmental Representative we are unable to accept the contention of the assessee. The judgment in question was delivered on 14th Nov., 1975 and there was time provided for executing the trust deed till 1st Jan., 1976. Therefore, on 14th Nov., 1975 certainly it would have been premature to make any disallowance on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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