Winding up of gratuity fund.

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....er company while the business of the company was continuing. 2. The matter was examined in the light of the provisions of Rule 3(a) and Rule 7 of part C of Fourth Schedule to the Income-tax Act and Rule 106,107 and 108 of the Income-tax Rules, particularly with a view to finding out whether there was any inconsistency in these provisions. On the one hand, Rule 3(a) of part C of Fourth Schedule an....

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....es that the gratuity payable to an employee whose service has been terminated for any wilful omission or negligence causing any damage or loss or destruction of property belonging to the employer shall be forfeited to the extent of the damage or loss so caused. It further provides that the gratuity payable to an employee whose services have been terminated for riotous or disorderly conduct or any ....

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....le 108 of Income-tax Rules which envisages the winding up of a gratuity fund. The question of winding up of trust fund arises only when the company is wound up or discontinued in terms of Rule 107 of the Income-tax Rules. Rule 107 provides that where the employer's trade or undertaking is to be wound up or discontinued, the trustees shall make satisfactory arrangement for the payment of gratuity t....