TMI Blog849/CBDT.X X X X Extracts X X X X X X X X Extracts X X X X ..... ecome payable during the previous year or for the purpose of making any payment on account of gratuity to employees where such provisions will continue to be eligible for deduction as hitherto. 2.With a view to mitigating hardship in cases where provision has been made by the assessee in their accounts for the previous years relating to assessment years 1973-74 to 1975-76 on the basis of their understanding of the law and the clarification given by the Board in Circular No. 47 dated 21-9-70, the new section 40A(7) has made a saving provision. Under this provision the prohibition regarding allowance of provision for gratuity will not apply in relation to such amount of the provision as does not exceed an amount calculated at the rate of 8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of creation of the approved gratuity fund. 3. For the removal of doubts, it has been specifically provided that where any provision made by the assessee in his accounts for payment of gratuity to his employees has been allowed as deduction in any previous year, any sum paid out of such provision by way of contribution to an approved gratuity fund or by way of gratuity to any employee will not be allowed as deduction in computing the income of the assessee in later previous year in which the sum is so paid. 4. It will be seen that the bar on allowance of provisions made for the payment of gratuity to employees will not apply for the assessment years 1973-74 to 1975-76 only if all the conditions referred to in para 2 above are fulfi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be noted that as the provision in section 220(2) of the Income-tax Act relating to payment of interest on the unpaid demand is mandatory assessees will have to pay interest under this provision on the demand allowed to be paid in instalments. (b) Penalty is exigible for making a false estimate of the current income for purposes of advance tax as also for filing an incorrect return of income. Interest is also charged in cases where advance tax paid by a person on the basis of his own estimate falls short of 75 per cent of the tax determined on regular assessment. In view of the position that the deduction of the provisions for payment of gratuity in computing the correct income for purpose of payment of advance tax was in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X
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