TMI Blog2005 (7) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... t would be attracted as the fund has not been recognised by the Department. The Tribunal was, therefore, not justified in upholding the deletion of the addition. Accordingly, we answer the question referred to us in the negative, i.e., in favour of the Revenue and against the assessee - - - - - Dated:- 19-7-2005 - Judge(s) : R. K. AGRAWAL., RAJES KUMAR. JUDGMENT The Income-tax Appellate Tribunal, New Delhi, has referred the following question of law under section 256(1) of the Income-tax Act, 1961, hereinafter referred to as "the Act", for opinion to this court: "Whether on facts and in the circumstances of the case, the learned Income-tax Appellate Tribunal was legally correct in upholding the provisions of section 40A(7) applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been paid on account of gratuity to the Life Insurance Corporation and, therefore, the finding of the appellate authority that it was not paid towards gratuity is not correct. He further submitted that as the amount paid towards gratuity to be payable to the employees on their retirement, death or leaving the service to the Life Insurance Corporation in the Gratuity Insurance Assurance Scheme was not recognised by the Department which for non-fulfilment of the conditions mentioned in clause (b) of sub-section (7) of section 40A of the Act cannot be allowed. Learned standing counsel has relied upon a decision of the apex court in the case of Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585. We have given our anxious consideration t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gratuity, still the same will be deductible and section 40A(7) will have no application, would defeat the very purpose and object of section 40A(7) and render it nugatory. The interpretation as suggested by the assessee would entitle the assessee who made no provisions to claim deduction whereas an assessee who made a provision would not get deduction unless the requirements laid down in the sub-section are fulfilled. This interpretation, if accepted, will lead to a curious result, and if one may venture to say, an absurd result, and even where the assessee has not chosen to adopt the spread-over method and has not provided for the present value of the contingent liability attributable to the year of account by charging it on the profits of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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