TMI Blog2002 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... to the deduction of gratuity amount of Rs. 3,41,203 paid to an approved gratuity fund as a contribution made to the fund. - we hold that the actual payment made to the gratuity fund is allowable as business expenditure and the Tribunal was right in holding that it should be allowed as a business expenditure. Though the question referred to us raises the question regarding allowability under section 36(1)(v) of the Act, we hold that the entire amount would be allowable either under section 36(l)(v) or under section 37 of the Act. Accordingly, the first question referred to us is answered in favour of the assessee and against the Revenue. In view of the answer to the first question, it is unnecessary to answer the second question - - - - - D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the assessee, but proceeded on a different footing and held that the assessee would be entitled to the deduction of the entire amount. The Revenue has challenged the said order in appeal before the Tribunal and the only point that was raised before the Tribunal was that under rule 103 of the Income-tax Rules, the salary paid to an employee at the end of the year should not be taken into consideration for the purpose of allowability of the expenditure under rule 103 of the Rules but the salary paid during the entire year should be taken into consideration for the said purpose. The Tribunal held that under the Payment of Gratuity Act, the gratuity is paid on the basis of the last drawn salary and equally for the purpose of applicability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 36(1)(v) read with the Income-tax Rules, 103. He further submitted even assuming that there was an excess amount, the excess amount would be allowable under section 37 of the Act as there was an actual payment of gratuity to an approved gratuity fund and, therefore, the entire amount would be allowable either under section 36(1)(v) or under section 37 of the Income-tax Act, 1961. Mr. Srinath Sridevan referred to the decision of this court in Triplicane Permanent Fund Ltd. v. CIT [1989] 179 ITR 492, which was followed in CIT v. Rayalaseema Passenger and Goods Transports Pvt. Ltd. [1998] 230 ITR 332 (Mad). We have carefully considered the submissions of learned counsel for the Revenue and the assessee. We are of the view that to deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty fund and there is no change in the legal position as far as the question of considering the allowability of the expenditure on payment basis even after the introduction of section 40A(7) of the Act. Hence, we hold that the actual payment made to the gratuity fund is allowable as business expenditure and the Tribunal was right in holding that it should be allowed as a business expenditure. Though the question referred to us raises the question regarding allowability under section 36(1)(v) of the Act, we hold that the entire amount would be allowable either under section 36(l)(v) or under section 37 of the Act. Accordingly, the first question referred to us is answered in favour of the assessee and against the Revenue. In view of the answe ..... X X X X Extracts X X X X X X X X Extracts X X X X
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