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Commissioner Of Income-Tax vs Indira Cotton Mills (P) Ltd. on 19 October, 1994 cites

Peoples Engineering & Motor Works Ltd. vs Commissioner Of Income-Tax on 4 August, 1980

7. The provisions of s. 40A of the Act will have effect notwithstanding anything to the contrary contained in any other provisions of the Act relating to computation of income under the head "Profits and gains of business or profession". They would have effect notwithstanding anything contained in ss. 30 to 39 of the Act and as prescribed under cl. (a) of sub-s. (7) thereof no deduction shall be allowed in respect of any provision whether called as such or by any other name made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason. This provision, however, is subject to the prescription contained in cl. (b) thereof. Clause (b)(i) excludes from the operation of cl. (a) contribution to an approved gratuity fund and the amount provided for or set apart for payment of gratuity which would be payable during the year of account. Clause (b)(ii) deals with a situation where the assessee makes provision by the spread over method and provides that such provision would be excluded from the operation of cl. (a) provided the three conditions laid down by the aforementioned sub-clause are satisfied, that is : (1) the provision being made in accordance with an actuarial valuation of the ascertainable liability; (2) the assessee creating an approved gratuity fund for the exclusive benefit of the employees under an irrevocable trust; and (3) at least 50 per cent. of the admissible amount has been paid by the assessee by way of contribution to the gratuity fund before 1st April, 1976, and the balance of the amount paid on or before 1st April, 1977. The last two conditions, it is conceded, are satisfied. The first, however, has to be understood in the light of the first Explanation that the admissible amount of deduction should not exceed eight and one-third per cent. of the salary of each employee entitled to the payment of such gratuity for each year of his service in respect of which such provision is made and the second Explanation, where any provision made by the assessee for the payment of gratuity to his employees on their retirement or on termination of their employment for any reason has been allowed as a deduction in computing the income of the assessee for any assessment year, any sum paid out of such provision by way of contribution towards an approved gratuity fund or by way of gratuity to any employee shall not be allowed as deduction in computing the income of the assessee of the previous year in which the sum is so paid.
Calcutta High Court Cites 20 - Cited by 7 - S Mukharji - Full Document
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