COMMISSIONER OF INCOME TAX Vs. JAMUNA AUTO INDUSTRIES

JUDGEMENT

(1.) WHETHER the assessee could claim deduction in lieu of provision made for gratuity despite the fact that gratuity fund had not been approved by the Commissioner of Income -tax (for short, 'the CIT') is the question which arise for determination in this reference made by the Income -tax Appellate Tribunal, Chandigarh Bench, Chandigarh (for short, 'the Tribunal') under s. 256(1) of the IT Act, 1961 (for short, 'the Act').

(2.) THE assessee is carrying on the business of manufacturing auto spring leaves, etc. For the asst. yr. 1978 -79, it filed the assessee which the latter set apart as gratuity payable to the employees. CIT(A), Chandigarh, upheld the addition made by the AO on the ground that gratuity fund had not been approved by the CIT. However, the Tribunal accepted the assessee's appeal and allowed deduction to the tune of Rs. 33,542 in lieu of gratuity fund. It referred to order dt. 28th gratuity fund by the CIT could not be made basis for disallowance under s. 40A(7) of the Act.

(3.) ON an application filed by the CIT under s. 256(1) of the Act, the Tribunal referred the question of law for the opinion of this Court in the following terms : "Whether, on the facts and in the circumstances of the case, the Tribunal has been right in law in holding that the assessee had complied with the provisions of s. 40A(7) of the IT Act, 1961, and hence its claim cannot be rejected, though the gratuity fund had not been approved by the CIT for the asst. yr. 1978 -79."