INCOME TAX ACT, 1961

Section 36(1)(v)

Business deduction under section 36(1)(v) - Group Gratuity-cum-Life Insurance Scheme Premium - Denial for want of approval of gratuity scheme - Payment made to LIC not being a provision, but actual expenditure claimed under gratuity scheme

Assessee-bank claimed deduction of Group Gratuity-cum-Life Insurance Scheme Premium paid by it. AO disallowed deduction on the ground that gratuity scheme was not approved as per the requirement of section 36(1)(v).Held: Employer-bank did not have any control over the funds of irrevocable trust created exclusively for the benefit of employees and gratuity scheme was being managed by LIC for which an agreement was entered into between trustees of the fund and LIC. All the contributions made by assessee in the said fund ultimately came back to bank employees' Grautity Fund. Also, assessee had not made provision but made payment before filing of return of income and claim of assessee had been allowed in earlier years since inception of fund, accordingly, disallowance of premium under section 36(1)(v) was without jurisdiction.

Followed:CIT v. Textool Co. Ltd. (2013) 216 Taxman 327 (SC) : 2013 TaxPub(DT) 2118 (SC).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2007-08, 2011-12 & 2012-13

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