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“approved gratuity fund”

Chapter I - PreliminarySection 2 - DefinitionsSection 2(5) / Part C of Fourth Schedule / ITR Part A-OI118 judgments

The decision most relied on for approved gratuity fund is Union of India v. Exide Industries (425 ITR 1), cited in 146 judgments on BharatTax.

Leading authorities on approved gratuity fund

Union of India v. Exide Industries
425 ITR 1 · 2020 · Supreme Court
146
citing judgments

The provision for leave encashment is allowable as a deduction only on an actual payment basis under Section 43B(f) of the Income Tax Act, 1961. The Supreme Court upheld the constitutional validity of Section 43B(f).

Commissioner of Income-tax v. Society for Promotion of Education, Adventure Sport & Conservation of Environment
382 ITR 6 · 2016 · Supreme Court
26
citing judgments

If an assessee has applied for approval of a fund or exemption within a reasonable time, the exemption should not be denied due to delays in processing by the tax authorities. The taxing authorities erred in holding that gross receipts are taxable without allowing expenditure when exemption is denied.

Agrawal Flooring Stone Co. v. CIT
216 ITR 757 · 1995 · High Court
17
citing judgments

An amount paid by an assessee to its employees' approved gratuity fund is not deductible if it is not paid wholly and exclusively for the purposes of the business. A payment made by way of contribution to a gratuity fund, while it may be for the benefit of the employees, must also be demonstrably for the purpose of the business itself to qualify for deduction.

CIT v. Bitoni Lamps Ltd.
144 Taxmann 33 · Reported
17
citing judgments

Disallowance under Section 40A(7) of the Income Tax Act cannot be made solely on the ground that the gratuity fund is not approved, especially when the payment is made to an LIC group gratuity fund and approval is pending.

327 (SC) Pr.CIT vs. Rajasthan State Seed Corporation 386 ITR 267 (Raj) and CIT v. Continental Commercial Co. Ltd.
192 ITR 66 · 1991 · High Court
10
citing judgments

For a provision for gratuity to be allowed as a deduction, the assessee must create an approved gratuity fund for the exclusive benefit of its employees under an irrevocable trust, and the application for approval must be made to the Commissioner.

Judgments citing approved gratuity fund

Solutions Infini Technologies (India) Private Limited, Bangalore vs. Deputy Commissioner of Income Tax, Circle 6(1)(1), Bangalore

In the result, the appeal of the assessee is treated as partly allowed for statistical purposes

ITA 1381/BANG/2025[2023-24]Status: DisposedITAT Bangalore06 Mar 2026AY 2023-24

Bench: Shri Waseem Ahmed & Shri Soundararajan Kassessment Year: 2023-24

For Appellant: Shri Ketan Ved, CAFor Respondent: Shri Subramanian, JCIT (DR)
Section 143(1)Section 250Section 40A(7)Section 43B

IN THE INCOME TAX APPELLATE TRIBUNAL ‘B’ BENCH, BANGALORE BEFORE SHRI WASEEM AHMED, ACCOUNTANT MEMBER AND SHRI SOUNDARARAJAN K, JUDICIAL

DCIT-4(1), Indore vs. Maral Overseas Ltd, Khargone

In the result appeal of Revenue is dismissed

ITA 571/IND/2025[2006-07]Status: DisposedITAT Indore27 Feb 2026AY 2006-07

Bench: Shri B.M. Biyani & Shri Paresh M Joshidcit-4(1), Indore Maral Overseas Ltd., बनाम/ Maral Sarovar, V& Po Vs. Khalbujurg, Kasrawad, Khargone, Bhopal

Section 10BSection 143(3)Section 246ASection 250Section 253Section 36Section 40A(7)Section 40A(7)(b)Section 40A(9)

company for the employees was not approved by competent authority and assessee got approval w.e.f. 01.04.2007, it is not a approved gratuity fund. Therefore claim of assessee u/s 40A(7), for gratuity is not allowable. It is also not allowable as per u/s 40A(9) also which is reproduced ... Delhi has erred in deleting disallowance of Rs. 1,45,87,125/- made by the AO on account of contribution made to un approved gratuity fund. We hold that Ld. CIT(A) in the “Impugned order” has not erred in law. In para 9 & 9.1 internal page

Deputy Commissioner of Income Tax, Chennai vs. M/S. Chemplast Sanmar Limited, Chennai

In the result, the appeal filed by the Revenue is partly-allowed for statistical purposes

ITA 2627/CHNY/2025[2017-18]Status: DisposedITAT Chennai06 Feb 2026AY 2017-18

Bench: Shri George George K & Shri Inturi Rama Raoआयकर अपील सं./Ita No.: 2627/Chny/2025 िनधा"रण वष"/Assessment Year: 2017-18 The Deputy Commissioner Of Chemplast Sanmar Limited, Income Tax, Vs. 9, Cathedral Road, Non-Corporate Circle 8, Chennai - 600 086. Chennai Pan: Aaacc 3000F (अपीलाथ"/Appellant) (""यथ"/Respondent) अपीलाथ" क" ओर से/Appellant By : Ms. Gouthami Manivasagam, Addl.Cit ""यथ" क" ओर से/Respondent By : Shri R. Vijayaraghavan, Advocate सुनवाई क" तारीख/Date Of Hearing : 03.02.2026 घोषणा क" तारीख/Date Of Pronouncement : 06.02.2026

For Appellant: Ms. Gouthami ManivasagamFor Respondent: Shri R. Vijayaraghavan, Advocate
Section 115JSection 143(3)Section 14ASection 40A(7)Section 40A(7)(b)Section 40A(9)Section 43B

relation to any provision made by the assessee for the purpose of payment of a sum by way of any contribution towards an approved gratuity fund, or for the purpose of payment of any gratuity, that has become payable during the previous year. . . . . ” 18. Clause (a) of Section ... termination. Clause (b) carves out an exception to the stipulation under clause (a), to the extent of a contribution made towards an approved gratuity fund or for the purpose of payment of any gratuity that has become payable during the previous year. :- 6 -: 19. Section 43B too commences with

Pawai Trust, New Delhi vs. Deputy Commissioner of Income Tax, New Delhi

In the result appeal filed by the assessee is allowed

ITA 5106/DEL/2025[2021-22]Status: DisposedITAT Delhi06 Feb 2026AY 2021-22

Bench: Shri S. Rifaur Rahman & Shri Raj Kumar Chauhanpawai Trust , Vs. Dcit B-60-61 C/O Bajaj Auto Ltd. Cirlce 49(1) Naraina Industrial Area Phase Ii Delhi New Delhi (Pan: Aaatp0445J)

For Appellant: Ms. Vasanti Ben Patel, Adv &For Respondent: Sh. Ankush Kalra, Sr DR
Section 11Section 143(1)Section 234CSection 243CSection 243c

Board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise

Cisco Systems (India) Private Limited, Bangalore vs. The Principal Commissioner of Income Tax - 2, Koramangala, Bangalore

In the result, the appeal of the assessee is hereby dismissed

ITA 1234/BANG/2025[AY 2021-22]Status: DisposedITAT Bangalore30 Jan 2026

Bench: Shri Waseem Ahmed & Shri Soundararajan Kassessment Year: 2021-22

For Appellant: Shri Nageshwar Rao, AdvocateFor Respondent: Shri Shivanad Kalakeri, CIT (DR)
Section 143(3)Section 144BSection 263Section 37(1)

Sections 36(1)(iv), 36(1)(v), and 43B of the Act. It was submitted that contributions made to recognized provident and approved gratuity funds are allowable deductions under Section 36 of the Act, subject to the condition under Section 43B of the Act that such payments are actually made ... paid within the due date, was disallowed by the assessee itself in its computation of income. Similarly, the total cost recognized towards the approved gratuity fund was ₹39,35,86,063/-, all of which was paid before the due date of filing the return. Hence, no disallowance was warranted under

Vihar Trust, New Delhi vs. Deputy Commissioner of Income Tax, New Delhi

In the result, captioned appeals of the assessee in ITA Nos

ITA 4374/DEL/2025[2023-24]Status: DisposedITAT Delhi29 Jan 2026AY 2023-24

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 11Section 12ASection 143(1)Section 167BSection 250

that cases where income received by the trustees on behalf of a recognized Page | 5 ITA No.4372-4374/Del/2025 provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise

Vihar Trust, New Delhi vs. Deputy Commissioner of Income Tax, New Delhi

In the result, captioned appeals of the assessee in ITA Nos

ITA 4373/DEL/2025[2022-23]Status: DisposedITAT Delhi29 Jan 2026AY 2022-23

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 11Section 12ASection 143(1)Section 167BSection 250

that cases where income received by the trustees on behalf of a recognized Page | 5 ITA No.4372-4374/Del/2025 provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise

Vihar Trust, New Delhi vs. Deputy Commissioner of Income Tax, New Delhi

In the result, captioned appeals of the assessee in ITA Nos

ITA 4372/DEL/2025[2021-22]Status: DisposedITAT Delhi29 Jan 2026AY 2021-22

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 11Section 12ASection 143(1)Section 167BSection 250

that cases where income received by the trustees on behalf of a recognized Page | 5 ITA No.4372-4374/Del/2025 provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income-tax Act, the question of their being charged to tax does not arise

Adani Tracks Management Service Limited (Formerly Known As Adani Tracks Management Service Private Limited) (Also Formerly Known As Surguja Rail Corridor Private Limited), Gurgaon vs. DCIT Circle 3(1), Gurgaon

In the result, the appeal filed by the assesse is allowed

ITA 1128/DEL/2023[2020-21]Status: DisposedITAT Delhi21 Jan 2026AY 2020-21

Bench: Shris.Rifaur Rahman & Shri Anubhav Sharmaadani Tracks Management Vs. Ao-Cpc (Bangalore) Service Limited (Formerly Known (Jurisdictional Ao-Dcit, As Adani Tracks Management Circle-3(1), Gurgaon. Service Pvt. Ltd.) (Also Formerly Known As Surgula Rail Corridor Pvt. Ltd., Plot No. 83, Sector 32 Adani House, \ Institutional Area, Gurgaon, Delhi-110006. (Pan: Aaocs5350A) (Appellant) (Respondent) Assessee By : Dhrunal Bhatt, C.A. Revenue By : Shri Ajay Arora, Sr. Dr Date Of Hearing : 04.11.2025 Date Of Order : 21.01.2026 Order Per S. Rifaur Rahman: The Assessee Has Filed Appeal Against The Order Of The Learned Commissioner Of Income Tax (Appeals)/National Faceless Appeal Centre (Nfac), Delhi [“Ld. Cit(A)”, For Short] Dated 20.02.2023 For The Assessment Year 2020-21, Wherein The Assesse Has Raised Following Grounds:-

For Appellant: Dhrunal Bhatt, C.AFor Respondent: Shri Ajay Arora, Sr. DR
Section 115JSection 143(1)Section 40A(7)Section 43B

such provisions has made by the assesse shall not be allowed u/s 40A(7) unless such payments are made to any contribution towards approved gratuity funds 3 orpayment of any gratuity becomes payable during previous years. After considering submissions of the assesse, he observed that the assesse has made

JCIT Cent. Cir. - 1(4), Mumbai vs. Grasim Industries Ltd, Mumbai

The appeal is allowed

ITA 1561/MUM/2018[2011-12]Status: DisposedITAT Mumbai31 Dec 2025AY 2011-12

Bench: Justice (Retd.) C V Bhadang & Ms Padmavathy S, Am

For Appellant: Shri Yogesh Thar / Ms SukanyaFor Respondent: Shri Arun Kanti Datta, CIT-DR
Section 153CSection 250Section 43BSection 80I

Section 36(1)(v) of the Act says any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund has to be allowed as deduction. Unlike Section 36(1)(iv) Section 36(1)(v) is not subject to any condition. 39. According

DCIT, Circle 3 4, Mumbai vs. Tata Consultancy Services Limited, Mumbai

In the result, appeals of both, revenue and assessee are partly

ITA 2244/MUM/2025[2017-18]Status: DisposedITAT Mumbai30 Dec 2025AY 2017-18

Bench: Shri Pawan Singh & Shri Girish Agrawal

For Appellant: Shri Porus Kaka, Sr. AdvocateFor Respondent: Shri Ajay Chandra, CIT DR
Section 92CSection 92C(3)

IN THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI GIRISH AGRAWAL, ACCOUNTANT

Narmada Trust, New Delhi vs. The Income Tax Officer, New Delhi

In the result, both the appeals of the assessee are allowed

ITA 2531/DEL/2025[2022-23]Status: DisposedITAT Delhi30 Dec 2025AY 2022-23

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Vasantiben Patel, AdvFor Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Section 11Section 12Section 12ASection 143(1)

board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income –Tax Act, the question of their being charged to tax does not arise

Narmada Trust, New Delhi vs. The Income Tax Officer, New Delhi

In the result, both the appeals of the assessee are allowed

ITA 2530/DEL/2025[2021-22]Status: DisposedITAT Delhi30 Dec 2025AY 2021-22

Bench: Shri C. N. Prasad & Shri M. Balaganesh

For Appellant: Shri Vasantiben Patel, AdvFor Respondent: Shri Rajesh Kumar Dhanesta, Sr. DR
Section 11Section 12Section 12ASection 143(1)

board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income –Tax Act, the question of their being charged to tax does not arise

Prasam Rakesh Choudhary, Girnar Society, Bapurao Galli, Itwari, Nagpur vs. Deputy Commissioner of Income Tax, Central -1, Bhopal

Appeal is dismissed

ITA 529/IND/2025[2018 -2019]Status: HeardITAT Indore22 Dec 2025

Bench: Ms. Suchitra R. Kamble & Shri B.M. Biyaniacit Circle-1(1) M/S. Rashtriya Takniki Bhopal Shikshak Prashikshan Evam Anunsandhan Sansthan बनाम/ Samiti, Vs. Bhopal (Revenue/Appellant) (Assessee/Respondent) Pan: Aabar2266H Assessee By Shri Ashish Porwal, Sr. Dr Revenue By Shri Vinod Joshi, Ar Date Of Hearing 08.12.2025 Date Of Pronouncement 22.12.2025

Section 10Section 271(1)(c)Section 43(1)

fact that the services of some employees had been taken over upon acquisition of a business, but they were not members of an approved gratuity fund unlike other employees of the assessee. Under these circumstances, the tax return was finalized and filled in by a named person

Assistant Commissioner of Income Tax Circle-1(1), Bhopoal, Bhopal vs. M/S Rashtriya Takniki Shikshak Prashikshan Evam Anunsandhan Sansthan, Bhopal

Appeal is dismissed

ITA 509/IND/2025[2014-15]Status: DisposedITAT Indore22 Dec 2025AY 2014-15

Bench: Ms. Suchitra R. Kamble & Shri B.M. Biyaniacit Circle-1(1) M/S. Rashtriya Takniki Bhopal Shikshak Prashikshan Evam Anunsandhan Sansthan बनाम/ Samiti, Vs. Bhopal (Revenue/Appellant) (Assessee/Respondent) Pan: Aabar2266H Assessee By Shri Ashish Porwal, Sr. Dr Revenue By Shri Vinod Joshi, Ar Date Of Hearing 08.12.2025 Date Of Pronouncement 22.12.2025

Section 10Section 271(1)(c)Section 43(1)

fact that the services of some employees had been taken over upon acquisition of a business, but they were not members of an approved gratuity fund unlike other employees of the assessee. Under these circumstances, the tax return was finalized and filled in by a named person

M/S. Cpv Engineer Private Limtied, Hubballi vs. The Income Tax Officer, Ward-1(1), Hubballi

In the result, both the appeals filed by the assessee are partly allowed

ITA 1487/BANG/2024[2015-16]Status: DisposedITAT Bangalore02 Dec 2025AY 2015-16

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Narendra Sharma, AdvocateFor Respondent: Shri N Baluswamy, Jt.CIT(DR)(ITAT), Bengaluru
Section 143(3)

profit and loss account towards the gratuity. The learned assessing officer is of the view that the contribution towards an approved gratuity fund created by the assessee for the exclusive benefits of the employees is only deductible. Assessee submitted when questioned that assessee is a small scale industry, employees

M/S. Cpv Engineer Private Limtied, Hubbalii vs. The Income Tax Officer, Ward-1(1), Hubballi

In the result, both the appeals filed by the assessee are partly allowed

ITA 1486/BANG/2024[2014-15]Status: DisposedITAT Bangalore02 Dec 2025AY 2014-15

Bench: Shri Prashant Maharishi & Shri Keshav Dubey

For Appellant: Shri Narendra Sharma, AdvocateFor Respondent: Shri N Baluswamy, Jt.CIT(DR)(ITAT), Bengaluru
Section 143(3)

profit and loss account towards the gratuity. The learned assessing officer is of the view that the contribution towards an approved gratuity fund created by the assessee for the exclusive benefits of the employees is only deductible. Assessee submitted when questioned that assessee is a small scale industry, employees

Vindhya Trust, Delhi vs. Delhi

In the result, appeal of the assessee is allowed

ITA 2122/DEL/2025[2024-25]Status: DisposedITAT Delhi28 Nov 2025AY 2024-25

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 11Section 143(1)Section 250

Board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income- tax Act, the question of their being charged to tax does not arise

Vindhya Trust, Delhi vs. Deputy Commissioner of Income Tax, Delhi

In the result, appeal of the assessee is allowed

ITA 2121/DEL/2025[2023-24]Status: DisposedITAT Delhi28 Nov 2025AY 2023-24

Bench: Shri Anubhav Sharma & Shri Manish Agarwal

Section 11Section 143(1)Section 250

Board have been advised that cases where income received by the trustees on behalf of a recognized provident fund, approved superannuation fund and approved gratuity fund is governed by section 10(25) of the Income- tax Act, the question of their being charged to tax does not arise

The Kasauli Club, Solan vs. Income Tax Officer, Exemption Ward, Solan

The appeal stand partly allowed for statistical purposes

ITA 832/CHANDI/2025[2020-21]Status: DisposedITAT Chandigarh19 Nov 2025AY 2020-21

Bench: Hon’Ble Shri Laliet Kumar, Jm & Hon’Ble Shri Manoj Kumar Aggarwal, Am आयकर अपील सं./ Ita No.832/Chandi/2025 (िनधा"रणवष" / Assessment Year: 2020-21) The Kasauli Club Ito, Exemption Ward बनाम/ Vs. Upper Mall, Kasauli Club, Kasauli, Solan (Hp) - 173213 Solan, Himachal Pradesh - 173204 "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aabct-6983-F (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Sh. Sahil Chadha (Advocate) – Ld. Ar ""थ"कीओरसे/Respondent By : Dr. Ranjit Kaur (Addl. Cit) – Ld. Sr. Dr सुनवाईकीतारीख/Date Of Hearing : 20-11-2025 घोषणाकीतारीख /Date Of Pronouncement : 20-11-2025 आदेश / O R D E R Manoj Kumar Aggarwal () 1. Aforesaid Appeal By Assessee For Assessment Year (Ay) 2020-21 Arises Out Of An Order Of Learned Addl. / Joint Commissioner Of Income Tax (Appeals), Nfac [Cit(A)] Dated 23-04-2025 In The Matter Of An Intimation Issued By Cpc U/S 143(1) On 18-12-2021 Disallowing Provision Of Gratuity For Rs.14,50,110/- U/S 40A(7) As Reported By Tax Auditor. Having Heard Rival Submissions, The Appeal Is Disposed-Off As Under.

For Appellant: Sh. Sahil Chadha (Advocate) – Ld. ARFor Respondent: Dr. Ranjit Kaur (Addl. CIT) – Ld. Sr. DR
Section 143(1)Section 40A(7)Section 40A(7)(a)

provisions as made by the assessee for the purposes of payment of a sum by way of an contribution towards an approved gratuity fund or for the purpose of any gratuity that has become payable during the previous year. Nothing has been established before us that the said provision ... account of contribution to approved gratuity fund. Therefore, the deduction could not be allowed to the assessee either under clause (a) or under clause (b). However, Ld. AR has made a limited prayer that the assessee has paid sum of Rs.2,52,710/- towards LIC premium and another amount