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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

F5 Networks Innovation Private Limited, Hyderabad vs. Income Tax Officer, Ward-17(1), Hyderabad

In the result, the appeal of the assessee is partly allowed for

ITA 912/HYD/2024[2020-21]Status: DisposedITAT Hyderabad30 Jun 2025AY 2020-21

Bench: Shri Vijay Pal Rao & Shri Madhusudan Sawdia

For Appellant: Shri Sharath Rao & ShriFor Respondent: Shri Narender Kumar Naik
Section 143(1)Section 143(3)Section 92C

No.912/Hyd/2024 12 which is duly reflected in the Tax Audit Report. As per section 43B of the Act, gratuity contributions to an approved gratuity fund are allowable on an actual payment basis. The company has complied with this provision, and thus, the gratuity expense should be treated as an allowable

Technova Imaging Sys (P) Ltd Employees Group Gratutiy Cumla Scheme, Mumbai vs. ITO Ward-22(3)(6), Mumbai

ITA 2460/MUM/2025[2018-19]Status: DisposedITAT Mumbai26 Jun 2025AY 2018-19

Bench: SHRI AMIT SHUKLA (Judicial Member), SHRI GIRISH AGRAWAL (Accountant Member)

Section 10(25)Section 10(25)(iv)Section 143(1)

with Birla Sunlife Insurance, accordingly, the entire income of the assessee was exempt u/s. 10(25)(iv) of the Act as per the approved gratuity fund. For the relevant A.Y.2018-19 assessee has e-filed its return of income declaring ‘nil’ income after claiming the exemption u/s.10

The Staff Gratuity Fund of the Maharashtra State Co Op Cotton Growers Mrkd, Mumbai vs. ITO 25(2)(1), Mumbai

In the result, the appeal is allowed for statistical purposes

ITA 2913/MUM/2025[2015-16]Status: DisposedITAT Mumbai24 Jun 2025AY 2015-16

Bench: Shri Beena Pillai & Smt. Renu Jauhrithe Staff Gratuity Fund Of Vs. Commissioner Of Income The Maharashtra State Co- Tax (Appeals)-National Op Cotton Growers Markd Faceless Appeal Centre, 201, Jolly Bhavan No. 2, New Delhi & Ito 25(2)(1), 2Nd Floor, Room No. 247, 2Nd Floor, 7 New Marine Lines, Kautilya Bhavan, Churchgate, ‘G’ Block, Bandra Kurla Mumbai-400020. Complex, Bandra (East), Mumbai-400051. स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaatt8512G Appellant .. Respondent

For Appellant: Shri. Gautam GokhaleFor Respondent: Mr. Virabhadra S. Mahajan, Sr
Section 10(25)(iv)Section 142(1)Section 144Section 148Section 154

after treating the return in response to notice u/s. 148 as non-est. Thereafter, the assessee applied for registration as an approved Gratuity Fund before CIT (Exemption) vide application dated 17.04.2023, seeking registration from the date of incorporation, i.e. 31.03.1984. However, Ld. PCIT Mumbai-17 vide order dated 18.02.2025 granted

Income Tax Officer- 23(3)(1), Mumbai vs. Uti Asset Management Company Limited Employees Provident Fund, Mumbai

In the result, the appeal of the revenue is dismissed

ITA 2022/MUM/2025[2018-19]Status: DisposedITAT Mumbai30 May 2025AY 2018-19

Bench: Smt. Beena Pillai & Smt. Renu Jauhriआयकर अपील सं./Ita No. 2022/Mum/2025 (निर्धारण वर्ा / Assessment Year :2018-19) Ito, 23(3)(1), Mumbai V/S. Uti Asset Management 5Th Floor, Room No. 525A, बिधम Company Ltd. Employees Piramal Chambers, Parel, Provident Fund Mumbai-400012 5Th Floor Doaa, Uti Tower, Bandra Kurla Complex, Bandra (E), Mumbai-400051 स्थायी लेखा सं./जीआइआर सं./Pan/Gir No: Aaatu2391J Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी

For Appellant: Shri Jayant Bhatt/Shri FaheemFor Respondent: Shri Vivek Perampurna
Section 10Section 10(25)Section 12ASection 143(3)Section 250

clause (1), recognized provident fund referred to in sub- clause (ii), approved superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25);” 8. In view of the above factual and legal position

JCIT (OSD)Cen Cir 1(4), Mumbai vs. Grasim Industires Ltd, Mumbai

In the result, appeal of the Revenue is partly

ITA 3334/MUM/2016[2009-10]Status: DisposedITAT Mumbai23 May 2025AY 2009-10

Bench: Shri Saktijit Dey, Vp & Shri N.K. Billaiya, Am

Section 37(1)Section 40Section 8O

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

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

In the result, appeal of the Revenue is partly allowed for statistical purpose

ITA 2224/MUM/2016[2009-10]Status: DisposedITAT Mumbai23 May 2025AY 2009-10

Bench: Shri Saktijit Dey, Vp & Shri N.K. Billaiya, Am M/S Grasim Industries Ltd. Dcit, (Corporate Finance Division) Central Circle 1(4), A-2, Aditya Birla Centre, Vs. Room No. 902, S.K. Ahire Marg, Worli, Old Cgo Building, Mumbai - 400030 Mumbai-400020 (Appellant) : (Respondent) Pan No. Aaacg 4464B Dcit, M/S Grasim Industries Ltd. Central Circle 1(4), (Corporate Finance Division) Room No. 902, A-2, Aditya Birla Centre, Old Cgo Building, Vs. S.K. Ahire Marg, Worli, Mumbai-400020 Mumbai - 400030 Appellant By : Shri J.D. Mistri, Sr. Advocate, Shri Madhur Agarwal & Respondent By : Shri Dr. Kishor Dhule, Cit(Dr) (Appellant) (Respondent)

For Appellant: Shri J.D. Mistri, Sr. AdvocateFor Respondent: Shri Dr. Kishor Dhule, CIT(DR)
Section 37(1)Section 40Section 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

ACIT 6(3), Mumbai vs. Grasim Industires Ltd, Mumbai

In the result Revenue's appeal is dismissed

ITA 6758/MUM/2011[2008-09]Status: DisposedITAT Mumbai21 May 2025AY 2008-09

Bench: Shri Saktijit Dey, Vp & Shri N.K. Billaiya, Am

Section 36(1)(va)

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

Toyota Boshoku Automotive India Private Limited, Bidadi vs. Assessment Unit, Income Tax Department Or the DCIT, Circle - 7(1)(1), Koramangala

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

ITA 1539/BANG/2024[AY 2020-21]Status: DisposedITAT Bangalore09 May 2025

Bench: Shri Waseem Ahmed & Shri Keshav Dubey

For Appellant: Shri K.R Vasudevan, AdvocateFor Respondent: Ms. Neera Malhotra, CIT (DR)
Section 234ASection 270A

certain gratuity expenses which is duly reflected in the Tax Audit Report. As per section 43B of the Act, gratuity contributions to an approved gratuity fund are allowable on an actual payment basis. The company has complied with this provision, and thus, the gratuity expense should be treated

Makcur Laboratories Limited, Gandhinagar vs. The Income Tax Officer, Ward-1, Gandhinagar

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

ITA 1443/AHD/2024[2019-20]Status: DisposedITAT Ahmedabad08 Apr 2025AY 2019-20

Bench: Dr. B.R.R. Kumar, Vice-Ms. Suchitra Kamble

For Appellant: Shri Rupesh R. Shah, ARFor Respondent: Shri Kavan Limbasiya, Sr DR
Section 143(1)Section 143(1)(a)Section 250Section 40A(7)Section 40A(7)(a)Section 40A(7)(b)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 Explanation. - For the removal of doubts ... 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 a deduction in computing the income of the assessee

Karnataka Cashew Development Corporation Ltd Employees Gratuity Fund Trust, Mangalore vs. Income Tax Officer, Ward-1 (Exemptions), Mangalore

In the result, accordingly, the appeal of the assessee is allowed for statistical purposes

ITA 139/BANG/2025[2021-22]Status: DisposedITAT Bangalore28 Mar 2025AY 2021-22

Bench: Shri Laxmi Prasad Sahu & Shri Keshav Dubeyassessment Year : 2021-22

For Appellant: Shri R. Chandrashekar, AdvocateFor Respondent: Ms. Neha Sahay, Jt.CIT(DR)(ITAT), Bengaluru
Section 10(12)Section 10(25)Section 11Section 12ASection 143(1)Section 143(1)(a)Section 234ASection 234C

Appeals) and submitted that assessee is eligible for exemption u/s. 10(12) and 10(25) of the Act since it is approved gratuity fund. Approval/recognition was granted on 31.3.1994 as per amended Page 4 of 5 provisions w.e.f. 1.4.2020. Amendment in section 12AB w.e.f. 1.4.2021 is not applicable

Breach Candy Hospital Trust Employees Comprehensive Gratuity Scheme, Mumbai vs. Income Tax Officer, Ward 19(1)(2), Mumbai

In the result, both the appeals of the assessee are treated as allowed for statistical purposes

ITA 3739/MUM/2023[2017-18]Status: DisposedITAT Mumbai27 Feb 2025AY 2017-18

Bench: Shri B.R. Baskaran & Shri Raj Kumar Chauhan

For Appellant: Shri J.D. Mistri &For Respondent: Ms. Monika H. Pande, Sr. DR
Section 10(25)(iv)

Section 10(25)(iv)of the Act provides exemption of income received by trustees on behalf of an approved gratuity fund. During the course of assessment proceedings, the AO asked the assessee to furnish a copy of approval granted to the gratuity fund by the competent authority.In response thereto ... Supreme Court (referredabove)and contended that the exemption should not be denied.Since exemption u/s 10(25)(iv) is granted to an “approved gratuity fund”, we are aware that the tax authorities wouldalways insist uponthe production ofcopy of approval granted to the gratuity fund in order to grant exemption

Breach Candy Hospital Trust Employees Comprehensive Gratuity Scheme, Mumbai vs. Income Tax Officer, Ward 19(1)(2), Mumbai

In the result, both the appeals of the assessee are treated as allowed for statistical purposes

ITA 3738/MUM/2023[2016-17]Status: DisposedITAT Mumbai27 Feb 2025AY 2016-17

Bench: Shri B.R. Baskaran & Shri Raj Kumar Chauhan

For Appellant: Shri J.D. Mistri &For Respondent: Ms. Monika H. Pande, Sr. DR
Section 10(25)(iv)

Section 10(25)(iv)of the Act provides exemption of income received by trustees on behalf of an approved gratuity fund. During the course of assessment proceedings, the AO asked the assessee to furnish a copy of approval granted to the gratuity fund by the competent authority.In response thereto ... Supreme Court (referredabove)and contended that the exemption should not be denied.Since exemption u/s 10(25)(iv) is granted to an “approved gratuity fund”, we are aware that the tax authorities wouldalways insist uponthe production ofcopy of approval granted to the gratuity fund in order to grant exemption

National Association of Interlocking Surgeons, Solapur, Maharashtra vs. The ITO, Exemption Ward 1(2), Pune, Maharashtra

In the result, all the three appeals of the assessee are allowed

ITA 2817/PUN/2024[2014-2015]Status: DisposedITAT Pune12 Feb 2025AY 2014-2015

Bench: Dr.Manish Boradआयकर अपील सं. / Ita Nos.2816, 2817 & 2560/Pun/2024 Assessment Years : 2010-11, 2014-15 & 2016-17

For Appellant: Shri C.H. NaniwadekarFor Respondent: Shri Sanjay K. Dhivare
Section 154Section 167ASection 167BSection 250

Board have been advised that cases where income received by the trustees on behalf of a recognised 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

National Association of Interlocking Surgeons, Solapur, Maharashtra vs. The ITO, Exemption Ward 1(2), Pune, Maharashtra

In the result, all the three appeals of the assessee are allowed

ITA 2816/PUN/2024[2010-2011]Status: DisposedITAT Pune12 Feb 2025AY 2010-2011

Bench: Dr.Manish Boradआयकर अपील सं. / Ita Nos.2816, 2817 & 2560/Pun/2024 Assessment Years : 2010-11, 2014-15 & 2016-17

For Appellant: Shri C.H. NaniwadekarFor Respondent: Shri Sanjay K. Dhivare
Section 154Section 167ASection 167BSection 250

Board have been advised that cases where income received by the trustees on behalf of a recognised 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

National Association of Interlocking Surgeons, Solapur, Maharashtra vs. The ITO, Exemption Ward 1(2), Pune, Maharashtra

In the result, all the three appeals of the assessee are allowed

ITA 2560/PUN/2024[AAATN9300L]Status: DisposedITAT Pune12 Feb 2025

Bench: Dr.Manish Boradआयकर अपील सं. / Ita Nos.2816, 2817 & 2560/Pun/2024 Assessment Years : 2010-11, 2014-15 & 2016-17

For Appellant: Shri C.H. NaniwadekarFor Respondent: Shri Sanjay K. Dhivare
Section 154Section 167ASection 167BSection 250

Board have been advised that cases where income received by the trustees on behalf of a recognised 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

Mayurakshi Gramin Bank Employees Provident Fund, Pbgb Regional, Suri, Birbhum vs. D.C.I.T., Circle - 3, Suri, Birbhum

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

ITA 1159/KOL/2024[2015-2016]Status: DisposedITAT Kolkata31 Jan 2025AY 2015-2016

Bench: Shri Duvvuru Rl Reddy, Vice-(Kz) I.T.A. No. 1159/Kol/2024 Assessment Year: 2015-2016 Mayurakshi Gramin Bank Employees Provident Fund,………………………………………Appellant Pbgb Regional, Suri Birbhum-731101, West Bengal [Pan:Aabtm2580Q] -Vs.- Deputy Commissioner Of Income Tax,……...Respondent Circle-3, Suri, Aayakar Bhawan, Lalkuthipara, Suri, Birbhum-731101, W.B. Appearances By: Shri S.K. Tulsian, Advocate & Ms. Lata Goyal, Ca, Appeared On Behalf Of The Assessee Shri Subhro Das, Addl. Cit, Appeared On Behalf Of The Revenue Date Of Concluding The Hearing: January 23, 2025 Date Of Pronouncing The Order: January 31, 2025 O R D E R

Section 10Section 10(25)Section 10(25)(ii)Section 139Section 143(3)Section 254

income received by the trustees on behalf of an approved superannuation fund; (iv)any income received by the trustees on behalf of an approved gratuity fund; (v)any income received— (a)by the Board of Trustees constituted under the Coal Mines Provident Funds and Miscellaneous Provisions ... clause (i), recognised provident fund referred to in sub-clause (ii), approved superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25); (xii) Employees State Insurance Fund referred to in clause

Indira Gandhi Institute of Technology, Saranga vs. ITO, Exemption, Bhubaneswar

In the result, appeal of the assessee stands dismissed

ITA 375/CTK/2024[2015-16]Status: DisposedITAT Cuttack30 Jan 2025AY 2015-16

Bench: Before Shri George Mathanmember & Manish Agarwal Manish Agarwalassessment Year : 2015-16 Indira Gandhi Institute Of Indira Gandhi Institute Of Vs. Ito, Ito, Exemption, Exemption, Technology, Technology, Saranga, Saranga, Bhubaneswar. Kamakhya Kamakhya Nagar, Nagar, Dist: Dhenkanal-759146 759146 Pan/Gir No. No.Aaati 5050 J (Appellant (Appellant) .. ( Respondent Respondent) Assessee By : Shri Natabar Panda, Adv Adv Revenue By : Shri S.C.Mohanty, Sr Dr : Shri S.C.Mohanty, Sr Dr Date Of Hearing : 30/01/20 2025 Date Of Pronouncement : 30/01/20 025 O R D E R Per Bench

For Appellant: Shri Natabar Panda, AdvFor Respondent: Shri S.C.Mohanty, Sr DR
Section 10Section 139Section 139(1)Section 143(1)Section 147Section 148Section 148ASection 197A

clause (i), recognised provident fund referred to in sub-clause (ii), approved superannuation funds referred to in sub-clause (iii), approved gratuity fund referred to in sub-clause (iv) and funds referred to in sub-clause (v) of clause (25); (xii) Employees’ State Insurance Fund referred to in clause

Gurumachideva Vividhodeesha Sahakara Sangh Ltd., Udupi vs. Income Tax Officer, Ward-1 & Tps, Udupi

In the result, the appeal filed by the assessee is allowed for statistical purposes

ITA 1345/BANG/2024[2017-18]Status: DisposedITAT Bangalore10 Jan 2025AY 2017-18

Bench: Shri Laxmi Prasad Sahu & Shri Soundararajan K.Assessment Year : 2017-18

For Respondent: Shri Mahesh .R. Uppin
Section 40A(7)Section 40A(7)(b)Section 43(2)Section 80P(2)(a)

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. Explanation.—For the removal of doubts ... 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 a deduction in computing the income of the assessee

Standard Hr Solutions, New Delhi vs. ITO, Ward- 22(2), New Delhi

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

ITA 4100/DEL/2017[2011-12]Status: DisposedITAT Delhi29 Nov 2024AY 2011-12

Bench: Shri Vikas Awasthy & Shri Avdhesh Kumar Mishra

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘G’: NEW DELHI BEFORE SHRI VIKAS AWASTHY, JUDICIAL MEMBER AND SHRI AVDHESH

Deputy Commissioner of Income Tax, Circle, Patiala vs. Punjab State Power Corporation Limited, Patiala

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

ITA 659/CHANDI/2023[2012-13]Status: DisposedITAT Chandigarh28 Nov 2024AY 2012-13

Bench: SHRI. VIKRAM SINGH YADAV (Accountant Member), SHRI. PARESH M. JOSHI (Judicial Member)

For Appellant: Shri Rajiv Saldi, C.AFor Respondent: Smt. Kusum Bansal, CIT, DR
Section 36(1)(va)Section 43B

existing provisions of the 1961 Act, the contribution made by an employer towards a recognised provident fund, an approved superannuation fund or an approved gratuity fund is allowable as a deduction from business income under clauses (iv) and (v) respectively, of section 36(1), subject to certain limits. However, section