Gratuity Policy from LIC by a Society
(b) nothing in clause (a)shall apply in relation to any provision made by the assesse 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.
Section 36 deals with deduction allowable in computing the income under section 28 (Profit and gains of Business or profession). Clause (1)(v) of the section say any sum paid by the assessee as an employer by way of contribution towards an approved Gratuity fund created by him for exclusive benefit of his employees under an irrevocable trust.
A Society maintain its Books of account on accrual basis and makes provision of Gratuity on actuarial basis.
My quarry is – (i) whether society can claim deduction of Gratuity provision while computing its income and its application as its income is chargeable u/s 11 and 12, while provisions of Section 36, 40A applicable for computing income under the head Profit and gains from Business or profession and not applicable to the Trust / Society.
(ii) if by any interpretation, provisions of section 40A apply to Society, whether it may take Gratuity policy from LIC directly without forming any Gratuity Trust?
and there is no income under head business or profession of the Society.