Income Tax Officer Ward 4 (1), Baroda ................Respondent Appearances by: Mehul K Patel for the appellant V K Singh for the respondent Date of concluding the hearing: November 13, 2017 Date of pronouncing the order: November 15, 2017 O R D E R Per Pramod Kumar AM: 1. This appeal challenges order dated 14th February 2014, passed by the learned CIT(A) in the matter of assessment under section 143(3) of the Income Tax Act, 1961, for the assessment year 201011, on the following grounds: "1. The learned AO and the learned CIT (Appeals) have erred in disallowing contribution to gratuity fund of Rs.5,63,235/ holding that the gratuity fund was not approved on the date of contribution, not appreciating that the approval was in process and hence, the contribution was allowable as a deduction. 2. Without prejudice to the above and if it is held that the same is not allowable u/s 36(1)(v), it is respectfully submitted and claimed that the same be allowed u/s 37 of the Act as business expenditure." 2. The issue in appeal lies in a very narrow compass of material facts. During the relevant previous year, the assessee had set up an employees' gratuity fund, by the name of Prakash Software Solutions Pvt Ltd Employees Group Gratuity Scheme for administering a scheme, which was named as Prakash Software Solutions Pvt Ltd Employees Group Gratuitycum Life Assurance Scheme, in collaboration with the Life ITA No. 1390/Ahd/2014 M/s. Prakash Software Solution Pvt Ltd vs. ITO A.Y. 201011 Page 2 of 7 Insurance Corporation of India. This trust was set up on 1st January 2010 and was effective from 1st January 2010. On 03.03.2010, an initial payment of Rs.5,63,235, as premium under this scheme for the period of one year commencing from 1st January 2010, to Pension and Group Schemes Department of the Life Insurance Corporation of India. As the payment was made on behalf of the gratuity fund, this premium paid to the LIC was treated as contribution to the said gratuity fund. The gratuity fund had also applied, vide letter dated 31st March 2010, on 07.04.2010, for approval of the said fund by the Commissioner of Income Tax under rule 2(1) of Part C to the Third Schedule to the Incometax Act, 1961. It was in this backdrop a deduction of Rs.5,63,235 was made for contribution towards approved gratuity fund. However, this claim was declined by the Assessing Officer on the ground that "the assessee has applied for the approval of gratuity fund, after making payment to Gratuity Fund" and that "hence, as per provisions of Section 36(1)(v), the said contribution to the gratuity fund is not eligible for deduction". The Assessing Officer also noted that "the assessee has not received any approval from the statutory authority for its gratuity fund till date". Aggrieved by denial of this deduction of Rs.5,95,485, assessee carried the matter in appeal before the CIT(A) but without any success. Learned CIT(A), inter alia, observed that "at the time of making of contribution, the appellant had not filed any application for approval of gratuity fund, and hence the disallowance made by the Assessing Officer is correct". The assessee is not satisfied and is in further appeal before us. 3. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of applicable legal position. 4. It is important to note that in the meantime, the Commissioner of Income Tax has granted appr