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In the absence of approval to deed of variation the contribution made to Employees Group Gratuity Funds held inadmissible in NATIONAL DAIRY DEVELOPMENT BOARD case ( 2022] 20 ITR-OL 761 (Guj). 

The facts in this case were that the gratuity scheme had remained dormant and inoperative for 15 years in the absence of approvals corresponding to the enhancements in the statutory limit for payment of gratutity from time to time. Pursuant to amendments to Gratuity Act, monetary ceiling limit have  revised from time to time and further last revised from Rs. 1 lakh to Rs. 3.5 lakhs and accordingly, the assessee was under an obligation to seek approval as soon as the amendment happened and was required to submit a deed of variation for approval to enhance the maximum limit of benefit under the scheme but it was much after close of financial year, the trust moved a deed of variation for approval.

As there was no approval of the scheme at the relevant point of time the assessee was held not entitled to deduction of the contribution for payment of gratuity.

Those owning gratuity funds and trust are bound to hold Commissioner approval for enhanced gratuity limit which at present is 20 lacs post March 2018. 

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