595 : Circular No. 595, dated 05-03-1991

1335. Clarification regarding winding up of superannuation funds

1. The Board had clarified earlier that a gratuity fund, approved under the Income-tax Act, cannot be wound up unless it is neces­sitated by the winding up or discontinuance of the employer’s trade or undertaking, and that the revocation of a gratuity fund cannot be permitted on the basis of a resolution of the trustees and/or beneficiaries.

2. The Board has been requested to consider whether an approved superannuation fund can be allowed to be wound up only when the undertaking of the assessee is wound up or discontinued.

3. Rules 93 and 94 of the Income-tax Rules, relating to superan­nuation funds, are analogous to rules 107 and 108 of the Income-tax Rules relating to gratuity funds. Further rule 3(a) of Part ‘B’ of the Fourth Schedule to the Income-tax Act prescribes that superannuation funds should be established under an irrevocable trust in connection with a trade or undertaking.

4. The Board has, therefore, been advised that an approved super­annuation fund also cannot be wound up unless necessitated by the winding up or discontinuance of the employer’s trade or undertak­ing.

Circular : No. 595, dated 5-3-1991.