TMI Blog2007 (11) TMI 2X X X X Extracts X X X X X X X X Extracts X X X X ..... ified and allowed assessee appeal - ITA No. 423/2007 - - - Dated:- 7-11-2007 - ORDER 1. After hearing learned counsel for the parties, we admit the appeal and frame the following substantial questions of law for consideration: (a) Whether the Income Tax Appellate Tribunal ( Tribunal ) was correct in law in deleting the addition of Rs.1,88,40,319/- made by the Assessing Officer ( AO ) on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nditure debited by the Assessee to the Profit and Loss Account while computing book profit under Section115JA of the Act 2. There are certain other questions sought to be urged by the Revenue which we are not prepared to entertain. We give our reasons hereafter. 3. One question concerns a challenge to the decision of the Tribunal deleting the addition of Rs.37,67,226 made by the AO as a re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision for gratuity, a payment of Rs.10,80,000/- was made on 7 th January, 1998 and the balance amount of Rs.16,05,869/- was credited during the year. The submission on behalf of the Assessee was that this was an ascertained liability made towards contribution to an approved gratuity fund and therefore allowable as a deduction. The Tribunal accepted this contention. It held that Section 40A (7) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng a statutory liability is not actually paid during the year in question will not convert it into an unascertained liability. The law in this regard is well settled and has been explained by the Supreme Court in Bharat Earth Movers Ltd. v. Commissioner of Income Tax [2000} 245 ITR 428. There the Supreme Court held that that if a business liability has definitely arisen in the accounting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch disallows deduction of any provision of gratuity to employees on their retirement is itself made subject to Section 40A (7) (b) which allows such deduction as long as it is made towards an approved gratuity fund. There is no dispute that in the instant case the provision made is towards contribution to an approved gratuity fund. Therefore the claim by the Assessee for deduction on this score wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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