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TMI Blog2005 (7) TMI 55X X X X Extracts X X X X X X X X Extracts X X X X ..... ity being provision only not actually paid?" The present reference relates to the assessment years 1984-85, 1985-86, 1986-87 and 1988-89. Briefly stated the facts giving rise to the present reference are as follows: In respect of the aforementioned assessment years the respondent-assessee claimed deduction in respect of the amount paid to the Life Insurance Corporation of India under the Group Gratuity-cum-Life Insurance Scheme on the terms settled between the Life Insurance Corporation and the respondent-assessee for gratuity payable to the employees on their retirement, death or their leaving the service. The Assessing Officer in view of the provisions of section 40A(7) of the Act disallowed the contribution on the ground that the fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respondent-assessee in the audit report given by the auditor the contribution has been mentioned as gratuity paid to the Life Insurance Corporation. In the case of Shree Sajjan Mills Ltd. [1985] 156 ITR 585, the apex court has held as follows: "On a plain construction of clause (a) of sub-section (7) of section 40A of the Act, what it means is that whatever is provided for future use by the assessee out of the gross profits of the year of account for payment of gratuity to employees on their retirement or on the termination of their services would not be allowed as deduction in the computation of profits and gains of the year of account. The provision of clause (a) was made subject to clause (b). The embargo is on deductions of amou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the year the said estimated liability which he could have provided for but he has not chosen to do so. Where the intention of the Legislature in enacting the provision in question was to put an embargo on the deduction, the interpretation suggested by the assessee defeats that purpose." Respectfully following the principles laid down by the apex court in Shree Sajjan Mills Ltd. [1985] 156 ITR 585 we are of the considered opinion that the amount paid was nothing else but gratuity and merely because the scheme has been mentioned as Gratuity Insurance Assurance Scheme it will not make any difference. The provisions of section 40A(7) of the Act would be attracted as the fund has not been recognised by the Department. The Tribunal was, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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