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TMI Blog2015 (6) TMI 1204X X X X Extracts X X X X X X X X Extracts X X X X ..... tuity debited to the Profit & Loss Account and the applicability of provisions of section 43B and 40A(7) of the Act. 3. The relevant facts are that the assessee, who is engaged in the business and manufacturing of safety relief valves, filed its return of income declaring a total income of Rs. 12,64,00,713/-. In the assessment, the Assessing Officer quantified the total taxable income at Rs. 12,85,08,706/- and made various additions. One such addition relates to provision for gratuity of Rs. 20,95,266/- u/s 43B of the Act. Otherwise, the assessee created a provision of Rs. 50,95,266/- towards gratuity fund. Out of the same, Rs. 30 lakhs was already paid before the due date of filing the return of income, leaving the balance payable at the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... judication before the Tribunal. Relying on the decisions of CIT vs Commonwealth Trust (P) ltd (supra) and CIT vs Bechtel India (P) Ltd (supra), the assessee was granted relief on the very same issue. 7. We heard both the parties and perused the orders of the Revenue as well as the judgments cited before us. On a perusal of para 4.2 of the CIT(A)'s order as well as paras 5 to 8 of the order of the Tribunal in the assessee's own case for assessment year 2007-08 (supra), we find the issue has to be decided in favour of the assessee and against the Revenue. For the sake of completeness of this order, we reproduce below paras 5 to 8 of the order of the Tribunal: " 5. Heard both sides. Perused orders of lower authorities and the decisions reli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T Vs. Common Wealth Trust (P) Ltd &Anr. (supra) held as under:- "Section 40A(7) of the Income-tax Act, 1961, was introduced by the Finance Act, 1975, with retrospective effect from April 1, 1973, and section 43B was introduced by the Finance Act, 1983, with effect from April 1, 1984. Section 40A says that the provisions of this section shall have effect notwithstanding anything to the contrary contained in any other provision of the Act relating to the computation of income under the head "Profits and gains of business or profession". Similarly, section 43B opens with a non obstante clause. Section 40A(7) provides that in cases covered by the provisions of clause (a) no deduction shall be allowed in respect of any provision whether called ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns, viz., sections 40A(7) and 43B. Section 40A(7) is in negative terms and section 43B is in positive terms, the effect of both these provisions is that in order to claim deduction in respect of payment to a gratuity fund there must be actual payment and that deduction cannot be allowed on the basis of any provision. The only exception to the above rule is with regard to the provision for payment to an approved gratuity fund. It cannot be interpreted that the later pro vision in section 43B by introducing the non obstante clause would abrogate the special provision with regard to the provision made for payment to an approved gratuity fund contained in section 40A(7)(b)(i). This is all the more so since no patent conflict or inconsistency ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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