Law:

Section:

Section 40A(7), read with sections 43B and 36(1)(va), of the Income-tax Act, 1961 - Business disallowance - Gratuity - Assessment years 1990-91 and 1991-92 - Whether provisions of section 43B are not applicable in respect of claim for deduction of premium payable towards gratuity to which section 40A(7)(b) applies - Held, yes - Whether, by virtue of provisions of section 43B, benefit of deduction of gratuity payment towards fund can be obtained only in year in which payment is effected to said fund irrespective of previous year in which liability to pay such sum was incurred by assessee according to method of accounting regularly employed by him - Held, yes Section 43B, read with section 36(1)(va), of the Income-tax Act, 1961 - Business disallowance - Certain deductions to be allowed only on actual payment - Assessment year 1990-91 - Whether where employer did not pay amount of contribution to ESI fund within due date, same could not be allowed as deduction, notwithstanding fact that amount was paid during previous year relevant to assessment year in question - Held, yes FACTS The assessee claimed deduction of a provision towards the contribution to as approved gratuity-cum-life insurance premium. In respect of assessment year 1990-91, the assessee also claimed deduction towards ESI payment. The Assessing Officer disallowed the assessee's claim towards gratuity fund on the ground that said amounts were not paid on due date provided under section 43B read with section 36(1)(va) Explanation. The Assessing Officer also disallowed assessee's claim in respect of ESI payment for similar reasons. On appeal, theCommissioner (Appeals) deleted the addition of gratuity holding that no due date had been prescribed under section 36(1)(v) as contrasted with section 36(1)(va) read with section 2(24) and section 43B. So far as the disallowance under section 43B in respect of ESI payment was concerned, the Commissioner (Appeals) held that in view of the fact that the payment had been made during the accounting year relevant to the assessment year 1990-91, the question of applying the provisions of section 43B did not arise. On further appeal, the Tribunal upheld the deletion…

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