Law:

Section:

I. Section 43B of the Income-tax Act, 1961 - Business disallowance - Certain deduction to be allowed only on actual payment - Assessment year 2001-02 - Managerial provision for pension created by assessee-company for its employees by introducing a pension scheme over and above benefits available under superannuation scheme could not be disallowed by invoking provisions of section 43B [In favour of assessee] In order to retain managerial employees, the assessee-company introduced a pension scheme which was over and above the benefits available under superannuation scheme of the company. This scheme was non-funded and applicable to all management employees. The assessee sought deduction of provision of pension. The Assessing Officer disallowed the same by invoking the provisions of section 43B(b) on the ground that even if it was an ascertained liability, the deduction could not be allowed in the absence of contribution to the pension fund. The Commissioner (Appeals), however, reversed the decision of the Assessing Officer. The Tribunal upheld the order of the Commissioner (Appeals). Held that clause (b ) of section 43B deals with certain funds available for the benefit of the employees and, therefore, unless the payments are actually made to those employees, the same would not be entitled for deduction. Clause (b) of section 43B mentions about provident fund, superannuation fund, gratuity fund and followed by "any other fund for the welfare of the employees". This last clause, thus, has to take its colour from the previous clauses and has to be read ejusdem generis. The pension scheme of the assessee did not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provided that pension would be paid by the assessee to its employees on their attaining the retirement age or resigning after having rendered services for specified years. Thus, where the liability on this account accrued from year to year, the same was payable on retirement/resignation of the eligible employees. In view thereof, the disallowance was not justified. II. Section 80-IA of the Income-tax Act, 1961 - Deductions - Profits and gains from infrastructure…

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