Unapproved superannuation fund contribution denied deduction, while deputed employee payments were allowed as business expenditure.

An unapproved contribution to a superannuation fund was not deductible as business expenditure because it did not qualify under section 36(1)(iv) as a payment to a recognised provident fund or approved superannuation fund. By contrast, a payment made to the Government for the services of deputed employees, which was later credited to the employees' provident fund accounts, was treated as deductible business expenditure under section 37. The court followed an earlier Division Bench ruling on identical facts and answered the questions of law consistently with that precedent, resulting in the deduction issue being decided in favour of the assessee and against the Revenue.

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Issues: Whether the assessee's contribution towards the superannuation fund, though unapproved during the year, was allowable as business expenditure under the Income-tax Act, 1961.

Analysis: The Court followed an earlier Division Bench decision on identical facts and held that contribution to a fund which is neither a recognised provident fund nor an approved superannuation fund does not fall within the deduction contemplated by section 36(1)(iv). At the same time, the payment made to the Government towards the services of deputed employees, which was subsequently credited by the Government to the employees' provident fund accounts, was treated as business expenditure deductible under section 37, and the questions of law were answered consistently with that precedent.

Conclusion: The deduction issue was decided against the Revenue and in favour of the assessee.

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