Gratuity actually paid was deductible under section 43B, and the disallowance for lack of evidence was deleted.

Gratuity actually paid during the year was deductible under section 43B because the assessee supported the claim with audited accounts, notes to accounts, income computation, ledger extracts and salary vouchers showing actuarial provision and actual payment to two employees. On that record, the amount was treated as a paid liability rather than a mere provision, so the disallowance for alleged lack of evidence could not stand. The first appellate finding that no evidence had been furnished was held incorrect, and the disallowance under section 43B was deleted.

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Issues: Whether the assessee was entitled to deduction of gratuity actually paid during the year under section 43B, and whether the disallowance was sustainable for want of evidence.

Analysis: The assessee produced audited financial statements, notes to accounts, computation of income, ledger accounts, and salary vouchers to show that a gratuity provision was created on actuarial basis and that gratuity of Rs. 11,84,163 was actually paid to two employees during the year. These materials showed that the amount claimed was not a mere provision but an actual payment covered by section 43B. The finding of the first appellate authority that no evidence had been furnished was held to be incorrect on the record.

Conclusion: The disallowance under section 43B was deleted and the claim for deduction of gratuity actually paid was allowed in favour of the assessee.

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