https://www.taxtmi.com/caselaws?id=166260 A provision credited to a gratuity reserve for possible future retrenchment compensation was not an ascertained liability deductible in computing business profits. Liability under section 25F of the Industrial Disputes Act arises only when retrenchment actually occurs, so a mere anticipation of that event remains contingent even under mercantile accounting. Because the amount was neither paid nor credited to employees, was not placed in trust, and stayed under the assessee's control as a reserve, it was not expenditure actually incurred or a fair estimate of a present obligation. The deduction was therefore rightly disallowed. en-us Wed, 12 Sep 1962 00:00:00 +0530 Mon, 08 Sep 2014 17:49:24 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=166260 A provision credited to a gratuity reserve for possible future retrenchment compensation was not an ascertained liability deductible in computing business profits. Liability under section 25F of the Industrial Disputes Act arises only when retrenchment actually occurs, so a mere anticipation of that event remains contingent even under mercantile accounting. Because the amount was neither paid nor credited to employees, was not placed in trust, and stayed under the assessee's control as a reserve, it was not expenditure actually incurred or a fair estimate of a present obligation. The deduction was therefore rightly disallowed. Case-Laws Income Tax Wed, 12 Sep 1962 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=166260