https://www.taxtmi.com/caselaws?id=8094 A gratuity provision is deductible only if it reflects a properly ascertained liability valued on a sound and scientific basis; an ad hoc estimate for a future and uncertain obligation is not allowable as business expenditure. Here, the liability depended on contingent future events such as death, retirement, resignation, dismissal, or termination, and the amount payable would vary with salary at the time the liability matured. The assessee's provision was based on current salaries without adequate allowance for contingencies or proper discounting to present value, so the deduction was disallowed and the issue was answered against the assessee. en-us Tue, 24 Mar 1970 00:00:00 +0530 Sat, 28 Mar 2009 12:12:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=8094 A gratuity provision is deductible only if it reflects a properly ascertained liability valued on a sound and scientific basis; an ad hoc estimate for a future and uncertain obligation is not allowable as business expenditure. Here, the liability depended on contingent future events such as death, retirement, resignation, dismissal, or termination, and the amount payable would vary with salary at the time the liability matured. The assessee's provision was based on current salaries without adequate allowance for contingencies or proper discounting to present value, so the deduction was disallowed and the issue was answered against the assessee. Case-Laws Income Tax Tue, 24 Mar 1970 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=8094