https://www.taxtmi.com/caselaws?id=24532 A provision for retrenchment compensation is not an allowable deduction in computing business income because the liability arises only if retrenchment actually occurs and remains contingent during the accounting year. Unlike gratuity, which can sometimes be actuarially valued as a present obligation linked to completed service, retrenchment compensation is not a known or existing liability until the triggering event happens. The Madras HC therefore treated the provision as one for a purely contingent liability, incapable of satisfactory quantification in the relevant year, and held it nondeductible. en-us Thu, 19 Jan 1989 00:00:00 +0530 Wed, 20 Jan 2010 17:21:02 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=24532 A provision for retrenchment compensation is not an allowable deduction in computing business income because the liability arises only if retrenchment actually occurs and remains contingent during the accounting year. Unlike gratuity, which can sometimes be actuarially valued as a present obligation linked to completed service, retrenchment compensation is not a known or existing liability until the triggering event happens. The Madras HC therefore treated the provision as one for a purely contingent liability, incapable of satisfactory quantification in the relevant year, and held it nondeductible. Case-Laws Income Tax Thu, 19 Jan 1989 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=24532