2005 (7) TMI 55

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....ssee has claimed unascertained liability being provision only not actually paid?" The present reference relates to the assessment years 1984-85, 1985-86, 1986-87 and 1988-89. Briefly stated the facts giving rise to the present reference are as follows: In respect of the aforementioned assessment years the respondent-assessee claimed deduction in respect of the amount paid to the Life Insurance Corporation of India under the Group Gratuity-cum-Life Insurance Scheme on the terms settled between the Life Insurance Corporation and the respondent-assessee for gratuity payable to the employees on their retirement, death or their leaving the service. The Assessing Officer in view of the provisions of section 40A(7) of the Act disallowed t....

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....ounsel and find that according to the own showing by the respondent-assessee in the audit report given by the auditor the contribution has been mentioned as gratuity paid to the Life Insurance Corporation. In the case of Shree Sajjan Mills Ltd. [1985] 156 ITR 585, the apex court has held as follows: "On a plain construction of clause (a) of sub-section (7) of section 40A of the Act, what it means is that whatever is provided for future use by the assessee out of the gross profits of the year of account for payment of gratuity to employees on their retirement or on the termination of their services would not be allowed as deduction in the computation of profits and gains of the year of account. The provision of clause (a) was made subj....