2006 (6) TMI 76

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....nd that the said funds were not approved during the relevant period. For the assessment year 1998-99, the appellant filed a revised return declaring an income of Rs. 1,15,76,566. The assessee's case before the Assessing Officer was that it had entered into an agreement with the Life Insurance Corporation of India and made contributions towards gratuity and superannuation funds for the benefit of its employees. An application made by the appellant to the Commissioner of Income-tax for approval of the fund under the Employees Group Gratuity Scheme (corporate and factory) had resulted in approval for the said fund with effect from September 30, 1998. A similar approval for superannuation scheme was also granted with effect from October 14,1....

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....ns of section 40A(7) of the Income-tax Act, 1961. He urged that the Tribunal had failed to appreciate that the contribution made by the appellant was not a mere provision within the meaning of section 40A(7). It was, according to Mr. Aggarwal, a case that fell under section 36(1)(iv) and (v) of the Act as the appellant had paid the amounts and not simply made a provision for payments. The fact that the payments were made after the expiry of the financial year in question or before the recognition of the funds did not make any difference in so far as the admissibility of deductions claimed by the appellant were concerned. Alternatively, he contended that even if section 36(1)(iv) and (v) had no application as held by the Tribunal, the deduct....

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....sion, inter alia, deals with deductions otherwise allowable under the Act and stipulates that payments referred to in the provision shall be allowed as deductions in computing the income referred to in section 28 of the previous year in which such sum is actually paid irrespective of the previous year in which the liability to pay such sum was incurred by the assessee. What is significant is that before the provisions of section 43B could be held applicable, a deduction must otherwise be allowable under the Act. This implies that a deduction, if the same relates to contributions made towards a provident fund or superannuation fund or gratuity fund, must have been made only to approved funds. Section 43B does not dispense with the requiremen....