2005 (4) TMI 531 - AT - Income Tax

Summary

Issues: Disallowance of amount paid to LIC towards approved gratuity fund under section 43B of the Income Tax Act.

Detailed Analysis:
1. Facts and Background: The appellant filed a return of income for the assessment year 1995-96, claiming a payment to LIC towards an approved gratuity fund. The Assessing Officer proposed to disallow this amount under section 43B of the Income Tax Act, stating it was only a provision and not paid. The CIT(A) held that the payment could only be allowed if paid before the due date.

2. Appellant's Arguments: The appellant argued that gratuity payment cannot be disallowed under section 43B and that the amount paid to LIC should be allowed under section 40A(7). They contended that the amendments to section 43B, effective from 2004-05, should be applied retrospectively based on judicial interpretations in relevant cases.

3. Department's Position: The Department supported the CIT(A)'s order disallowing the payment to LIC.

4. Judgment: The Tribunal agreed with the appellant's arguments. It noted that the amended proviso to section 43B allowed payment to be considered if made before the due date of filing the return of income. The Tribunal highlighted a conflict between section 40A(7)(b) and section 43B, with the former prevailing due to its specific nature. The Tribunal emphasized the rule that special provisions override general ones. It concluded that the payment to LIC for the gratuity fund, made before the due date, was allowable. The disallowance of the amount was deleted, and the appeal was allowed.