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Issues Involved:
1. Direction to recompute deduction u/s 10B of the Income-tax Act, 1961 by reducing certain charges from export turnover. 2. Allowance of claim for provision for gratuity. Recomputing Deduction u/s 10B: The Revenue appealed against the CIT(Appeals) order to recompute the deduction u/s 10B by reducing freight and clearing charges from export turnover. The Special Bench in the case of Saksoft Ltd. held that exclusions from export turnover must also be excluded from total turnover for computing deduction u/s 10B. The Revenue failed to provide any new evidence to warrant a different view, resulting in the dismissal of this ground. Provision for Gratuity Claim: The Revenue contested the CIT(Appeals) direction to allow the assessee's claim for provision for gratuity. The assessee had made a provision for gratuity towards a Gratuity Fund with LIC of India, claiming it was in accordance with Section 40A(7)(b) of the Act. The Assessing Officer disallowed the claim citing Section 43B(b) of the Act, stating only payments made during the relevant previous year could be allowed. However, the CIT(Appeals) held that Section 40A(7)(b) prevailed over Section 43B, allowing the claim. The Revenue argued that the provision was never paid, thus not satisfying both Section 40A(7) and Section 43B requirements. The Assessing Officer noted the provision made by the assessee towards a Gratuity Fund with LIC of India, citing Section 40A(7)(a) of the Act. The question arose whether Section 40A(7) overrides Section 43B. Referring to a similar case before the High Court, it was determined that Section 40A(7) was an overriding section to Section 43B. The Court emphasized that payments to recognized approved funds were exempt from disallowance. The Tribunal concluded that the claim must satisfy Section 40A(7)(a) and Section 43B, including the proviso. As these aspects were not verified by the authorities, the orders were set aside, and the case was remitted back to the Assessing Officer for reconsideration. The Revenue's ground was allowed for statistical purposes. In conclusion, the appeal filed by the Revenue was partly allowed for statistical purposes.
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