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TMI Blog1985 (6) TMI 88X X X X Extracts X X X X X X X X Extracts X X X X ..... e profit and loss account. It was claimed as a deduction. The ITO found that the amount is not due in respect of any retired employees and it has not become payable. It is only a provision made in respect of existing employees who retire later and are eligible for gratuity. Further, no particular gratuity fund as per rules has also been formed and credited this amount therein. Thus, he disallowed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uity is allowable as deduction under section 36 as well as under section 37 of the Act. 4. We have considered the rival submissions. From the assessment year 1973-74 onwards the allowability of any provision for gratuity is governed by section 40A(7). Section 40A(1) clearly states as under: "(1) The provisions of this section shall have effect notwithstanding anything to the contrary contained i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t held that recourse cannot be had to a residuary or general provision if the amount is not deductible as a result of non-compliance with a specific or particular provision. The above ratio applies to the instant case. Thus, in our view, when there is a special provision the assessee cannot place any reliance on general provisions of the Act. 7. Under section 40A(7)(a) subject to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e payable during this year. Thus, the conditions mentioned in clause (b)(i) of section 40A(7) are not satisfied. Thus, no deduction is permissible under section 40A(7)(a). 9. The decisions relied on by the assessee in CIT v. Mettur Spg. Mills [1983] 140 ITR 991 (Mad.), Andhra Prabha (P.) Ltd.'s case and CIT v. Chamarchi Tea, Textile & Engg. Industries Ltd. [1982] 137 ITR 281 (Cal.) are distinguis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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