A doubt in tax s.44

Sec.44 regarding insurance business clarifies that  "any expenditure which is not admissible under sec.30 to 43B is disallowed under First Schedule read with S.44." 

But in the case, GIC of India vs.CIT, Supreme Court has held that "amount set apart is not an expenditure and therefore the question of disallowing what is not an expenditure does not arise", whereas u/s.40A(7), amount set as provision for payment of gratuity is disallowed.

what is the correct interpretation of the above 3 statements.

plz clarify..

Replies (2)

Hi Sharadha,

 

Section 30 to 43B talks about specific expenditure which needs to be dealt with accordingly.

 

As per decision quoted Amt set aside is not an expenditure but is an appropriation for contingencies like transfer to genreal reserve whereas Amt set aside to meet the obligation of gratuity payable is certain and there is specific section 40A(7) which deals with the same.

 

Also Specific provision has overriding effect over general provision.

 

Thanks & Regards

 

Hitesh

 

 

 

THANK U HITESH..

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