Deduction under s 43B

The intention of the legislature behind enacting s 43(b) was to disallow the statutory liabilities. The legislature was never intended to disallow a claim for ascertained liability which is computed scientifically in respect of the retiral benefits of its employees and which is not to be contributed to a fund. The pension scheme of the assessee does not envisage any regular contribution to any fund or trust or any other entity. The pension scheme provides that a pension would be paid by the appellant to its employee on attaining the retirement age or resigning after having rendered services for specified years. Thus, where the liability on this account accrues from year to year, the same is payable on retirement/resignation of the eligible employees. Thus, the claim by the assessee is allowable under s 43B.

Provision for pension made on basis of actuarial valuation is allowable deduction under s 43B — as held by DelHC in CIT v Ranbaxy Laboratories Ltd. — In favour of: The Assessee ; ITA 377 of 2010

Decided on: 17 March 2011