Where both Sec 43B and Sec 40A(7) contain non-obstante clause, Sec 40A(7) would prevail: Madras HC

M/s Sanmar Speciality Chemicals Limited v. The Assistant Commissioner of Income-Tax

Case Number: T.C.(A).No.493 of 2013

Facts:

1.  A provision made towards gratuity fund with the Life Insurance Corporation of India (LIC). The assessing officer (AO) noted that the claim had been made as per the provisions of Section 40(A)(7)(b) of the Income Tax Act.

2.  The AO was however of the view that though the narration in the schedules to the balance-sheet and profit and loss account stipulated that the amount was towards gratuity, it was only a provision.

3.  Hence, the claim was hence hit by the provisions of Section 43B of the Income Tax Act which requires certain claims to be allowed only on the basis of actual payment. The provision was thus disallowed and the amount was added back to total income.

4.  In appeal before the Commissioner of Income-Tax Appeals (CIT(A)), assailing the aforesaid disallowances amongst others, the assessee adopted the stand that the provisions of Section 40(A)(7)(b) would override all other provisions of the Act including Section 43B, being a specific provision.

Hon Madras HC held as below:

1.  Hon SC in Sarwan Singh and anr. v. KasturiLal [AIR 1997 SC 265] has stated that, when two or more laws operate in the same field and each contains a non obtante clause stating that its provisions will override those of any other law, stimulating and incisive problems of interpretation arise since statutory interpretation has no conventional protocol case of such conflict has to be decided in reference to the object and purpose of the laws under consideration.

2.  Had Section 43B also made reference to an approved gratuity fund, a conflict might have arisen.

3.  In the present circumstances, where Section 40(A)(7)(b) refers specifically to an approved gratuity fund and Section 43B, in generic terms, to a gratuity fund, we see no conflict in applying the provision of Section 40(A)(7)(b) in preference to Section 43B in the case of an approved gratuity fund.

The copy of the order is as under:

sanmar-speciality-chemicals-limited-593721