SHREE SAJJAN MILLS LTD. vs COMMISSIONER OF INCOME TAX, M.P. BHOPAL AND ANR.

The Supreme Court held that under Section 40A(7) of the Income Tax Act, 1961, a deduction for gratuity cannot be claimed without complying with its provisions, distinguishing between actual liabilities and future liabilities. The Court affirmed that the Income Tax Officer's disallowance of the Rs. 20 lacs provision was justified, as the assessee failed to meet the statutory requirements. Consequently, the appeal was dismissed, upholding the lower courts' decisions regarding the non-allowance of the claimed deductions.