JUDGMENT P.R. Ramachandra Menon, J. 1. Whether the amount paid by the petitioner towards the Group Gratuity Fund maintained by the LIC in respect of service of the employees, in relation to the assessment year, notwithstanding the concession given by the LIC to have it remitted by way of Instalments is liable to be treated as advance payment or as an accrued liability, so as to provide necessary deduction under S.43(b) of the Act, is the issue involved herein. 2. The undisputed facts and figures are as follows: As per Ext. P1 letter dated 14/10/1997 issued by the LIC, the petitioner was required to satisfy / replenish a sum of Rs.1.25 crores towards the Group Gratuity Fund maintained by the LIC, so as to top up the short fall, which however was permitted to be cleared by way of 5 equal yearly instalments of Rs.25,00,000/- each commencing from 1997-98. Pursuant to this, necessary provision was made by the petitioner and a payment of Rs.25,00,000/- was made in the year 1997-98; claiming deduction in respect of the concerned year. However, for the next two years, no payment was effected. In the meanwhile, pursuant to a settlement arrived at between the Management and the Trade Unions representing the Workers, a further sum of Rs.6,00,000/- was liable to be remitted as Gratuity payable to the part time sweepers. Thus the petitioner was to effect a balance sum of Rs.1 crore, plus 6 lakhs for clearing the above liability in toto. Accordingly, this amount was paid and necessary deduction was claimed in the assessment year 2000-01. But the petitioner forgot to include the said remittance in the return and on realizing the mistake, it was sought to be rectified by filing necessary proceedings before the assessing authority. But the assessing authority declined to extend the benefits, stating that the original return was belated, which made the petitioner to file Ext. P4 revision before the second respondent / Commissioner, projecting the grievance involved. 3. But the assessing authority declined to extend the benefits, stating that the original return was belated, which made the petitioner to file Ext. P4 revision before the second respondent / Commissioner, projecting the grievance involved. 3. After considering the materials on record, the second respondent / revisional authority referring to the provisions in the statute and also the law declared by the Division Bench of this Court in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114 interpreting the scope of S.43(b) arrived at a finding that, since neither the letter issued by the LIC, nor the Payment of Gratuity Act stipulated any due date for effecting the payment, the last day of the relevant financial year was liable to be reckoned as the due date. Accordingly, the assessing authority was directed to consider the matter in the light of the observations made in Ext. P5 and to pass appropriate orders regarding the claim preferred by the petitioner for refunds. 4. Pursuant to Ext. P5 order passed by the second respondent, the matter considered by the assessing authority / first respondent, who observed that, out of the total sum of Rupees One crore six lakhs, a sum of Rs.25,00,000/- was paid out of the financial year and hence the assessed was not eligible for deduction under S.43(b) of the Act and accordingly, only the balance sum of Rs.81,00,000/- (out of the total extent of Rs.1.6 crores) was reckoned for the purpose of computation, giving available refund; while rejecting the claim for the sum of Rs.25,00,000/- as out of context; which hence is subjected to challenge in this Writ Petition. 5. The learned counsel for the petitioner submits that, the course pursued by the respondents is not at all correct or sustainable; particularly since it is not a case where the payment has been effected after the due date. It is also pointed out that, the liability of the petitioner to effect the payment had already arisen and that, it could never be considered as an advance parent so as to have the benefit limited to the extent of Rs.81,00,000/- leaving out the remaining extent of Rs.25,00,000/-. It is also pointed out that, the liability of the petitioner to effect the payment had already arisen and that, it could never be considered as an advance parent so as to have the benefit limited to the extent of Rs.81,00,000/- leaving out the remaining extent of Rs.25,00,000/-. Learned counsel also placed reliance on the decision rendered by three Division Benches of this Court rendered in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114, Commissioner of Income Tax v. G.T.N. Textiles Ltd., 269 ITR 282 and Commissioner of Income Tax v. Jairam and Sons, 269 ITR 285. 6. The learned Standing Counsel appearing for the respondents submits that, the idea and understanding of the petitioner as to the scope and ambit of the provision is quite wrong and misconceived. The petitioner has to satisfy the specific requirements contemplated under the statute and unless and until it squarely comes within the parameters specified, no deduction is allowable, submits the learned Standing Counsel. Referring to the legal provisions and also with reference to the dictum laid down by this Court in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114 the learned Standing Counsel further submits that, the action pursued by the departmental authorities is perfectly within the four walls of the law and not assailable under any circumstance. 7. The subject-matter of dispute rather turns around the interpretation of the term due date which is very much explained in the explanation to clause v(a) of S.36(1) of the Act. The scope and ambit of the said provision with reference to S.43(b) has very much been considered by the Division Bench of this Court in the decision reported in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114, which was followed in the subsequent two decisions cited herein before. In all the above three decisions, the main issue was whether the payments effected beyond the due date (by which date, the assessee is legally required to effect the payment) is liable to be reckoned for the purpose of deduction. The factual situation involved in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114 was with regard to the contribution towards the Employees Provident Fund. The factual situation involved in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114 was with regard to the contribution towards the Employees Provident Fund. As per the provisions of the said enactment, the contribution is liable to be paid by the Employer� on or before the 15th of the next month. The statute provides a grace period of five days, within which time, the payment can be effected without any damages. A further period of ten days is also provided; within which time, the contribution can be effected, subject to payment of damages. The crucial question considered was whether the stipulation permitting the assessee to effect the payment with damages did really constitute the due date to be extended till the date of expiry of the said period. Observing that, the due date cannot be stretched to any indefinite extent, the Division Bench of this Court held that, the due date has to be read and understood as appearing in the Explanation to clause v(a) of S.36(1). Accordingly, the case put forth by the assessee was answered in the negative and in favour of the revenue. 8. As pointed out earlier, in none of the above three cases, the issue as involved in the present case was a subject-matter of consideration. To put it more clear, the issue involved in the present case is whether the payment effected by the assessee / petitioner pursuant to the demand / request made by the LIC (who is maintaining the Gratuity Fund) to top of the amount for replenishing the short fall (without availing the benefit of instalment granted) is liable to be treated as a payment eligible for reduction. In other words, by virtue of granting some instalment, could it be said that the entire payment effected by the assessee was not liable to be reckoned and that only such extent, which was actually liable to be paid alone could be reckoned, for the purpose of granting deduction under S.43(b); is the question involved. 9. For the purpose of better appreciation and effective adjudication, the provisions under S.36(1), iv, v. and v(a) with explanation are extracted below: S.36(1). The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in S.28. 9. For the purpose of better appreciation and effective adjudication, the provisions under S.36(1), iv, v. and v(a) with explanation are extracted below: S.36(1). The deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in S.28. (iv) any sum paid by the assessee as an employer by way of contribution towards a recognised provident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognising the provident fund or approving the superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head Salaries� or to the contributions or to the number of members of the fund; (v) any sum paid by the assessee, as an employer by way of contribution towards art approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust; [v(a) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of S.2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation. -- For the purpose of this clause, due date� means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise;] 10. It has been clearly specified in the Explanation to S.36(1) v(a) that the term due date means the day by which the assessee is required as an Employer to credit the Employees contribution to the Employees account in the relevant fund under any Act, Rule, order or Notification issued or under any contract of service or otherwise. The said explanation starts with the words for the purpose of this clause. This means, the above explanation is applicable with regard to the purpose of clause v(a) and not for the whole Section or sub-section. The said explanation starts with the words for the purpose of this clause. This means, the above explanation is applicable with regard to the purpose of clause v(a) and not for the whole Section or sub-section. Clause v(a) has got much significance and stands on a different pedestal than the position contemplated under clause or clause v. The payments made by the Employer towards the Provident Fund constitute two separate elements; the first one being the Employer's contribution and the second one the Employees contribution. With regard to the payment made by the assessee by way of Employer's contribution to the Provident Fund, it appears to be rather taken care of, by virtue of clause iv. Unlike this, with respect to the contribution collected from the Employees, the situation stands entirely on a different footing and this situation is taken care of under clause v(a). To put it more clear, the due date as mentioned in the Explanation appearing under clause v(a) is conspicuously absent with regard to the contribution payable to the Provident Fund as envisaged under clause iv or with respect to the Gratuity payable by the assessee as an Employer as contemplated under clause. This presumably is because of the legislative wisdom of the law makers, who wanted to stipulate that, once the Employer / assessee collects the contribution from the Employees, the said amount is not liable to be kept at the hands of the Employer, generating funds for them and later remitting the contribution to the Provident Fund, claiming deduction. The Explanation to clause v(a) clearly stipulates that deduction would be available, only if the amount collected from the Employees, by the assessee / Employer is remitted to the fund before the due date as specified and it is in the said circumstance, that the law was made clear by the Division Bench of this Court as referred to herein before; though the distinctive feature or significance as it exists under clause v(a) has not been specifically dealt with. 11. 11. Going by the dictum in Commissioner of Income Tax v. South India Corporation Ltd., 242 ITR 114 and also the specific stipulations under S.43(b), for availing eligible deduction, the required sum had to be remitted by way of contribution to the Provident Fund or Superannuation Fund or Gratuity Fund or any other fund for the welfare employees as provided under clause band in the specific manner as provided therein. It is true that the term due date also appears under S.43(b) and reference is made to Explanation under clause v(a) of 36(1) to appreciate its scope and applicability. But as far as the present case is concerned, the crucial question is not whether the amount of Rs.1.06 crores remitted by the petitioner was within the due date to avail the benefit of deduction; but is whether the payment effected by the assessee / petitioner without waiting for the benefit of instalment could be regarded as satisfaction of the accrued liability or will it merely constitute an advance payment. It was in the said context, that the departmental authorities; particularly, the second respondent chose to draw the line after observing that neither the LIC nor the provisions under the Payment of Gratuity Act specified any due date and accordingly, directed the first respondent to reckon the last day of the financial year as the due date and to compute the facts and figures. 12. While considering the above issue, the observation made by the second respondent in Ext. P5 and the consequential order passed by the first respondent (Ext. P6) holding that the payment of a sum of Rs.25,00,000/- (out of the total sum of Rs.1.06 crores) was beyond the financial year and hence that the assessee is not eligible to get deduction under S.43(b), does not appear to be correct or sustainable. Ext. P1 letter issued by the LIC starts with the opening words as extracted below: We have made an actuarial valuation of your gratuity liability as on 01/08/1997 with the data available at our end. The valuation reveals the fact that the gratuity fund needs a replenishment of nearly 1.25 crores, since there has been increased life settlements from the fund in the past few years. The valuation reveals the fact that the gratuity fund needs a replenishment of nearly 1.25 crores, since there has been increased life settlements from the fund in the past few years. It is stated that the actuarial valuation of the Gratuity liability was on 01/08/1997 and it is further stated that the valuation revealed the fact that the Gratuity fund needed replenishment by Rs.1.25 crores since there has been increased life settlement from the fund in the past few years. In the third paragraph, the LIC has further alerted that the petitioner / assessee had to replenish the fund by remitting the short fall; simultaneously permitting the petitioner / assessee to have it done by way of five yearly instalments. The contents of Ext. P1 reveal that the short fall had already occurred and the Gratuity liability of the petitioner / assessee was fixed; as on 01/08/1997 pointing out the need to satisfy the due amount, to top the figures as described in Ext. P1. This shows that, the assessee / petitioner was bound to effect necessary payment of Rs.1.25 crores to maintain the level of the Gratuity fund to the requisite extent as specified and intended. The stipulation to have it replenished by way of yearly instalment was only a matter of grace extended by the LIC; which did not mean that the liability / short fall had never occurred. This being the position, the assessee / petitioner, as a prudent employer and also taking note of the fact that, the amount was liable to be remitted towards the Gratuity payable to the Employees, took steps to give necessary provisions and part payment was effected in the year 1995-96 itself; followed by satisfying the entire remaining liability (along with the additional liability of six lakhs for providing gratuity to the part time sweepers based on the settlement arrived at between the Management and the workmen represented by the Trade unions) showing the necessary figures in the corrected returns filed in the year 2000-01. This being the position, the course pursued by the second respondent reckoning the due date as the last date of the financial year concerned and the consequential order passed by the first respondent deleting a sum of Rs.25,00,000/- from the purview of deduction envisaged under S.43(b) is not liable to be sustained any further. 13. Accordingly, Ext. P5 and Ext. P6 are hereby set aside. 13. Accordingly, Ext. P5 and Ext. P6 are hereby set aside. It is declared that the petitioner is very much entitled to have the benefit of deduction in respect of the entire balance sum of Rs.1.06 crores paid by them towards the Gratuity Fund in furtherance to Ext. P1 request made by the LIC and as claimed in the revised return. The first respondent is directed to pass consequential orders, taking note of the observations as above and to effect necessary refund to the petitioner; which exercise shall be finalized as expeditiously as possible, at any rate, within two months from the date of receipt of a copy of this judgment. The Writ Petition is allowed. No costs.