Insertion of Section 11(7) vide Finance Act, 2023 w.e.f. 01-04-2023 - implications

Facts:

Assessee a not for profit organization claimed provision for gratuity as an application of income on accrual basis in its return. Revenue disallowed the same citing non-payment of such gratuity. Assessee's plea was insertion of Section 11(7) w.e.f. 01-04-2023 was only to prevent allowance of such expenses on accrual basis and allow the same only upon actual payment for non-profit organizations. Thus prior to this insertion of this provision the law was to be read to be allowing the expenses on accrual basis, otherwise the insertion becomes otiose in law. CIT(A) went with the views of the AO. On higher appeal by the assessee -

Held in favour of the assessee that the gratuity accrual was an application of income.

Applied:

Sitaram Bhartia Institute of Science & Research v. DCIT in [ITA No. 202/Kol/2020 for AY 2013-14, dt. 4-1-2023] : 2023 TaxPub(DT) 303 (Kol-Trib)

Case: M.P. Birla Institute of Fundamental Research v. DCIT(E) 2023 TaxPub(DT) 5564 (Kol-Trib)