assessee s contention in this appeal is that assessee s provision for gratuity to workers of sum of Rs. 1,82,170 in its accounts should be allowed as deduction. assessee is co-operative society engaged in production and sale of salt. For asst. yr. 1980-81 (calendar year 1979) assessee claimed deduction of above sum which ITO disallowed in assessment. assessee s submission before CIT(A) in appeal against above disallowance were following: provision for gratuity related to varying number of workers from calendar years 1972 to 1979 on basis of 7 days wages. bye-laws of society prohibited member from being employee. profits are to be declared by Registrar of Cooperative Societies under s. 61 of Madras Co-operative Societies Act, 1961. Since Cooperative Department did not approve accounts assessee had to make provision for gratuity in above sum. income for purpose of s. 28 of IT Act, 1961, would be profit of business as certified by Registrar of Cooperative Societies. Secs. 36(1)(v) and 40A(7) would not apply to assessee s case where only workers were involved and not employees. assessee s other regular employees were covered by Group Insurance Scheme of LIC. CIT(A) observed that subsidiary regulations governing payment of gratuity to workers of assessee framed in Bye-law No. 25(A) XVII wit reference to Bye-law 37(9) provided that all workers who were employees in salt pans of Society on daily wages on permanent basis were eligible for gratuity. According to CIT(A), term "workers" was not restricted to non-members. CIT(A) held that such workers were entitled to gratuity and hence s. 36(1)(v)/40A(7) would apply. assessee had applied for recognition to CIT for approval of Gratuity Fund which had not been granted. In circumstances, CIT(A) disallowed claim. We have heard parties and find no reason for interference. assessee s learned counsel before us repeated same contentions. assessee s submission is that Co-operative Department in their audit report for 1978 mentioned that assessee s gratuity payment of Rs. 9,198 was objected on ground that there was no such provision under Registrar s circular. It was also stated therein that gratuity provisions of Rs. 1,38,419 to be paid should be set aside during next audit period or should be provided in annual instalments (pages 12 of assessee s paper book). necessary by its letter dt. 2nd Feb., 1980 to Registrar of Cooperative Societies requested permission to create gratuity fund as under: "As per provision of Gratuity Act, retired worker-members are paid gratuity at rate of seven days wages for each season and amount of gratuity so paid are met from General Funds from year 1972. So far no gratuity fund has been created to meet this liability. gratuity liability as on 31st Dec., 1979 is worked out to Rs. 1,82,169.75 as may be seen from statement enclosed. As amount is heavy and cannot be provided in one year, we request Registrar of Cooperative Societies, Madras to be kind enough to accord permission to create gratuity fund at rate of Rs. 45,542,44 per annum within period of 4 years commencing from audit year 1979 (Calendar year)." This was followed by assessee s letter dt. 3rd Oct., 1980 (page 15 of assessee s paper book) referring to Registrar, Circular No. RC 22179/73 H2 dt. 7th July, 1979 stating, inter alia, as under: "Likewise we are paying gratuity to our worker-members as per Gratuity Act since 1972 when Act came into force. There is provision in gratuity Act for payment of Gratuity to workers of seasonal establishment like our salt workers of co-operative society. We have been paying retaining wages to our member-workers during offseason since 1973. ..... ...... ..... In these circumstances, we request Registrar of Co-operative Societies, Madras to be kind enough to consider above aspects and issue suitable instructions to District Co-operative Audit Officer, Tuticorin to provide for entire amount of gratuity accrued upto end of year 1979 and as worked out by audit report for 1979 and help society to meet this liability of paying gratuity every year to retired member-workers from gratuity fund." Registrar, Co-operative Society by his letter No. RC No. 226398/80 H3 dt. 2nd Jan., 1981 (p. 20 of assessee s paper book) informed District Co- operative Audit Officer, inter alia, as under: "1. Provision towards gratuity to workers of above society may be made at rate of seven days wages for each season." assessee s submissions before us are that restrictions under s. 36(1)(v) r/w 40A(7) apply only regarding regular employees (the assessee had 19 such monthly paid staff) but do not apply to member-workers. It is further submitted that under s. 61 of Co-operative Societies Act, "no part of funds of registered society, expert net profits as declared by Registrar for purposes of this Act, shall be divided by way of bonus or dividend or otherwise among its member. Sec. 62 provides for disposal of net profits as declared by Registrar. assessee submits that District Co- operative Audit Officer, Tuticorin issued Audit certificate dt. 30th Dec., 1980 (p. 21 of assessee s paper book) referring to net profit of Rs. 58,498 for year 1979 (present appeal) which profit has been arrived at after debiting impugned provision of Rs. 1,82,170. It is urged that since net profit thus arrived at has been "declared" by Registrar, it has necessarily to be accepted by Department. On due consideration of rival contentions, we are unable to agree. assessee s submissions that "worker-members" are not "employees", as referred in relevant provisions of IT Act [ss. 36(1)(v) & 40A(7)], is not acceptable. That these member-workers have been treated by assessee itself as employees is brought out by following. Firstly cl. 6(2) of bye-laws of assessee-society regarding "membership" states that salt worker- member who is contributing towards Employees Provident Fund need not pay any amount towards thrift deposit. (p. 20 of assessee s paper book). This would show that member could contribute towards Employees Provident Fund which would apply only to employees. Secondly, it is assessee s own case, as stated in its representations to Co-operative Department extracted above, that assessee has been paying gratuity to worker-members as per Gratuity Act by assessee s letters dt. 10th Feb., 1980 and 3rd Oct., 1980 adverted to above. Payment of Gratuity Act, 1972 provides for payment o f gratuity to specified employees. "Employee" is defined in s. 2(e) of Gratuity Act as "any person (other than apprentice) employed on wages, not exceeding one thousand rupees per mensem, in any establishment, factory..... ...etc." assessee has also applied to CIT for approval of Gratuity Fund though CIT s approval has not been given. We are hence unable to find any substance in assessee s plea that worker-members should not be treated as "employees", for application of s. 36(1)(v)/40A(7). assessee s further contention that Registrar having declared net profit as shown by assessee such income is final for income-tax assessment purposes is not acceptable. total income of every assessee liable to tax under IT Act has to be computed in manner laid down in Act (as defined in s. 2(45). further question that arises is effect of s. 36(1)(v) r/w s. 40A(7). Under s. 40A(7) which is effective from 1st April, 1973 no deduction shall be allowed in respect of any prevision by assessee for payment of gratuity to its employees on retirement or termination of service, exception under sub- cl. (b)(i) being that any provision made by assessee for purpose of payment of sum by way of any contribution towards approved Gratuity Fund or for purposes of payment of any gratuity that has become payable during previous year, will not be affected by aforesaid prohibition. (The further exception in sub-cl. (ii) regarding asst. yrs. 1973-74 to 1975-76 is not relevant here). Sec. 36(1)(v) permits deduction of sums paid by way of contribution towards approved gratuity fund created by assessee for exclusive benefit of his employees under irrevocable trust. scope of this provision was considered by Madras High Court in CIT vs. Andhra Pradesh (P) Ltd. (1980) 14 CTR (Mad) 269: (1980) 123 ITR 760 (Mad). It was held therein that this sub-section supersedes general principle regarding liability for gratuity and after 1st April, 1973, question of deductibility of provision for gratuity would have to be found within four corners of s. 36 and s. 40A. High Court further observed that so long as there is specific provision which regulates claim, it is that provision that is to be resorted to and not general principle laid down in above decision would negate assessee s plea that provision for gratuity is allowable under s. 28 in arriving at its total income. It is not disputed that provisions of ss. 39(1)(v) and 40A(7) are not satisfied in present case. Hence, we have to agree with CIT(A) that provision for gratuity is not admissible deduction. assessee s appeal is dismissed. *** ARUMUGANERI SALT WORKERS COOP. PRODUCTION & SLAE SOCIETY LTD. v. INCOME TAX OFFICER