A doubt in tax s.44

Sharadha Visalakshi (CA PCC) (62 Points)

22 July 2009  

Sec.44 regarding insurance business clarifies that  "any expenditure which is not admissible under sec.30 to 43B is disallowed under First Schedule read with S.44." 

But in the case, GIC of India vs.CIT, Supreme Court has held that "amount set apart is not an expenditure and therefore the question of disallowing what is not an expenditure does not arise", whereas u/s.40A(7), amount set as provision for payment of gratuity is disallowed.

what is the correct interpretation of the above 3 statements.

plz clarify..