Recognised provident fund treatment allowed deduction for cooperative society contributions under income-tax law.

A provident fund created by a cooperative society under section 72 of the Gujarat Cooperative Societies Act, 1961 was treated as falling within the definition of a recognised provident fund under section 2(38) of the Income-tax Act, 1961. On that basis, the employer's contribution met the conditions for deduction under section 36(1)(iv), and the disallowance under section 40A(9) was not sustainable. The analysis notes that section 72 requires the fund to be kept separate from the society's assets and links its operation to the Employees' Provident Funds Act, 1952 where applicable, supporting the deduction claim.

---

---

Issues: Whether the assessee was entitled to deduction for contributions made to the provident fund established under sections 71 and 72 of the Gujarat Cooperative Societies Act, 1961, and whether such fund qualified as a recognised provident fund within section 2(38) of the Income-tax Act, 1961 so as to attract sections 36(1)(iv) and 40A(9).

Analysis: Section 72 of the Gujarat Cooperative Societies Act, 1961 permits a society to establish a provident fund for its employees, requires the fund to be kept separate from the society's assets, and provides that where the Employees' Provident Funds Act, 1952 applies, the fund is governed by that Act. Reading this with section 2(38) of the Income-tax Act, 1961, the fund established under the cooperative society law was treated as falling within the definition of recognised provident fund, since that definition includes provident funds established under a scheme framed under the Employees' Provident Funds Act, 1952. Once the fund was regarded as recognised, the employer's contribution satisfied the conditions for deduction under section 36(1)(iv), and section 40A(9) did not bar the claim.

Conclusion: The contribution to the provident fund established under section 72 of the Gujarat Cooperative Societies Act, 1961 was allowable as a deduction and the disallowance was unsustainable.

---