Kerala High Court: No deduction for Retired Employees Medical Benefit scheme contribution.

The High Court of Kerala upheld the disallowance of contribution to a Retired Employees Medical Benefit scheme under Section 40A(9) of the Income Tax Act for the assessment year 2007-08. Despite arguments in favor of the assessee, the court ruled in favor of the revenue, citing a previous judgment involving the State Bank of Travancore that contributions not permitted under Section 36 cannot be deducted under Section 40A(9). The appeal was disposed of accordingly.

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Issues: Disallowance of contribution to Retired Employees Medical Benefit scheme under Section 40A(9) of the Income Tax Act.

Analysis:
The High Court of Kerala heard an appeal filed by the revenue against the order of the Income Tax Appellate Tribunal concerning the disallowance of contribution to a Retired Employees Medical Benefit scheme under Section 40A(9) of the Income Tax Act for the assessment year 2007-08. The Commissioner of Income Tax (Appeals) had set aside the assessment order disallowing the contribution. The primary question before the court was whether the assessee's contribution towards the Retired Employees Benefit Scheme could be considered an allowable deduction under Section 40A(9) of the Income Tax Act. The Tribunal had relied on its own order from a previous assessment year, and the revenue challenged this decision. The court referred to a previous judgment involving the State Bank of Travancore, where it was held that if the contribution made by the assessee was not a permitted payment under Section 36, it could not be allowed as a deduction under Section 40A(9). Despite arguments citing other judgments in favor of the assessee, the court upheld the binding precedent set by the State Bank of Travancore case, ruling in favor of the revenue and disposing of the appeal accordingly.

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