Recognised provident fund status survives later exemption under provident fund law, preserving deduction and defeating revision.

A provident fund framed and approved under the Employees' Provident Funds and Family Pension Fund Act, 1952 did not lose its status as a recognised provident fund merely because a later exemption was granted under section 17. The exemption was treated as continuing the fund subject to regulatory conditions, not as extinguishing its statutory character under section 2(38) of the Income-tax Act, 1961. On that basis, deduction under section 36(1)(iv) remained available, and the Commissioner's revision under section 263 was held unsustainable.

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Issues: Whether the assessee's provident fund continued to be a recognised provident fund within section 2(38) of the Income-tax Act, 1961 after exemption under section 17 of the Employees' Provident Funds and Family Pension Fund Act, 1952, and whether the Commissioner was justified in revising the assessment under section 263 by disallowing deduction under section 36(1)(iv).

Analysis: The assessee had framed a provident fund scheme under the Employees' Provident Funds and Family Pension Fund Act, 1952 in 1965, and the scheme had been approved by the Regional Provident Fund Commissioner. The subsequent exemption notification did not extinguish the fact that the fund had been established under a statutory scheme framed under that Act. The exemption only continued the fund subject to regulatory conditions and did not show that the fund had ceased to satisfy the definition of a recognised provident fund. The Board circular relied upon by the Commissioner did not state that a fund earlier established under such a scheme would lose its recognised character merely because exemption was later granted under section 17.

Conclusion: The provident fund remained a recognised provident fund, the Commissioner's view was erroneous, and the revision under section 263 could not stand.

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