TaxTMI 
TaxTMI 
2011 (8) TMI 328
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....1,25,475 metric tones. 3. We shall first deal with the appeal of the assessee for the assessment year 2005-06. The substantive controversy in the captioned appeals relates to the allowability of the contribution amounting to Rs 16,77,170/- made by the assessee to MSWC Karmachari Welfare Fund in terms of the provisions of section 40A(9) of the Act. As per the Revenue, such contribution is hit by the provisions of section 40A(9) of the Act, which read as under: "40A(9):No deduction shall be allowed in respect of any sum paid y the assessee as an employer towards the setting up or formation of, or as contribution to, any fund, trust, company, association of persons, body of individuals, society registered under the Societies Registration Act, 1860 (21 of 1860), or other institution for any purpose, except where such sum is so paid, for the purposes and to the extent provided by or under clause (iv) or clause (v) of sub-section (10 of section 36, or as required by or under any other law for the time being in force." 4. The provisions of section 40A(9) of the Act prescribe that no deduction shall be allowed in respect of any sum paid by the assessee as an e....
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....ontribution in question is in accordance with the directive issued by the Government of Maharashtra and therefore, the contributions carry an obligation of law and, as such, are covered by the exceptions provided in section 40A(9) of the Act. 6. Before us, learned Counsel for the assessee has vehemently pointed out that the contribution has been made in terms of the Board Resolution and the understanding with the Karmachari Welfare Fund which is backed by the standing approval given by the Co-operation and Rural Development Department, Government of Maharashtra. It has been pointed out that such contributions have been paid out by the assessee Corporation for a number of years in the past. It is pointed out that the payments are governed by the Maharashtra State Warehousing Corporation (Staff) Service Regulations, which are created with the previous sanction of the Government of Maharashtra, a copy of such Service Regulations has been placed on record. It was submitted that such regulations which govern the terms and conditions of service including pay, allowances and other benefits of the employees, carry a statutory force and therefore any payment made by the appellant ....
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.... covered by the second exception provided in section 40A(9) of the Act, as it has been paid as mandated by law. 10. In order to test the efficacy of the assessee's plea, the moot question to be addressed is as to whether the Regulations in terms of which the payment has been made by the assessee, carry the force of law or not. In this connection, we may refer to the judgment of the Hon'ble Supreme Court in the case of U P Warehousing Corporation (supra) relied upon by the appellant before us. The status of the entity before the Hon'ble Supreme Court was analogous to that of the appellant before us. As has been observed earlier, the appellant is a Corporation established by the State Government in exercise of the powers conferred by sub-sections (1) and (3) of section 28 of the Agricultural Produce (Development and Warehousing) Corporation Act, 1956 (28 of 1956), which was subsequently replaced by Warehousing Corporation Act, 1962 (58 of 1962). The appellant is a statutory body fully controlled and managed by the Government. The entity before the Hon'ble Supreme Court was also a similarly established Corporation, being a statutory body wholly controlled and managed by the ....
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.... These regulations are not only binding on the authority but also on the public. They give the employees a statutory status and impose obligations on the statutory authorities, who cannot deviate from the conditions of service." 11. The Hon'ble Supreme Court held that the regulations framed by the Corporations, being framed under the statutory provisions would have the force of law. The Hon'ble Supreme Court further went on to hold that there was no distinction on principle between a person directly under the employment of the Government and a person under the employment of an agency or instrumentality of the Government or a Corporation, set up under a statute or incorporated but wholly owned by the Government. 12. In the background of the legal position explained by the Hon'ble Supreme Court, in our view, the Service Regulations framed by the appellant Corporation for the terms and conditions of employment and services of their employees carry a statutory force. In this context, we have perused the Maharashtra State Staff Warehousing Corporation (Staff) Service Regulations and find that the same have been framed with the previous sanction of the Government of t....
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.... point of law. Quite clearly, it emerges that the disallowance was made in the return without prejudice to its lawful right to assail the applicability of section 40A(9) qua the impugned amount. This clearly implied that the assessee was denying its liability to be assessed under the Act qua the impugned amount and certainly this invested the assessee with a right to appeal before the Commissioner of Income-tax (Appeals). Therefore, in our view, the Commissioner of Income-tax (Appeals) erred in not entertaining the grievance raised by the assessee. In this context, we may refer to the judgment of the Hon'ble Delhi High Court in the case of CIT v Bharat General Reinsurance Co. Ltd. 81 ITR 303 (Del) wherein the assessee had included in the return of income certain dividend income and in appeal assessee claimed that the dividend income did not pertain to the stated assessment year and objected to its assessment. As per the Hon'ble High Court the factum of the assessee itself including the income in the return was of no effect as there was no estoppel against the assessee challenging the validity of taxing such income. The Hon'ble High Court further went on to hold that merely because ....