TaxTMI 
TaxTMI 
TaxTMI 
2013 (8) TMI 763
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....nd is thus allowable as deduction and it is prayed that the same needs to be allowed. 2. The learned CIT(A) erred, in confirming the addition of Rs.15,71,767/- being premium paid to LIC group gratuity scheme, the LIC had actually paid to the retiring employees gratuity Rs.17,85244/-, which having been paid on behalf of appellant it is an amount which is deductible u/s 36 or 37 as business expenditure. The same needs sir, to be allowed. 3. The learned CIT(A) erred in confirming the addition of Rs.28,17,236/- having been paid by the appellant as premium for Leave encashment group scheme. The LIC in fact paid a sum of RS.12,34,542/- to the employees of appellant, the same is expenditure made in appellants account on behalf of appellant and needs to be directed sir to be allowed. 4. That in any case it is prayed and has so been prayed before the learned CIT(A) in writing, that either Rs.28,17,236/- and Rs.15,71,767/- should be allowed or in any case the actual payments/actual expenditure under these heads fully proved being Rs.17,85,244/- and Rs.12,34,542/- needs to be allowed as deduction/expenditure to the appellant. 5. As regards non raising of these points/grounds/legal positio....
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....e bank profitability and this expenditure did not expedite to increase the profitability of the bank. He accordingly disallowed the amount of Rs.65,67,700/-. 5. The assessee carried the matter to the learned CIT(A) and submitted that the fund was an essential creation which was an expenditure allowable u/s 37 of the Act as the fund had been created under the directions of apex authority. It was further stated that as the assessee bank did not have any control over the fund, the money falls in the category of the money spent wholly and exclusively as it has been provided that the assessee may take loan from this fund and not spend it. 6. The learned CIT(A), after considering the submissions of the assessee, observed that sum of Rs.65,67,700/- was consisted of provision of Rs.58,00,000/- and interest of Rs.7,67,700/-. He was of the view that no provision was allowable as deduction u/s 37 of Act and that the sum of Rs.7,67,700/- was an interest accruing on the balance appearing in this account for earlier period and it was not the case of the assessee that the said sum of Rs.7,67,700/- had been accounted for as interest income during the current year. Therefore, it was not allowable....
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....in ITA No.1277/JP/2010 wherein vide order dated 22/07/2011, the order of the Ld. CIT(A) was upheld by observing in para 3.6 of the said order as under: "3.6 We have heard both the parties. The Hon'ble Apex Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. vs CIT,223 ITR 101 has stated that it is to be seen as to whether the payment is compulsory for the assessee to make or not but whether it was expended out of consideration of commercial expediency. Any contribution made by the assessee to a fund which directly connected or related to carrying on assesee's business or which results in benefit to the assesee's business has to be regarded as deduction allowable u/s 37 of the Act. The decision of Hon'ble Apex Court in the case of Associated Power Co. Ltd. vs CIT (supra) is not applicable. The Hon'ble Apex Court held that application of the doctrine of diversion of income by reason of overriding title is not applicable in that case as the reserve is out of the revenues of the undertaking and reach the electricity company and is not diverted away from it. However, in the instant case, the amount is to be contributed to a fund and the fund is not being managed by....
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.... the premium paid or the actual payment made to the staff members be allowed as deduction as the expenditure incurred was wholly and exclusively for the business purpose. 13.1 The learned CIT(A), after considering the submissions of the assessee, observed that a sum of Rs.15,71,767/- was a premium paid to LIC towards the fund created as per Group Gratuity Scheme out of which payment of gratuity to the retiring employees were made. The learned CIT(A) further observed that this fund was nothing but an investment for accumulation of fund for the purpose of meeting out assessee's liabilities towards gratuity payable to its employees retiring in future and that any deduction in respect of liability towards gratuity was governed by the provisions of section 36(v) of the Act which lays down the condition of such gratuity fund having been approved and since in the instant case, the appellant has not been able to establish that the fund had been approved as required under the provisions of section 36(v) the Act, therefore, any payment to such fund could not be allowed as deduction. He also observed that the payment of Rs.15,71,767/- could not be treated as assessee's expenditure as the pay....
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....td. 277 ITR 396 relied by the learned counsel for the assessee. 17. The next issue, vide ground No. 3, relates to the confirmation of addition made by the Assessing Officer on account of premium paid for leave encashment group scheme. 18. The facts related to this issue, in brief, are that the Assessing Officer on analyzing the profit & loss account furnished by the assessee found that the assessee had debited a sum of Rs.28,17,236/- as leave encashment which was paid to the LIC. The Assessing Officer was of the view that the said expenditure was allowable only on the actual payment. The Assessing Officer observed that the assessee had not produced the evidence of actual payment. He, therefore, disallowed the same and added to the income of the assessee. 19. Being aggrieved, the assessee carried the matter to the learned CIT(A) and submitted that the assessee had incurred an expenditure of Rs.28,17,236/- for payment of premium for leave encashment scheme of LIC which was expenditure as the same was not refundable. It was further stated that the actual payment on account of leave encashment to the employees entitled to it was Rs.12,34,542/-. It was further stated that both the pr....