TaxTMI 
TaxTMI 
2015 (8) TMI 123
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....ot justified in upholding the addition of Rs. 6029838/- on account of interest accured on FDRs under ASIDE scheme. 4. That in the facts and circumstances of the case the ld. CIT(A) is not justified in upholding the addition of Rs. 1,11,537/- on account of disallowance of expenses pertaining to CPF trust. 3. Out of the above Ground No. 4 was not pressed and the same is dismissed as not pressed. Ground No. 1 4. After hearing both the parties we find that during the assessment proceedings AO noticed that assessee has paid a sum of Rs. 68,34,365/- on account of Premium for Gratuity. The assessee was asked to file copy of the order granting approval to the Gratuity Fund. No such certificate was filed but it was claimed that assessee has following the mercantile system of accounting and therefore claim was justified, this claim was not allowed since the funds was not approved. However the alternative submission that amounts already paid to the employees amounting to Rs. 21,56,573/- should be allowed was accepted and disallowance was made for Rs. 46,77,792/-. 5. On appeal the action of the AO was confirmed by the Ld. CIT(A). 6. Before us the Ld. Counsel for the ass....
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....eading of section 36(1)(iv) and (v) makes it manifest that deductions there under are admissible only if the employer pays the contributions towards a recognized provident fund, an approved superannuation fund or an approved gratuity fund. The provisions of a taxing statute have to be interpreted strictly applying the rule of literal interpretation. Nothing can be added or substituted by implication or intendment. If Parliament has made deductions towards provident fund, superannuation fund or gratuity fund admissible only in cases where such funds are approved, granting deduction of amounts pad into unapproved funds under the cover of section 37 may defeat the legislative intent and frustrate the very purpose underlying the specific provisions made thereunder. The assessee entered into an agreement with the LIC and made contributions towards gratuity and superannuation funds for the benefit of its employees. The assessee made an application to the Commissioner for approval of the fund under the Employees Group Gratuity Scheme (corporate and factory ) which was approved by the Commissioner with effect from September 30,1998. A similar approval for the superannuati....
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....sessee claimed a deduction of Rs. 92,06,978/- as contribution / provision towards the approved gratuity fund. As per the breakup of the said amount, an amount of Rs. 5,84,754/- was paid as annual premium to the Life Insurance Corporation("LIC" for short); a sum of Rs. 50,00,000/- was paid to the LIC as initial contribution in the group Life Assurance Scheme framed by the LIC for the benefit of the employees of the assessee and the remaining amount of Rs. 36,22,224/- was shown as provision for initial contribution. It is common ground that assessee company's gratuity fund, viz., the Textool Company Ltd. Employees Group Gratuity Fund was approved by the Commissioner of Income Tax, coimbatore, w.e.f. 25th February, 1983. While completing assessment, the Assessing Officer allowed a deduction of Rs. 36,22,224/- under section 40A(7) of the Act. However, deduction for the balance amount was disallowed on the ground that payment towards the gratuity fund was made by the assessee directly to the LIC and not to an approved gratuity fund and, therefore, it was not allowable under Section 36(1)(v) of the Act." Therefore following the earlier decision we decide this issue against the ass....
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....e order of Ld. CIT(A). 17. After considering the rival submissions carefully we find that identical issue came up for consideration in earlier year and same was decided in ITA No. 1226 & 1227/Chd/2010 vide para 25 which is as under: 25. We have considered the rival submissions carefully and find that Government of India, Ministry of Commerce and Industry, Department of Commerce has sanctioned the grant to the assessee vie letter dated 16.7.2002. Clause 4 of the same reads as under: "4 The release of fund are subject to the following terms and conditions: (i) No administrative expenditure be incurred out of the funds allocated (ii) The account of the implementing agency be kept open for inspection by the sanctioning authority/audit. (iii) The amount received from the Government be kept in a separate head of account of the nodal agency. (iv) No part of the funds be invested except in the scheduled nationalized banks. Any interest accrued be utilized for the scheme. (v) The nodal agency shall submit the report in the prescribed proforma along with the proposal for release of second installment as prescribed in the guide....
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..... Therefore, in computing the total income of the assessee the interest accrued on the bank deposits could not be treated as income." This decision has been followed by the Chandigarh Bench of the Tribunal in case of H.P. Government Energy Development Agency, Shimla V. ACIT (supra). Therefore following this decision we are of the opinon that the interest income does not accrued to the assessee and the assessee is not liable to be taxed on such interest. Therefore we set aside the order of the CIT(A) and delete this addition. Following the same we decide this issue against the assessee. 18. In the result appeal of the assessee is partly allowed. ITA No.1308/Chd/2012 The appeal by the Revenue is directed against the order dated 24/09/2012 passed by the CIT(A). 19. In this appeal Revenue has raised the following grounds: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the A.O. was not right in apportioning the development cost incurred on 159868 sq. mtrs of marketable land to whole piece of land of 317803 sq. mtrs purchased and developed by the assessee for sale. 2. On the facts and in the circums....
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....taken and only the purchase cost was incurred. In the balance sheet cost of this land measuring 88292 sq. mtrs was separately shown in the inventory. Further the land comprising tube well measuring 3000 sq. mtr. could also not be sold and therefore cost of that land was also reduced for working out of cost of land to be sold. Therefore, total balance available areas was only 229511 sq. mtrs. The said area was developed by providing sewerage, roads and other facilities and which also lead to wastage of developed area which was reduced to 69643 sq. mtrs. Thus net saleable area was 159868 sq. mtrs. which gave the average cost of Rs. 2438.77 per. sq. mtr. since the assessee has sold land measuring 65051 sq. mtrs. of land. During the year the profit was reflected accordingly. It was also pointed out that out of the sold area 14148 sq. metrs. was surrendered by the buyers in the immediately succeeding year and loss was booked accordingly which was accepted by the department. The Ld. CIT(A) found force in this submission and decided the issue in favour of the assessee. 22. Ld. DR relied on the contents of the assessment order and vehemently argued that the cost of development was requi....