TaxTMI 
TaxTMI 
2017 (3) TMI 143
X X X X Extracts X X X X
X X X X Extracts X X X X
....f a sum of Rs. 36,41,496/- which was a payment made by the Assessee as an employer to a Superannuation Fund (Scheme) created by the Assessee for it's employees. The query of the AO in his letter was as follows :- "5. From item no.14 of notes on account in schedule 8 it is seen that contribution to superannuation scheme for Rs. 36,41,496/- has been debited to Profit & Loss Account although the approval of Commissioner of Income-tax was not obtained. Please explain why this claim should not be disallowed." 3. The assessee addressed a reply dated 20.01.2006 in which the assessee submitted that a sum of Rs. 36,41,496/- debited in the profit and loss account was a contribution to "Gloster Jute Superannuation Fund" and the said fund was duly approved by the Commissioner of Income tax vide his order dated 16.11.2004. It was specifically brought to the notice of the AO that order dated 16.11.2004 specifically says that the approval of the fund will take effect from 06.03.2003. A copy of the approval of the Commissioner of Income Tax was also filed along with this letter. 4. The assessment was completed u/s 143(3) of the Act by an order dated 15.03.2006. There was no addition made ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e allowed as deduction u/s 36(1)(iv) of the Act. The AO however, rejected the explanation of the assessee and disallowed the claim of the assessee for deduction by observing as follows :- "5. The explanation furnished by the A/R of the assessee has been examined. But the explanation submission of the A/R of the assessee are not acceptable on the following grounds: (i)The contribution of Rs. 36,41,496/- to the Superannuation Fund was not related to the financial year 2002-03 and the same was related to the period prior to 1st April 2002. (ii)At the time of payment of Rs. 36,41,496/- on 10.03.03 to Birla Sunlife Insurance Company Ltd there was no approval of the Superannuation Fund to which the contribution was made. (iii)As per the Audit Report the petition for approval of the Superannuation Fund by the CIT-I, Kol was filed on 27.03.03 much after the actual payment made on 10.03.03. Therefore, the contribution of 36,41,496/- on account of Superannuation Fund charged to revenue is not allowed to be deducted from revenue account and added back for computing the total income of the assessee for the assessment year 2003-04. [Addition Rs. 36,41,496/-]" 8. Before CIT(A) the....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nue expenditure. Hence, in the absence of any tangible material which could persuade the AO to form the belief that income chargeable to tax had escaped assessment by reason of the allowance of the expenses, he cannot issue notice u/s 148 even though the notice has been issued within the period of four years from the end of the A.Y. 1998-99. 9. As far as the merits of the addition made by the AO is concerned, the Assessee drew attention of the AO to the provisions of section 36(1)(iv) of the Act which states follows:- "36(1) The deduction provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 28 (iv)any sum paid by the appellant as an employer by wav of contribution towards a. recognized provident fund or an approved superannuation fund, subject to such limits as may be prescribed for the purpose of recognizing the provident fund or approving the superannuation fund, as the case may be; and subject to such conditions as the Board may think fit to specify in cases where the contribution are not in the nature of annual contributions of fixed amounts or annual contributions fixed on s....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e return of income for the relevant assessment year, irrespective the previous year in which the liability to pay such sum was incurred. Reference was also made to the judgment of Hon'ble Delhi High Court in the case of CIT -vs.- Kelvinator of India Ltd. (1994) 210 ITR 933 (Delhi) wherein it has been held by the Court that: "When a gratuity scheme is introduced for the first time, the gratuity payable to the existing employees who have already rendered some years of service and are still in service shall have to be considered ,to make a provision, because the gratuity payable depends on the entire length of service of an employee. The provision for gratuity has to value the liability with reference to 15 years of service, but this is distributed entire 15 years, out of which, when the scheme comes into force , a part of the total liability dependent upon the completed five years service of the employee has arisen. Though, this liability, in turn, is referable to each of the previous five years the legal liability arises only when the gratuity scheme is brought into force. Therefore, to that extent the liability attributable to those five years could be stated as having arise....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....s 147 dated 24-12- 2007 by the A.O. is unjustified, erroneous and needs to be summarily cancelled. (b). That on the facts and in the circumstances of the case, the issues raised under re-assessment proceedings were already examined by the A.O. during the course of scrutiny proceedings u/s 143(3) and hence re-assessment proceedings have been initiated for mere change of opinion and needs to be quashed. 2. That the respondent craves leave, to add, to amend, modify, rescind, supplement or alter any of the grounds stated here-in-above either before or at the time of hearing of the appeal. 13. We have heard the submissions of the ld. DR. The ld. Counsel for the assesse sought for an adjournment which was rejected. We have also heard the submissions of the ld. Counsel for the assessee, who reiterated the submissions as made before CIT(A). 14. We have given a very careful consideration to the submissions of the ld. DR, who reiterated the stand of the AO as is reflected in the order of assessment. We are of the view that the initiation of re-assessment proceedings was not legally valid. As we have already seen the question whether contribution to superannuation fund ought to b....