TaxTMI 
TaxTMI 
2017 (8) TMI 566
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.... assessment the Assessing Officer disallowed the claim related to PF Contribution and Contribution to LIC Group Gratuity Scheme and also made addition on disallowance of Prior Period Expenses to Rs. 2,99,213/- and disallowed the wrongly claimed depreciation of Rs. 11,23,123/-. Against this order, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions, partly allowed the appeal. Thereby confirmed the addition made on account of LIC Group Gratuity Scheme deleted the disallowance made on account of delay in deposit of PF Contribution of employees. 3. Further, aggrieved by this order, the present appeal has been filed. 4. Ground no. 1 is against confirming the disallowance of contribution made to LIC Group Gratuity Scheme of Rs. 1,66,96,379/-. 4.1 Ld. Counsel for the assessee vehemently argued that authorities below were not justified in disallowed the claim of the assessee. He submitted that it is the first time, when the claim has been disallowed in earlier years, such claim was not disallowed. He submitted that the application for approval of gratuity had been filed 14.08.1992, no communication had been received. Under these facts, the assessee a....
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.... approval in time. 2. It is submitted that the assessee has applied for approval in time. This application is still not rejected but kept pending for a long time. Therefore, assessee can't be made suffer for the mistake or inaction on the part of department. In these circumstances, even when approval to the said trust is granted by the Commissioner w.e.f. 05.08.2015 in view of the subsequent application dt. 04.08.2015 made in continuation to earlier application dt. 14.08.1992, the claim of the assessee cannot be disallowed as such approval would relate back to the date of application. 3. It is submitted that in the following cases, where application for approval is made in time but no action is taken on such application, the contribution made to LIC towards the Group Gratuity Scheme has been allowed. M/s Man Structural Pvt. Ltd. Vs. ACIT ITA No.63 to 65/JP/2016 order dt. 16.08.2016 The facts of the case are that assessee filed an application for approval of the Group Gratuity Trust to the CIT on 13.05.1996. Subsequent thereto, the Life Insurance Corporation of India (LIC) vide its letter dated 16.05.1996 asked the Ld. CIT to grant approval of the Group Gratuity Scheme. In purs....
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.... The assessee paid certain amount to LIC towards premium of group gratuity scheme. The AO asked to submit the copy of approval of the group gratuity scheme in support of their claim of deduction. The assessee replied that it has moved application for its approval in time but formal approval letter was not yet been received. However, the department had not rejected the scheme. The Assessing Officer after relying on the decision of Allahabad High Court in the case of CIT Vs. Electra (Jaipur) P. Ltd. (2006) 282 ITR 598, disallowed the expenses. CIT(A) deleted the disallowance made by the AO. The Hon'ble Tribunal upheld the action of AO by giving the following findings at para 9 of its order:- "9. The issue is identical to AY 2006-07, which has been considered by the Coordinate Bench in ITA No. 307/JP/2009 in assessee's own case. As the assessee has applied for its approval in time but formal approval had not been issued by the Department, therefore, there is no fault on the assessee. The identical issue has been decided by the Coordinate Bench, which is squarely application on this year also. Therefore, we uphold the order of ld CIT(A)." Against the order of Hon'ble Tribunal, depa....
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....strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. From a bare reading of sec. 36(1)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident that the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and further all the contribution made by the assessee in the said fund ultimately came back to the Textool Employees Gratuity Fund approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in section 36(1)(v) of the Act were satisfied. Narasu's Spinning Mills Vs. ACIT (2016) 157 ITD 512 (Chennai) (Trib.) Where assessee paid amount towards Employees Group Gratuity Fund to LIC and application made by assessee was still pending before Commissioner for approval and assessee had no control over fund created by LIC for benefit of its emp....
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....ssessee cannot be made to suffer for inaction of the revenue, admittedly the respondent assessee is a Government of Rajasthan Undertaking or even otherwise the Commissioner ought not have slept over the application for approval for more than 25 years. The Appellate Authorities are well justified in coming to the said conclusion. Needless to mention that a finding has been given by the Tribunal that the amounts are being disallowed by the learned AO from year to year at least from the assessment year 1996-1997 i.e almost 20 years but is being allowed regularly in appeal therefore, for this reason also we reject the claim of the revenue. The Assessing Officer ought not have made a repeated addition merely for this purpose and a litigation of this nature ought not to have come before this court as appeals all throughout is being allowed year after year. On the one hand the revenue does not decide the application for approval and the amount is being disallowed by the Assessing Officer from year to year which is not at all justified. The Revenue is well advised not to make repetitive additions/disallowance for this purpose and expose its weakness before the Courts as on the one hand app....