TaxTMI 
TaxTMI 
2018 (1) TMI 956
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....ant previous year, the assessee had set up an employees' gratuity fund, by the name of Prakash Software Solutions Pvt Ltd Employees Group Gratuity Scheme for administering a scheme, which was named as Prakash Software Solutions Pvt Ltd Employees Group Gratuity-cum- Life Assurance Scheme, in collaboration with the Life Insurance Corporation of India. This trust was set up on 1st January 2010 and was effective from 1st January 2010. On 03.03.2010, an initial payment of Rs. 5,63,235, as premium under this scheme for the period of one year commencing from 1st January 2010, to Pension and Group Schemes Department of the Life Insurance Corporation of India. As the payment was made on behalf of the gratuity fund, this premium paid to the LIC was treated as contribution to the said gratuity fund. The gratuity fund had also applied, vide letter dated 31st March 2010, on 07.04.2010, for approval of the said fund by the Commissioner of Income Tax under rule 2(1) of Part C to the Third Schedule to the Income-tax Act, 1961. It was in this backdrop a deduction of Rs. 5,63,235 was made for contribution towards approved gratuity fund. However, this claim was declined by the Assessing Officer on th....
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....believes, and that's what he emphatically argues before us, is that all that is required to be seen is the situation prevailing as on the point of time when assessee made the contribution to the fund, and since, beyond any dispute or controversy, that contribution was made to a gratuity fund, which was not approved at the relevant point of time, the assessee was clearly hit by the disabling provisions under section 36(1)(v) which categorically provides that only such contribution to the approved gratuity funds, created by the assessee for the exclusive benefits of its employees, are permissible as deduction as are approved. Once it is not in dispute that the gratuity fund in question was not an approved gratuity fund at the relevant point of time, according to the learned Departmental Representative, it is end of the road so far as deductibility of the contribution to such a gratuity fund is concerned. The law, according to the learned Departmental Representative, is unambiguous, clear and does not need any creative interpretation contrary to the plain words of the law. 5. So far as the contribution to the approved gratuity funds are concerned, section 36(1)(v) categorically provi....
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....some hint about the guiding principles governing the date from which the withdrawal of approval is to take effect under rule 4(2) by specifically providing that "if any alteration in the rules, constitution, objects or conditions of the fund is made at any point of time after the date of application for approval........any approval given shall, unless the Principal Chief Commissioner, Chief Commissioner, Principal Commissioner or Commissioner otherwise orders, be deemed to have been withdrawn from the date on which the alteration took effect". Quite clearly, it is the point of time when content of the rules, constitution, objects or conditions of the fund, or alteration thereto, are made which is relevant for the purpose of withdrawing, and as a corollary thereto, granting the approval to the gratuity fund. That approach is quite justified on the first principles as well. It cannot even be seriously argued by anyone that underlying principles for withdrawal of vis-à-vis grant of approval can be different. The thrust and the underlying principle on which the date of approval of the trust and the withdrawal of such an approval is based is thus clear, unambiguous and beyond con....
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....acts of this case, serious prejudice may be caused to the assessee employer on account of grant of approval with effect from a date later than the date on which the trust is created. To quote the oft quoted words of Lord Justice Denning in the case of Seaford Court Estates Ltd. vs. Asher (1949) 2 All ER 155 at p. 164 : "......when a defect appears, a Judge cannot simply fold his hands and blame the draftsmanship. He must set out to work on the constructive task of finding the intention of Parliament..... and then he must supplement the written word so as to give "force and life" to the intent of legislature...... A Judge should ask himself the question how, if the makers of the Act had themselves came across this ruck in the texture of it they would have straightened it out? He must do as they would have done. A Judge must not alter the material of which the Act is woven, but he can and should iron out the creases." In many cases, embarking upon such a voyage to discover the legislative intent may not really be workable for a variety of reasons but given the fact that it is a non-appealable decision of the Commissioner and it is not only contrary to the scheme of the Act but is cau....
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....and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year:" 9. Clearly, the grant of approval under section 12AA not only applies to the current assessment year but also in respect of preceding assessment years, in respect of which assessment proceedings are pending, as long as the material factors qualifying for such registration remain the same for such preceding assessment year. Undoubtedly, the provisions of Section 12AA have no application in this case, but what is relevant is the approach adopted by the statute itself which is contrary to the stand of the Departmental Representative. That is also the approach adopted by a series of binding judicial precedents granting deduction on the basis of approvals granted subsequent to the claim being made. As a matter of fact, this aspect of the matter is by and large well settled in law, and, there are a large number of judicial....