TaxTMI 
TaxTMI 
2017 (6) TMI 1234
X X X X Extracts X X X X
X X X X Extracts X X X X
....ts grievance is against the addition of Rs. 1,33,419/- which was made by the AO by not allowing deduction towards payment of PF and gratuity. 3. Brief facts of the case are that the assessee is a cooperative society, It has filed its return of income on 23.8.2010 declaring a total income at NIL. On scrutiny of the accounts, it revealed to the AO that the assessee has debited the following amounts: (a) Employees' contribution to PF : Rs. 52,752/- (b) Employer's contribution to PF : Rs.52,752/- (c) Contribution to gratuity fund : Rs.27,915/- 4. This claim of the assessee was disallowed by the AO by assigning the following reasons: "5.1. I have carefully gone through the facts of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....6. Before us while impugning orders of the Revenue authorities, the Id. counsel for the assessee contended that the Id. Revenue authorities have failed to take cognize sections 71 and 72 of the Gujarat Cooperative Societies Act, 1961 ("GCSA" for short). The GCSA authorizes assessee to establish a provident fund for its employees which will be governed by Employees' Provident Fund Act, 1952. This fund would be independent to assessee and the assessee could not use this fund for its business purposes. Safeguards have been made. Section 2(38) of the Income Tax Act also recognizes provident fund established under scheme framed under the Employees' Provident Fund Act. Thus, it was a valid fund constituted by the assessee and the contribu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ident fund : 1. Any society may establish for its employees a provident fund, into which shall be paid the contributions made by its employees and by the society. Such provident fund shall not be used in the business of the society, nor shall it form part of the assets of the society; but shall be invested under the provisions of section 71 and shall be administered in the prescribed manner. 2. Notwithstanding anything contained in sub-section (1) a provident fund established by a society to which the Employees' Provident Fund Act, 1952 (XIX of 1952), is applicable, shall be governed by that Act." 8. Similarly, it is pertinent to take note of sections 36(1), 40A(9) and section 2(38) of the Income Tax Act. It read as....
X X X X Extracts X X X X
X X X X Extracts X X X X
....en and continues to be recognised by the -[-[Principal Chief Commissioner or] Chief Commissioner or -[Principal Commissioner or] Commissioner] in accordance with the rules contained in Part A of the Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees' Provident Funds Act, 1952 (19 of 1952);" A conjoint reading of these sections would show that section 2(38) provides definition of recognized fund. According to this definition, a recognized fund would be considered, if it has been recognized by the Pr. Commissioner, Chief Commissioner, Joint Commissioner and it continues to be recognized by these authorities in accordance with rule contained in part-A of the IVth Schedule. Definition fur....