TaxTMI 
TaxTMI 
2016 (7) TMI 1512
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....on the ground that such scheme was not specifically approved by concerned Commissioner of Income Tax though carried under general approval of Central Government. (ii) Whether the payment made to LIC by way of premium on Insurance Policy under Group Gratuity Insurance Scheme was liable to be treated as payment made to a fund which is deemed to have been approved by the CIT by the reason of efflux of time. (iii) Whether at an any rate actual payment made to the retiring employees, through the mechanism of Insurance Policy issued under Group Gratuity Insurance Scheme launched by Life Insurance Corporation of India should have been considered and allowed as deduction under Section 37 read with Section 43B of the Act ?" (iv) Whether addition of amount being 5% of premium collected by Assessee and forfeiture of earnest money/ premium is vitiated due to non-consideration of principle governing accrual of income and other material / information placed on record. (v) Whether the Tribunal was legally justified in upholding taxbility of 5% premium collected by Assessee in its hand without considering obligation / liabilities of overriding nature, attached t....
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.... of technical parks. 4. Assessee preferred an appeal where Commissioner of Income Tax (Appeals) ( hereinafter referred to as 'CIT (Appeals)') not only upheld dis-allowance but enhanced assessed income by taking a view that eligible profit for the purposes of computation of relief under Section 80IA deserved to be reduced by the amount of interest received on unpaid installments of premium from income disclosed by the Tronica City Industrial Model Town Loni, Ghaziabad and Greater Noida Export Promotion Industrial Park etc. with regard to Assessment Year 2006-07. Assessee and Revenue both filed appeals i.e. I.T.A. No. 384 of 2011 by Assessee and I.T.A. No. 398 of 2011 by Revenue. Similarly for Assessment Year 2005-06, Revenue filed I.T.A. No.560 of 2011 and Assessee filed I.T.A. No. 540 of 2011. Revenue's appeals for Assessment Years 2005-06 and 2006-07 have been dismissed while Assessee's appeals for Assessment Year 2005-06 is partly allowed but that of Assessment Year 2006-07 is dismissed. 5. With regard to dis-allowance of payment of Life Insurance Corporation of India ( hereinafter referred to as 'LIC') under Group Gratuity Insurance Scheme the only reason followed ....
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....v) which reads as under : - "any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust; " 8. The term "approved gratuity" fund is defined in Section 2(v) as under : "approved gratuity fund" means a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule;" 9. It is not in dispute that no gratuity fund constituted by Assessee has not been approved by Commissioner or Principal Commissioner till date but it is also proved that amount towards gratuity payable to employee has gone out of hands of Assessee having been deposited with LIC and, therefore, it is a case where expenses have actually been incurred by Assessee for benefit of its employees which is connected with the purposes of business or profession being carried by Assessee. If the terminology by itself is not relevant and if Revenue thinks that deposit made with LIC, on account of lack of approval by CIT, did not qu....
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....tters such as consideration of applications for registration even within the large six month period provided by s. 12AA(2) of the Act. 18. We accordingly direct the respondents, subject to any order which may be passed under s. 12AA(3), to treat the petitioner society as an institution duly approved and registered under s. 12AA and to recomputed its income by applying the provision of s. 11 of the Act. Accordingly, a formal certificate of approval will be issued forthwith to the petitioner by the respondent Nos. 2. The writ petition is allowed to the above extent" 11. In this view of the matter, gratuity fund of Assessee stood deemed to have been registered and that being so subsequent order passed by CIT(Appeals) had no consequence or illegal effect. Hence, Assessee was entitled to claim deduction under Section 36(v). The view taken otherwise in impugned orders, therefore, is illegal, and contrary to law and observing to be set aside. 12. Coming to the question of 5% income in term of premium received during concerned assessment years and deduction under Section 80IA and applicability of provision. It is said that there is no justification for presuming inc....