TaxTMI 
TaxTMI 
2021 (6) TMI 252
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....id is allowable as deduction only if the registration have been granted to the trust under I.T Act. 3. That the ld.CIT(A) has substantially erred by not considering the fact that registration for the gratuity has been granted to the assessee under I.T Act w.ef. 01.04.2012 and the Assessing officer has made disallowance in the A.Y. 2011-12 which is before the effective date of the registration towards gratuity fund. 4. The appellant craves, to leave, to amend and/or to alter any ground or add a new ground which may be necessary. 3. The only effective issue raised by the Revenue is that the learned CIT-A erred in allowing the claim of the assessee under section 36(1)(v) of the Act for Rs. 1,67,90,200/- on account of gratuity contribution, thuough the gratuity fund was not approved under the Act. 4. The Fact in brief is that the assessee is a registered cooperative society and engaged in distribution of agricultural inputs, outputs, oil seeds, food grains etc. The assessee during the under consideration claimed deduction of Rs. 1,67,90,200/- on account of contribution made toward employee gratuity fund. The assessee submitted that it being a Co-operative soc....
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....premium and in turn the LIC is managing all the fund independently. It has no control of whatsoever on fund, hence the situation for the utilization of such fund by diverting to the business of the assessee cannot arise. Further these fact can be verified from formation deed of gratuity trust as well from rule and condition attached to master policy of LIC. The assesse once again placed its reliance on the Judgment of Hon'ble SC in case of Textool Co. Ltd (supra). The assessee also submitted that all the conditions stipulated under section 36(1)(v) and relevant rules for getting approval were satisfied and accordingly applied before authorized authority. But the department did not take cognizance by pointing out any defect in application made earlier viz a viz not denied the approval. Therefore it should not denied from claiming such deduction just because the approval was granted on a later date w.e.f. from subsequent year. 5.1 The learned CIT (A) after considering all the facts allowed the appeal of the assessee by observing as under: 2.4 On careful consideration of entire facts, it is observed that Appellant has taken master policy with pension and group Schemes Depa....
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....y. Accordingly the learned AR contended that the deduction under section 36(1)(v) cannot be denied. The learned AR alternatively claimed that the contribution should be treated as an expense for the purpose of the business of the assessee and therefore the same should be allowed as deduction under section 37 of the Act. 8.1 Both the learned DR and the AR before us vehemently supported the order of the authorities below as favourable to them. 9. We have heard the rival contentions of both the parties and perused the materials available on record. The limited controversy that arises for our adjudication in the given facts and circumstances whether the assessee is entitled for the deduction for the contribution made to the gratuity fund which was not approved by the Commissioner of income tax under section 2(5) of the Act in the year under consideration. 9.1 The gratuity represents a lump sum amount which is paid by the employer to the employee upon his retirement. The amount of gratuity is calculated based on length of service of the employee and its payment to the employee is subject to other conditions as specified under the Payment of Gratuity Act 1972. The provisions of ....
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....t is placed on pages 41-45 of the paper book. At this stage the question arises, the assessee can be penalised for nongranting of the approval by the Commissioner of income tax. In this connection, we note that substantial time has been elapsed between the original application made by the assessee and the fresh application made by the assessee dated 08-03-2016. To our understanding, the assessee should be vigilant enough to pursue its matter before the authorities. The assessee should not fold his hands on the reasoning that its job has done upon making the requisite application before the Commissioner of income tax under section 2(5) of the Act. 9.5 Be that as may be, undisputedly the approval was granted under section 2(5) of the Act subsequently by the Commissioner of income tax with effect from 1st April 2012. Furthermore, we note that the purpose of creating the approved gratuity fund was to ensure that the amount contributed by the assessee as the employer should leave the possession from its hands. In other words, the assessee should not have any control on the fund created for the welfare of the employees. In the case on hand, there is no ambiguity that there was no c....
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....ords of Lord Justice Denning in the case of Seaford Court Estates Ltd. v. 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 causing wholly unjust prejudice to the taxpayer, we have, on these facts, no hesitation in holding that the date on which approval is to take effect can only be the date on which fund is created or th....