TaxTMI 
TaxTMI 
2022 (3) TMI 715
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....oup Gratuity Scheme. The AO asked the assessee to produce the Commissioners approval for the fund. The assessee contended that the deduction is sought u/s 37 of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') and therefore according to it the actual payment of Rs. 65,92,737/- is to be allowed. However the AO did not accept the same since the assessee failed to produce the approval of Commissioner in respect of gratuity fund to which the assessee has made the contribution. Therefore according to the AO as per Section 36(1)(v) of the Act, the deduction is not allowable, so he disallowed the amount of Rs. 65,92,737/-. 4. Aggrieved the assessee preferred an appeal before the Ld. CIT(A) wherein it challenged the action of AO to have disallowed contribution made by it as LIC premium on the scheme of Gratuity for the employees to the tune of Rs. 38,85,096/- (wrongly given and Correct figure as per AO order is Rs. 65,92,737/-) and the Ld. CIT(A) was pleased to dismiss the appeal, thus sustaining the disallowance. 5. Aggrieved the assessee is before us. 6. Assailing the action of Ld. CIT(A) the Ld. A.R. of the assessee Shri Dudhwewala contended that the Ld. CIT(A) e....
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....the Hon'ble High Court relying on the decision of the Hon'ble Supreme Court in the case of Textool Company Ltd. (supra) decided in favour of the assessee. 7. And the Ld. A.R. has relied on the decision of Co-ordinate Bench of this Tribunal in the case of DCIT vs. Epcos Ferrities Ltd. (102 taxmann.com 422) wherein the Tribunal held as under: 26. We have heard both the parties and perused the material available on record, we note that these grounds relate to payment of gratuity u/s.40A(7) of the Act and contribution to superannuation fund u/s. 40A(9) of the Act. Before us, Ld Counsel for the assessee submitted that the assessee company was not maintaining the group gratuity and superannuation funds on its own but are maintained and managed through the Life Insurance Corporation of India (LIC). In this connection, it was stated that since the funds are not being maintained by the assessee company or the trusts set up by the assessee so there was no need to get any approval from the concerned Commissioner. The assessee duly stated the above facts before the tax auditor but they did not appreciate the above fact and qualified the same under section 43B of the Act in....
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....tain benefits i.e. gratuity payments under this Scheme. The LIC would directly pay the benefits arising under the Scheme to the employees upon their retirement and/or to their beneficiaries upon their death. The assessee neither exercised any control or influence over the management of the funds nor did it have any say in the matters relating to payments of the benefits arising or accruing there from which was due to the Members. 10. It is noted that somewhat similar issue came up for consideration before the Hon'ble Supreme Court in the case of CIT VsTextool Ltd (263 CTR 257) wherein the Hon'ble Court after considering the earlier decision rendered in the case of Shree Sajjan Mills Ltd Vs CIT (156 ITR 585) [ relied by Ld DR] held that, the intention of Section 36(1)(v) of the Act, is that the employer should not have control over the funds of the irrevocable trust created exclusively for the benefit of the employees of the assessee. Applying the principle of reasonable construction, the Hon'ble Apex Court in that case noted that, the assessee had absolutely no control over the fund created by the LIC for the benefit of the employees of the assessee and hence allowed the deducti....
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....rovisions of section 40A(7) of the Act, 1961 ? (iv) Whether the Tribunal was justified in not considering the fact that premium paid by the appellant to LIC was under a scheme known as 'Group Gratuity Scheme' formed by LIC and the insurance premium paid under the said scheme is treated as a deductible business expense of the company ? (v) Whether the Tribunal was justified in relying upon a decision of this court which was decided on ex parte basis and the decision of the Madras High Court in the case of CIT v. Textool Co. Ltd. was not considered ? (vi) Whether the Tribunal was justified in not considering the fact that a bare reading of section 36(1)(v) of the Act, 1961 clearly shows that real intention behind the provision is that employer should not have any control over the funds of irrevocable trust created exclusively for the benefit of the employees and thus the condition is satisfied and the deduction is allowable ? (vii) Whether the Tribunal was justified in not considering the decision of apex court in CIT v. Textool Co. Ltd. [2013] 1 ITR-OL 241 (SC) ; [2013] 216 Taxman 327 (SC) wherein the apex court has considered its earlier ....