TaxTMI 
TaxTMI 
2024 (7) TMI 144
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....stated, facts of the present case are that the assess is a pension fund which was accorded recognition/approval by the Commissioner of Income Tax, Central-I, Kolkata vide order dated 29.09.1985 under Rule 2(1) of Part-B of the Fourth Schedule to the Income Tax Act, 1961 [hereinafter referred to as "the Act 1961"]. Thus, the fund of the assessee was approved under the Rules as contained in Part-B of the Fourth Schedule [hereinafter referred to as "the Rules"]. The order of approval is reproduced below:- "Under Rule 2(1) of the Part-B of the Fourth Schedule to the Income Tax Act, 1961 approval is hereby accorded to Assam Frontier Employee's Pension Fund constituted under the Trust Deed 12-07- 1994. The approval of the Fund maintained by the above-named employer will take effect from 30-01-1995. The approval of the Fund will be subject to the condition that the Trustee shall file before the Commissioner every year within three months from the date of the closing of the annual accounts of the Fund the following statements:- (a) Statement of accounts of the Fund. (b) A statement showing date-wise contributions made to the fund and details of ....
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....led an appeal under Section 246A of the Act 1961, which was allowed by the CIT (A) by a detailed and well discussed order dated 24.04.2008. Relevant portion of the aforesaid order of CIT (A) is reproduced below:- "(5.3) I have quite carefully considered the submissions made by the A.R. of the appellant in respect of the issues raised in Ground Nos. 2 and 3. I have also given thoughtful consideration to the reasoning of the A.O., as recorded in the impugned order. The order dated 29.9.1995 under Rule 2(1) of Part-B of Fourth Schedule to the Act passed by then C.I.T., Central-1, Kolkata is also perused. Finding substantial force in the arguments put forth by the A.R. of the appellant, it is observed at the outset that the action of the A.O. amounting to treating the appellant as an unapproved fund and thereafter denying the exemption u/s. 10(25)(iii) of the Act, is not legally sustainable. The provisions contained in Rule 2 of Part-B of Fourth Schedule are found to be quite unambiguous and I see no doubt in interpreting the same. The power to accord approval to any Superannuation Fund as well as to withdraw such approval, besides the power to prescribe the date of commenceme....
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.... prevented to call for such documents/statements etc. by virtue of powers conferred upon him in Rule 10 and thereafter put the matter before the competent authority for withdrawal of the approval, in case he found any discrepancy or non-compliance of the conditions. The fact that the appeal against withdrawal of approval lies with the Board further points out unequivocally that the A.O. is not vested with any power to withdraw/refuse the approval granted by the competent authority. Be that so; A.O.'s subsequent action in denying the exemption u/s. 10(25)(iii) on the purported ground is not sustainable in the eyes of law. The contention of the appellant that so long as the approval under Rule 2(1) is not withdrawn by the competent authority who granted it, the A.O. has no choice but to allow the exemption under Section 10(25)(iii) is not inappropriate and I am inclined to agree with it. It is further observed that the A.O. is not precluded at any point of time to bring the fact of non-compliance of the prescribed conditions by the appellant-fund, to the notice of the competent authority granting the approval with the suggestion for withdrawal of the same with effect from the date, w....
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....03.2009 in ITA No.1345/Kol/2008, the assessee has filed the present appeal, which was admitted by this Court by order dated 08.07.2009 on the afore-quoted substantial question of law. Submission on behalf of the Appellant/Assessee 11. Learned counsel for the appellant submits that the prescribed authority to issue approval order under Section 10(25)(iii) of the Act 1961 read with Rule 2(1) of the Rules is the Commissioner of Income Tax who had granted approval of the fund by the afore-quoted order dated 29.09.1995 and that order has neither been withdrawn nor cancelled. Under the circumstances, the Income Tax Officer / assessing officer had no jurisdiction to pass the assessment order denying exemption and to assess the assessee to tax with respect to the fund in question. Reliance is placed upon two judgments of Hon'ble Supreme Court in Gestetner Duplicators Pvt. Ltd. v. Commissioner of Income Tax, West Bengal reported in (1979) 2 SCC 354 [Para 3 and 12] and Industrial Infrastructure Development Corporation (Gwalior) Madhya Pradesh Limited v. Commissioner of Income Tax (Gwalior), Madhya Pradesh reported in (2018) 4 SCC 494 [Para 16-21]. 12. Learned counsel for the app....
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.... the approval is to take effect, and, where the approval is granted subject to conditions, those conditions. (3) The "[Chief Commissioner or Commissioner] shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect. (4) The "[Chief Commissioner or Commissioner] shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees of that fund a reasonable opportunity of being heard in the matter. Conditions for approval. 3. In order that a superannuation fund may receive and retain approval, it shall satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe- (a) the fund shall be a fund established under an irrevocable trust in connection with a trade or undertaking carried on in India, and not less than ninety per cent of the employees shall be employed in India; (b) the fund shall have for its sole purpose the provision of annuities for employees in the trade or undertaking on their retirement at or ....
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....[tax] on the amounts so paid shall be deducted at the average rate of [tax] at which the employee was liable to [tax] during the preceding three years or during the period, if less than three years, when he was a member of the fund, and shall be paid by the trustees to the credit of the Central Government within the prescribed time and in such manner as the Board may direct. Deduction from pay of and contributions on behalf of employee to be included in return. 7. Where an employer deducts from the emoluments paid to an employee or pays on his behalf any contributions of that employee to an approved superannuation fund, he shall include all such deductions or payments in the return which he is required to furnish under [***] section 206. Appeals. 8. (1) An employer objecting to an order of the [Chief Commissioner or Commissioner] refusing to accord approval to a superannuation fund or an order withdrawing such approval may appeal, within sixty days of such order, to the Board. (2) The appeal shall be in such form and shall be verified in such manner and shall be subject to the payment of such fee as may be prescribed. Liability ....
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....satisfy the requirements of this Part or of the rules made thereunder; and (g) generally, to carry out the purposes of this Part and to secure such further control over the approval of the superannuation funds and the administration of approved superannuation funds as it may deem requisite. (2) All rules made under this Part shall be subject to the provisions of section 296." 16. Perusal of the assessment order and more particularly the relevant portion afore-quoted, leaves no manner of doubt that the assessing officer has denied exemption to the assessee fund on the finding that "the Fund looses its recognition. Hence exemption u/s 10(25)(iii) claimed by the Fund is rejected." The CIT (A) well considered the relevant provisions of the Rules and recorded a finding with reference to the statutory provision that the powers conferred under the Rules upon the Chief Commissioner or Commissioner cannot be exercised by any authority below the rank of the Chief Commissioner or Commissioner. It was further observed that the Rule provides that the Chief Commissioner or Commissioner may withdraw the approval with reasons for such withdrawal and also the date on which the ....
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....(25)(iii) of the Act 1961 claimed by the assessee. Even the order of withdrawal of exemption has been made appealable under Rule 8 of the Rules, which goes to show that the power conferred upon the Chief Commissioner or Commissioner of Income Tax for withdrawal of exemption under Rule 4(2) of the Rules is a quasi judicial function. Undisputedly, the approval granted to the appellant/assessee has not been withdrawn or cancelled. Therefore, the assessing officer cannot look behind the approval and cannot hold that the approval looses its effect on account of alleged non-submission of certain financial statements by the assessee. 20. The question whether the Tribunal erred in law in holding that the assessee is not entitled to exemption under Section 10(25)(iii) of the Act 1961 in the absence of withdrawal of the order approving the fund of the assessee, stands answered from bare perusal of the provisions of the Rules aforequoted and Section 10(25)(iii) of the Act 1961. Section 10(25)(iii) of the Act 1961 clearly mandates that any income received by the Trustees on behalf of an approved superannuation fund shall not be included in computing the total income of a previous year of an....
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....ssment years. In that situation we do not think that it was open to the taxing authorities to question the recognition in any of the relevant years on the ground that the assessee's Provident Fund did not satisfy any particular condition mentioned in Rule 4. It would be conducive to judicial discipline and the maintaining of certainty and uniformity in administering the law that the taxing authorities should proceed on the basis that the recognition granted and available for any particular assessment year implies that the Provident Fund satisfies all the conditions under Rule 4 of Part A of the Fourth Schedule to the Act and not sit in judgment over it. There is ample power conferred upon the Commissioner under Rule 3 of Part A of the Fourth Schedule to withdraw at any time the recognition already granted if, in his opinion, the Provident Fund contravenes any of the conditions required to be satisfied for its recognition and if during assessment proceedings for any particular assessment year the taxing authority finds that the Provident Fund maintained by an assessee has contravened any of the conditions of recognition he may refer the question of withdrawal of recognition to the C....
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....Income Tax, Mangalore vs. M/s. Manipal Academy of Higher Education. We find that the judgment relied by the learned counsel for the respondent is of no help to the respondents, rather it is against them. Relevant portion of the aforesaid judgment is reproduced below: "11. A reading of the aforesaid provisions makes it very clear that if an assessee invests its funds in immovable property as aforesaid and satisfies one of the requirements of law, then he is entitled to the exemption as per the notification issued. Whether the assessee has complied with the conditions stipulated in the exemption order, before it could claim exemption is a matter, which has to be investigated by the Assessing Authority. It is only on the Assessee satisfying the conditions stipulated in the exemption order, it would be entitled to exemption. In the event there is a violation of the terms and conditions of the exemption order, the Assessing Authority would be justified in not extending the benefit of exemption but at the same time the Assessing Authority cannot ignore the order of exemption. Therefore, on enquiry if he is satisfied that the assessee is not entitled to exemption as he has violat....