TaxTMI 
TaxTMI 
2026 (3) TMI 1258
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....Ld. Counsel for the assessee is with regard to disallowance of debited expenses of Rs. 1,50,00,000/- under the contribution to society cadre fund which was held as not allowable expenditure u/s. 37 of the Income Tax Act, 1961 (for short 'the Act') by the Revenue. 3. The assessee viz. Jila Sahakari Kendriya Bank Maryadit is engaged in providing banking facilities to its member cooperative societies and to staff only. During the course of assessment the A.O disallowed the expenditure debited under the head 'cadre fund expenses', holding that the same is either not incurred wholly and exclusively for the purposes of business. In this regard, the Ld. Counsel for the assessee has submitted as follows: "2. Nature and Purpose of Cadre ....
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....term advances, medium term advances & restructured or rephased loans) e) The provision for Cadre Fund is made by debiting the Profit Lis Loss Account and crediting a Cadre Fund (Provision) Account. f) Actual expenditure is incurred during the year when the cadre staff is deputed to various societies and payments are made, debiting the provision account. Refer : a) Cadre Fund : Page No 5 to 9 - b) Accounting Treatment : Page No 114 to 200 ____________________________________________________________ 3. Accounting Treatment and Compliance with Accounting Standards The provision for Cadre Fund is made in accordance with: Accounting Standard (AS) 29- Provisions, Contingent L....
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....ner as provided in the government instructions can be said be well related to business of the assessee. Therefore, the same is allowable as per the provisions of section 37 of the Act. Considering this we direct to allow the same." 2. Jila Sahakari Kendriya Bank Marya oshangabad v. DCIT (1)(1), Bhopal ITA No.307/Ind/2015, A.Y. 2010-11 - Indore Bench. The Tribunal deleted an addition of 47.071akh on identical facts, holding that contribution to the Cadre Fund is not an appropriation of profit but a necessary business expenditure arising from the statutory cadre system. These coordinate-bench rulings, rendered in identical factual and legal circumstances, fully support the present assessee's claim. In all these ....
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....recedents. Refer Page No 17 to 61) Prayer In view of the above facts, documentary evidences, consistent accounting treatment and settled judicial precedents, it is respectfully prayed that the disallowance of Cadre Fund Expenses sustained by the learned CIT(A) may kindly be deleted." 4. It is emphasized by the Ld. Counsel for the assessee that the provisions for cadre fund is made in accordance with Accounting Standard (AS) 29, Provisions, Contingent Liabilities and Contingent Assets/Ind AS 37, which permits recognition of a provision when: (a) the entity has a present obligation as a result of a past event; (b) it is probable that an outflow of resources will be required to settle the obligation; and (c) a reliable est....
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....h of the Tribunal, Indore in the case of The District Central Co-operative Bank Ltd., Raisen Vs. ACIT 3(1), Bhopal, ITA No.47/Ind/2014, A.Y.2010-11 has held that "The income of the assessee and District central Cooperative Bank generates from the basic activities done at the level of Primary Agricultural societies (PACS). Thus the sharing of the salary of the staff in a manner as provided in the government instructions can be said be well related to business of the assessee. Therefore, the same is allowable as per the provisions of section 37 of the Act. Considering this we direct to allow the same." 7. Further, we observe that the assessee had provided all the documents and evidence regarding details of cadre fund provisions made, ledge....