Indore Premier Co-operative Bank Ltd., Indore V. The ACIT 4(1), Indore

ITA 198/IND/2013

• Counselvise Citation: 19822714 RSA 2013
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2009-2010
• Appeal Filed On: 08-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: GIRIRAJ GUPTA
• Section: 37(1)

Judgement Text

1 INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI R.C. SHARMA, ACCOUNTANT MEMBER ITA NO. 198/IND/2013 A.Y. 2009-10 INDORE PREMIER CO-OPERATIVE BANK LTD. INDORE PAN AAAAI-0701M :: APPELLANT VS ASSTT. COMMISSIONER OF INCOME TAX 4(1) BHOPAL :: RESPONDENT APPELLANT BY SHRI SANTOSH DESHMUKH AND SHRI GIRIRAJ GUPTA RESPONDENT BY SHRI R.A. VERMA DATE OF HEARING 1.8.2013 DATE OF PRONOUNCEMENT 1.8.2013 O R D E R PER JOGINDER SINGH, JUDICIAL MEMBER THE ASSESSEE IS AGGRIEVED BY THE IMPUGNED ORDER DA TED 24.1.2013 OF THE LEARNED FIRST APPELLATE AUTHORITY, INDORE. THE ONLY GROUND ARGUED BY THE LEARNED COUNSEL FOR T HE ASSESSEE PERTAINS TO CONFIRMING THE ADDITION OF RS. 75 LACS 2 AS CONTRIBUTION TO LIFE INSURANCE CORPORATION UNDER GROUP GRATUITY-CUM-ASSURANCE POLICY FOR THE REASON THAT T HE CONTRIBUTION WAS MADE TO NON-APPROVED GRATUITY FUND . 2. DURING HEARING OF THIS APPEAL, WE HAVE HEARD SHR I SANTOSH DESHMUKH ALONG WITH SHRI GIRIRAJ GUPTA, LEA RNED COUNSEL FOR THE ASSESSEE, AND SHRI R.A. VERMA, LEAR NED SENIOR DR. AT THE OUTSET, IT WAS POINTED OUT THAT THE IMPUGNED ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSE E ITSELF FOR THE A.YS. 2007-08 AND 2008-09 ORDER DATED 27 TH FEBRUARY, 2013. THIS FACTUAL MATRIX WAS NOT CONTROVERTED BY THE REVENUE. 3. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PER USED THE MATERIAL AVAILABLE ON RECORD. THE FACTS, IN BR IEF, ARE THAT THE ASSESSEE BANK PAID CONTRIBUTION OF RS. 75 LACS DURING THE YEAR UNDER QUESTION TOWARDS GROUP GRATUI TY LIFE ASSURANCE FUND (POLICY NO. 59080). THE SAID POLICY WAS TAKEN BY THE BANK FOR THE BENEFIT OF EMPLOYEES IN T HE YEAR 1976 AND THE BANK IS REGULARLY PAYING THE PREMIUM T O THE LIC UNDER THIS POLICY. THE PAYMENT SO MADE AS PREM IUM WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT. THE LE ARNED 3 ASSESSING OFFICER DISALLOWED THE CONTRIBUTION FOR T HE REASON THAT THE TRUST HAS NOT APPROVED THE FUND TO THE ASS ESSEE BANK. ON APPEAL, THE LEARNED CIT(A) AFFIRMED THE S TAND OF THE LEARNED ASSESSING OFFICER. WE FIND THAT ON IDEN TICAL ISSUE THE MATTER TRAVELLED TO THE TRIBUNAL AND THE TRIBUNAL AFTER HAVING DETAILED DISCUSSION ON THE ISSUE INCLU DING THE CONDITIONS PRESCRIBED U/S 40A(7) AND SECTION 37(1) DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE VIDE ORDER DATE D 27 TH FEBRUARY, 2013. NO CONTRARY DECISION WAS BROUGHT TO OUR NOTICE BY THE REVENUE. 3.1 AS PER SECTION 37(1) OF THE ACT, AN EXPENDITURE INCURRED FOR STAFF WELFARE IS DEDUCTIBLE PROVIDED I T IS ESTABLISHED THAT THE PAYMENTS WERE MADE FOR SOUND COMMERCIAL PURPOSES AND WITH THE OBJECT OF FACILITA TING THE CARRYING ON OF THE BUSINESS. IT IS AN UNDISPUTED F ACT THAT THE PAYMENTS OF THE IMPUGNED AMOUNT WERE MADE TO LI FE INSURANCE CORPORATION AS PREMIUM TOWARDS THE MASTER POLICY WHICH COVERS THE EMPLOYEES OF THE ASSESSEE. IN OTHER WORDS, THE PAYMENTS RELATE TO THE OBLIGATION OF THE ASSESSEE TOWARDS OWN EMPLOYEES. IT CAN BE SAID, THERE WAS NO THING WRONG WITH THE TRUST DEED SO AS TO WARRANT DISALLOW ANCE ON 4 ANY OTHER GROUND. MERELY BECAUSE THE TRUST DEED IS CONVENIENTLY ADOPTED AS THE BASIS OF RECKONING THE OBLIGATIONS UNDER THE SCHEME, IT DOES NOT MEAN THAT THE TRUST FUND CREATED BY THE TRUST DEED SHOULD BE RECO GNISED BEFORE THE QUESTION OF DEDUCTIBILITY OF INSURANCE P REMIUM IS GONE INTO. IF THE ASSESSEES CLAIM IS ALLOWABLE ON MERIT, IT WILL HAVE TO BE ALLOWED NOT-WITH-STANDING NON-RECOG NITION OF THE TRUST FUND. THE TRIBUNAL IN THE AFORESAID CA SE (IN THE CASE OF THE ASSESSEE ITSELF) FOLLOWED THE DECISION OF THE HYDRABAD BENCH IN THE CASE OF INTERNATIONAL ORE & FERTILIZERS (INDIA) PRIVATE LIMITED REPORTED AT 3 I TD (HYD) 593 WHEREIN THE IDENTICAL ISSUE WAS DEALT WITH AND DECIDED IN FAVOUR OF THE ASSESSEE U/S 37(1) OF THE ACT, NOT -WITH- STANDING THE FACT THAT THE GRATUITY FUND ESTABLISHE D BY THE ASSESSEE WAS NOT RECOGNISED U/S 40A(7) OF THE ACT W HICH HAS ALSO BEEN DISCUSSED BY THIS BENCH IN ITS ORDER DATED 27.2.2013. THE RATIO LAID DOWN BY HONBLE APEX COUR T IN SHRI VENKATA SATYANARAYANA RICE MILL CONTRACTORS COMPANY VS. CIT; 89 TAXMAN 92 (SC); CIT VS. SPIN WA LL & CO. LTD.; 204 ITR 225 (KER.) AND CIT VS. PUNJAB FIN ANCIAL CORPORATION LIMITED (2007) 295 ITR 510 SUPPORTS OUR VIEW. 5 FOLLOWING THE AFORESAID DECISIONS INCLUDING THE DEC ISION OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR EARLIE R ASSESSMENT YEAR, THE APPEAL OF THE ASSESSEE IS ALLO WED. THIS ORDER WAS PRONOUNCED IN THE OPEN COURT IN TH E PRESENCE OF LD. REPRESENTATIVES FROM BOTH SIDES AT THE CONCLUSION OF THE HEARING ON 1.8.2013. SD SD (R.C.SHARMA) (JOGINDER SIN GH) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2.8.2013 COPY TO: APPELLANT, RESPONDENT, CIT, CIT(A), DR, GU ARD FILE DN/-122