THE BUNDI CENTRAL CO-OPERATIVE BANK LTD., Kota V. ASSISTANT COMMISSIONER OF INCOME TAX, SAWAI MADHOPUR

ITA 366/JPR/2018

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 0344 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 19-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B V MAHESHWARI
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 366/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2014-15 THE BUNDI CENTRAL CO OP. BANK LTD., BYE PASS ROAD, BUNDI CUKE VS. ACIT, CIRCLE, SAWAI MADHOPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABAT4227G VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI B. V. MAHESHWARI (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J. C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 26/08/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 02/09/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A), KOTA DATED 16.01.2018 FOR ASSESSMENT YEAR 2014-15 W HEREIN THE LIMITED ISSUE RAISED BY THE ASSESSEE RELATES TO DISALLOWANCE OF C ONTRIBUTION OF RS. 51,58,859.00/- TOWARDS GRATUITY FUND MAINTAINED BY THE ASSESSEE WITH LIFE INSURANCE CORPORATION OF INDIA. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A CO-OPERATIVE BANK AND HAS CLAIMED DEDUCTION FOR GRA TUITY PAYMENT AMOUNTING TO RS. 57,58,849/- U/S 43B OF THE ACT TOWARDS GRATU ITY FUND MAINTAINED WITH THE LIC. THE ASSESSING OFFICER OBSERVED THAT THE GR ATUITY FUND WAS NOT APPROVED BY THE COMMISSIONER AND A SHOW CAUSE WAS I SSUED TO THE ASSESSEE. IN RESPONSE, THE ASSESSEE SUBMITTED THAT IT HAS APP LIED FOR THE 2 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR COMMISSIONERS APPROVAL WAY BACK IN THE YEAR 2003 A ND SUBMITTED ALL THE DOCUMENTS AT THAT POINT IN TIME. IN SUPPORT, THE C OPY OF THE TRUST DEED, LIC POLICY AND OTHER DOCUMENTS WERE SUBMITTED TO THE AS SESSING OFFICER WITH A REQUEST THAT THE LATTER CAN VERIFY THE SAME WITH TH E OFFICE OF THE LD. CIT. HOWEVER, THE REPLY SO FILED WAS NOT FOUND NOT ACCEP TABLE BY THE ASSESSING OFFICER AS THE FUND WAS NOT APPROVED BY THE LD. CIT AND THE CLAIM OF THE ASSESSEE WAS DISALLOWED. 3. BEING AGGRIEVED, THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT AND REITERATED THE SUBMISSIONS MADE BEFORE THE ASSESSING OFFICER. FURTHER, RELIANCE WAS PLACED ON THE HONBLE SUPREME COURT DECISION IN CASE OF CIT COIMBATORE VS. M/S TEXTOOL CO. LTD. 263 CTR 257 (SC). HOWEVER, THE LD. CIT CONFIRMED THE DISALLOWANCE SO MADE BY THE ASSES SING OFFICER AND THE RELEVANT FINDINGS READS AS UNDER:- AS REGARDS GROUND NO. 3, THE REFERENCE TO THE ORDE R OF THE APEX COURT IN THE CASE OF TEXTOOL INDIA HAS BEEN MADE BY THE A PPELLANT. IN THAT CASE, THE FUND WAS DULY APPROVED BY THE COMMISSIONE R WHILE IT IS NOT SO IN THE PRESENT CASE. FURTHER THE ISSUE THERE WAS ALSO DIRECT PAYMENT TO LIC WHICH IS NOT DISPUTED BY THE AO HERE. HENCE, THE ASSESSEE CANNOT CLAIM PARITY ON ACCOUNT OF THE SAME CASE LAW . IT IS THE APPROVAL OF THE SCHEME WHICH (IS) NOT AVAILABLE HERE. THE RE QUIREMENT OF APPROVAL HAS BEEN BROUGHT IN THE ACT WITH A PURPOSE WHICH CANNOT BE WAIVED JUST FOR ALLOWING BENEFIT AS IS DUE IN OTHER CASES WHERE THE ASSESSEE HAS A REGULAR APPROVAL AND THEN THE LEGAL ISSUE CROPS UP. THUS IN THE PRESENT CASE, UNLESS THE CIT HAD GIVEN THE A PPROVAL TO THE GRATUITY SCHEME, THE BENEFIT U/S 36(1)(V) COULD NOT BE GIVEN TO THE APPELLANT AND HAS BEEN RIGHTLY DENIED BY THE AO. TH E DISALLOWANCE OF RS. 57,58,849/- IS UPHELD. 3 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR 4. AGAINST THE SAID FINDING, THE ASSESSEE IS IN APP EAL BEFORE US. DURING THE COURSE OF HEARING, THE LD. AR SUBMITTED THAT THE AS SESSEE CO-OPERATIVE BANK HAS SETUP THE TRUST FUND FOR ENSURING THE GRATUITY PAYMENT TO ITS EMPLOYEES AND HAS TIED UP WITH LIC. THE BANK HAS APPLIED FOR THE APPROVAL OF THE GRATUITY TRUST TO THE LD. CIT, KOTA ON 03.02.2003. HOWEVER, THERE WAS NO COMMUNICATION FROM THE LD. CIT OFFICE THOUGH CERTAI N QUERIES WERE RAISED BY THE THEN ITO, BUNDI WHICH WERE RESOLVED AND THEN TH E ITO, BUNDI INFORMED THE ASSESSEE THAT NO FURTHER ACTION LIES AT ASSESSE ES END. IT WAS ACCORDINGLY SUBMITTED THAT ALL ALONG THESE YEARS, THE ASSESSEE CARRIED THIS BELIEF AND UNDERSTANDING THAT THE FUND HAS BEEN DULY APPROVED BY THE CIT AND THE SAME HAS ALSO BEEN ALLOWED AND ACCEPTED IN PAST ASSESSME NT PROCEEDINGS EXCEPT WHEN THE ISSUE WAS RAISED BY THE ASSESSING OFFICER FOR THE IMPUGNED ASSESSMENT YEAR. 5. IT WAS FURTHER SUBMITTED THAT THE ASSESSEE THERE AFTER FILED A REMINDER LETTER TO THE LD. CIT ON 10.08.2018 AND IN RESPONSE , THE APPROVAL HAS SINCE BEEN GRANTED BY THE PR. CIT, KOTA DATED 29.10.2018 APPROVING THE EMPLOYEES GROUP GRATUITY SCHEME W.E.F 01.10.2018. IT WAS SUBM ITTED THAT IT WAS NOT A FRESH APPLICATION BUT THE REMINDER TO THE APPLICATI ON FILED EARLIER ON 03.02.2003 AND THROUGH A LETTER DATED 01.11.2018, T HE LD. CIT WAS REQUESTED TO APPROVE THE SCHEME W.E.F 01.01.2003 AS AGAINST O N 01.10.2018 AS THE BANK HAS SATISFIED THE CONDITIONS LAID DOWN IN RULE 3 OF PART C OF THE FOURTH SCHEDULE TO THE INCOME TAX ACT. 6. FURTHER, OUR REFERENCE WAS DRAWN TO THE CO-ORDIN ATE BENCH DECISION IN CASE OF ACIT VS. JHALAWAR KENDRIYA SAHAKARI BANK (IN ITA NO. 1032 & 1051/JP/2011 DATED 14.08.2014) WHEREIN FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN CASE OF CIT COIMBATORE VS. M/S TEX TOOL CO. LTD (SUPRA), THE 4 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR MATTER WAS DECIDED IN FAVOUR OF THE ASSESSEE AND TH E RELEVANT FINDING IS CONTAINED AT PARA NO. 17 WHICH IS READS AS UNDER:- 17. WE HAVE HEARD THE RIVAL CONTENTIONS OF THE BOT H THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. WE PR OCEED TO DECIDE THE GROUNDS RAISED BY THE ASSESSEE AS UNDER:- APROPOS GROUND NO.2 IN RESPECT OF GROUP GRATUITY SC HEME POLICY FROM TIME TO TIME THEREOF WAS PAID TO LIC. THE DISALLOWA NCE HAS BEEN MADE BY THE LOWER AUTHORITIES HOLDING THAT THE NECESSARY REGISTRATION OF SCHEME WAS NOT OBTAINED BY THE ASSESSEE, IN OUR CON SIDERED VIEW, THE CONTROVERSY STANDS SQUARELY COVERED IN FAVOUR OF TH E ASSESSEE BY THE HONBLE SUPREME COURT JUDGMENT IN THE CASE OF CIT V S. TEXTOOL CO. LTD 263 CTR 257 (SC) WHEREIN THE SIMILAR PAYMENT MADE B Y THE ASSESSEE DIRECTLY TO LIC FOR GROUP GRATUITY FUND WAS HELD TO BE ALLOWABLE DEDUCTION U/S 36(1)(V) OF THE ACT. THIS DECISION HA S BEEN FOLLOWED BY THE DELHI BENCH OF ITAT IN THE CASE OF KEIHIN PENAL FA LTD. VS. ACIT VIDE ITA NO. 4309/DEL/2011 (SUPRA), TO WHICH ONE US (LEA RNED J.M) IS A PARTY. IN VIEW THEREOF, WE ARE INCLINED TO HOLD THA T THE ASSESSEE IS ENTITLED TO DEDUCTION OF PAYMENT OF GRATUITY TO THE LIC. ACCORDINGLY, GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. 7. IT WAS ACCORDINGLY SUBMITTED THAT NECESSARY RELI EF MAY BE GRANTED TO THE ASSESSEE AS THE SCHEME HAS BEEN DULY APPROVED B Y THE LD. CIT AND THERE IS NO DISPUTE THAT THE ASSESSEE HAS ACTUALLY MADE T HE PAYMENT TO THE GRATUITY FUND MAINTAINED WITH LIC. 8. PER CONTRA, THE LD. DR RELIED ON THE FINDINGS O F THE LOWER AUTHORITIES. IT WAS SUBMITTED THAT THE APPROVAL TO THE GRATUITY FUN D HAS BEEN GRANTED BY THE 5 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR LD. CIT, KOTA W.E.F 01.10.2018, HENCE, ANY PAYMENT MADE ON OR AFTER SHALL BE IN COMPLIANCE WITH THE APPROVED GRATUITY SCHEME. HO WEVER, IN THE INSTANT CASE, SINCE THE PAYMENT IS MADE PRIOR TO THE EFFECT IVE DATE WHEN THE APPROVAL SO GRANTED BY THE LD. CIT, KOTA, GRATUITY DISALLOWA NCE HAS RIGHTLY BEEN MADE BY THE ASSESSING OFFICER IN TERMS OF SECTION 36(1)( V) OF THE ACT. HE ACCORDINGLY SUBMITTED THAT THERE IS NO INFIRMITY IN THE FINDINGS OF THE LD. CIT (A) WHICH SHOULD BE CONFIRMED. 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE GRATUITY SCHEME HAS BEE N APPROVED BY THE LD. PR. CIT, KOTA W.E.F 01.10.2018. THE CLAIM OF THE ASSES SEE IS THAT SINCE THERE IS NO CHANGE IN THE TRUST DEED AND OTHER TERMS AND CON DITIONS OF SETTING UP OF THE FUND MAINTAINED WITH LIC, THE SAID APPROVAL SHO ULD BE READ RETROSPECTIVELY W.E.F 03.02.2003 FROM THE DATE OF ORIGINAL APPLICAT ION AND GIVEN THAT, NO DISALLOWANCE SHOULD BE MADE IN THE HANDS OF THE ASS ESSEE BANK. 10. WE FIND THAT THE APPROVAL TO THE GRATUITY SCHEM E HAS BEEN GRANTED BY THE LD PCIT ON 29.10.2018 EFFECTIVE FROM 1.10.2018. GIVEN THAT THE SAID APPROVAL HAS BEEN GRANTED SUBSEQUENT TO THE ORDER O F LD. CIT(A) DATED 9.01.2018, THERE IS NO FINDING RECORDED BY THE LD C IT(A) OR A DECLARATION IN THE APPROVAL SO GRANTED BY THE PCIT IN TERMS OF WHE THER THE SAID APPROVAL HAS BEEN GRANTED WITH REFERENCE TO THE EARLIER APPL ICATION FILED BY THE ASSESSEE IN THE YEAR 2003 OR IN PURSUANCE TO THE FR ESH APPLICATION FILED ON 10.08.2018 AND IN ANY CASE, THE ASSESSEE HAS MOVED AN APPLICATION IN THIS REGARD BEFORE THE LD PCIT SEEKING NECESSARY AMENDME NT/CLARIFICATION TO THE APPROVAL WHICH IS APPARENTLY PENDING HIS DECISION. THEREFORE, AS FAR AS THE CONTENTION OF THE LD. AR REGARDING RETROSPECTIVE AP PLICABILITY OF THE APPROVAL SO GRANTED BY THE LD. PR. CIT, KOTA IS CONCERNED, W E FIND THAT THE MATTER IS CURRENTLY PENDING DECISION OF THE LD PCIT AND IT IS ADVISABLE FOR THE ASSESSEE 6 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR TO PURSUE THE SAME WITH HIM. AT THE SAME TIME, THE ASSESSING OFFICER SHOULD ALSO VERIFY THE SAME WITH THE LD PCIT. WE THEREFOR E SET-ASIDE THIS ISSUE TO THE FILE OF THE ASSESSING OFFICER TO VERIFY THE EFFECTI VE DATE FROM WHEN THE APPROVAL OF GRATUITY SCHEME HAS BEEN FINALLY GRANTED BY THE LD PCIT AND DECIDE THE MATTER AS PER LAW. 11. ANOTHER CONTENTION OF THE LD AR IS THAT GIVEN T HAT THE ASSESSEE HAS ACTUALLY MADE THE PAYMENT TO THE GRATUITY FUND MAIN TAINED WITH LIC AMOUNTING TO RS. 51,58,859/- DURING THE FINANCIAL Y EAR RELEVANT TO THE IMPUGNED ASSESSMENT YEAR, FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN CASE OF TEXTOOL CO LTD (SUPRA), THE ASSESS EE DESERVE THE NECESSARY RELIEF. WE FIND THAT IN THAT CASE, THE ISSUE FOR C ONSIDERATION WAS ALLOWABILITY OF PAYMENT TOWARDS THE GRATUITY FUND MADE BY THE ASSES SEE DIRECTLY TO THE LIC AND NOT TO AN APPROVED GRATUITY FUND UNDER SECTION 36(1)(V) OF THE ACT. IN THAT CONTEXT, THERE WAS CONCURRENT FINDINGS RECORDE D BY THE APPELLATE AUTHORITIES THAT THE ASSESSEE HAD ABSOLUTELY NO CON TROL OVER THE FUND CREATED BY THE LIC FOR THE BENEFIT OF THE EMPLOYEES OF THE ASSESSEE AND FURTHER ALL THE CONTRIBUTION MADE BY THE ASSESSEE IN THE SAID FUND ULTIMATELY CAME BACK TO THE TEXTOOL EMPLOYEES GRATUITY FUND, APPROVED BY TH E COMMISSIONER WITH EFFECT FROM THE FOLLOWING PREVIOUS YEAR. CONSIDERIN G THE SAME, THE HONBLE SUPREME COURT HELD THAT THE CONDITIONS STIPULATED I N SECTION 36(1)(V) OF THE ACT WERE SATISFIED. IN THE INSTANT CASE, THERE IS N O FINDING RECORDED BY EITHER THE ASSESSING OFFICER OR BY THE LD CIT(A) IN THIS R EGARD AND FURTHER, THERE IS NOTHING ON RECORD IN TERMS OF MASTER POLICY ISSUED BY THE LIC AND HOW THE FUNDS HAVE BEEN ACCOUNTED FOR BY LIC AND IN WHOSE A CCOUNT/BENEFIT AND HOW THE SAME HAVE BEEN REFUNDED. THEREFORE, IN ABSENCE OF FINDINGS OF THE LOWER AUTHORITIES AND IN ABSENCE OF MATERIAL AVAILABLE ON RECORD, THE MATTER DESERVES TO BE SET-ASIDE TO THE FILE OF THE ASSESSI NG OFFICER TO EXAMINE THE SAME AFRESH AS PER LAW. 7 ITA NO. 366/JP/2018 THE BUNDI CENTRAL CO OP. BANK LTD., BUNDI VS. ACIT, SAWAI MADHOPUR IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 02/09/2019. SD/- SD/- FOT; IKY JKO FO E FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER JAIPUR DATED:- 02/09/2019. GANESH KUMAR VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE BUNDI CENTRAL CO OP. BANK LT D., BUNDI 2. THE RESPONDENT THE ACIT, CIRCLE, SAWAI MADHOPU R 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 366/JP/2018) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR