MAN STRUCTURALS PVT. LTD., Jaipur V. ACIT, Jaipur

ITA 63/JPR/2016

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5189 (ITAT-JAIPUR)
• Duration Of Justice: 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-08-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2008-2009
• Appeal Filed On: 21-01-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH YFYR DQEKJ] U;KF;D LN L; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI LALIET KUMAR, JM VK;DJ VIHY LA- @ ITA NOS. 63 TO 65/JP/2016 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2008-09, 2009-10 & 2012-13 M/S MAN STRUCTURAL PVT. LTD., NEAR LOCO, JAIPUR. CUKE VS. A.C.I.T. CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ L A-@ PAN/GIR NO.: AAECM 0053 A VIHYKFKHZ @ APPELLANT IZR;FKHZ @ RESPONDENT FU/KZKFJRH DH VKSJ LS @ ASSESSEE BY : SHRI P.C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI R.A. VERMA (ADDL.CIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 10/08/2016 MN?KKS'K .KK DH RKJH[ K @ DATE OF PRONOUNCEMENT : 16/08/2016 VKNS'K @ ORDER PER: LALIET KUMAR, J.M. ALL THESE APPEALS FILED BY THE SAME ASSESSEE AROSE AGAINST THE ORDER DATED 12/10/2015 PASSED BY THE LD CIT(A)-I, JAIPUR F OR THE A.Y. 2008-09, 2009-10 AND 2012-13. THE COMMON EFFECTIVE GROUNDS OF ALL THE APPEALS ARE AS UNDER:- 1 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN HO LDING THAT PAYMENT OF RS. 15 LACS FOR THE A.Y. 2008-09 AN D 2009-10 AND RS. 20 LACS FOR THE A.Y. 2012-13 MADE T O LIC TOWARDS GROUP GRATUITY SCHEME IS DISALLOWABLE U/S ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 2 40A(7) AS THE SCHEME IS NOT APPROVED AND THEREBY CONFIRMING THE DISALLOWANCE MADE BY A.O. HE HAS FURTHER ERRED IN NOT CONSIDERING THE FACT THAT AMOU NT IS PAID UNDER LIC GROUP GRATUITY SCHEME FOR WHICH APPLICATION DATED 16/05/1996 MOVED TO COMMISSIONER FOR APPROVAL IS NOT REJECTED AND THE ISSUE IS OTHER WISE COVERED BY VARIOUS DECISIONS OF THE COURT BUT NOT CONSIDERED/INFERRED CORRECTLY BY HIM. 2. ALL THE APPEALS OF THE ASSESSEE HAVE BEEN HEARD TOGETHER, THEREFORE, FOR THE SAKE OF CONVENIENCE, COMMON ORDE R IS BEING PASSED. 3. THE ASSESSEE HAS SUBMITTED AN APPLICATION FOR IRR EVOCABLE TRUST ON 13/05/1996 NAMED AS MAN STRUCTURAL PVT. LTD. EMPL OYEES GROUP GRATUITY ASSURANCE SCHEME TO SECURE THE PAYMENT OF GRATUITY TO ITS EMPLOYEES. THE SAID APPLICATION WAS DULY RECEIVED IN THE OFFICE OF REVENUE ON 13/5/1996. SUBSEQUENT THERETO, THE LIFE INSURANCE CORPORATION OF INDIA (LIC) VIDE ITS LETTER DATED 16 /5/1996 ASKED THE LD CIT TO GRANT APPROVAL OF THE GROUP GRATUITY SCHEME. ON THE BASIS OF THE APPLICATION MADE BY THE ASSESSEE WITH THE RESPONDENT , THE RESPONDENT HAS BEEN CONTRIBUTING TOWARDS THE GROUP GRATUITY FUN D AND HAS BEEN CLAIMING THE DEDUCTION IN TERMS OF SECTION 40A(7) O F THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE LD ASSESSING OFFICER IN THE ASSESSMENT YEAR 2008-09 HAS OBSERVED THAT THE GRATUITY FUND IS NOT RECOGNIZED BY THE LD CIT AND THEREFORE, THE CONTRIBUTION MADE BY THE ASSE SSEE WAS DISALLOWED. SIMILAR ARE THE FACTS FOR THE ASSESSMENT YEAR 2009- 10 AND ALSO FOR ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 3 ASSESSMENT YEAR 2012-13. THE RESPONDENT REVENUE VIDE LETTER DATED 11/12/2014 HAD INFORMED THAT THE RECORD RELATING TO MAY, 1996 IS NOT AVAILABLE IN THE OFFICE OF THE REVENUE, THEREFORE, THE ASSESSEE HAS FILED ANOTHER APPLICATION FOR THE GRANT OF APPROVAL UNDER RULE 2 PART C OF THE FOURTH SCHEDULE TO THE ACT. THE SAID APPROVAL WAS GRA NTED BY THE REVENUE W.E.F. 23/6/2015 VIDE LETTER DATED 10/12/201 5. THE SOLE BASIS OF DENIAL IS THAT THE GRATUITY FUND IS NOT RECOGNIZED BY THE LD CIT HENCE, THE CONTRIBUTION MADE BY THE ASSESSEE IS NOT ALLOWABLE. 4. THE ASSESSEE FEELING AGGRIEVED BY THE ORDER PASSE D BY THE LD ASSESSING OFFICER HAS TAKEN UP THE MATTER IN THE AP PEAL BEFORE THE LD CIT(A). THE LD CIT (A) VIDE ORDER DATED 12/10/2015 HAS ALSO DISMISSED THE APPEAL OF THE ASSESSEE BY OBSERVING AS UNDER: 3.1.2 (I) I HAVE CAREFULLY PERUSED THE SUBMISSION OF THE ASSESSEE, THE ASSESSMENT ORDER AND THE MATERIAL PLACED ON RECORD. DURING THE APPELLATE PROCEEDINGS, IT WAS SUBMITTED BY THE AR THAT THE WRITTEN SUBMISSIONS FILED BY HIM IN ITA NO. 338/2014-15 FOR A.Y. 2009- 10 MAY ALSO BE CONSIDERED IN THE INSTANT CASE UNDER CONSIDERATION. A DETAILED ORDER HAS BEEN PASSED BY ME IN ITA NO. 338/2014-15. AS THE FACTS OF INSTANT CAS E UNDER CONSIDERATION ARE IDENTICAL WITH THE FACTS IN ITA NO. 338/2014-15, FOLLOWING MY DECISION OF EVEN DATE IN ITA NO. 338/2014-15, IT IS HELD THAT THE A.O. WAS ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 4 JUSTIFIED IN MAKING DISALLOWANCE OF A SUM OF RS. 15 LACS ON ACCOUNT OF PROVISION MADE FOR GRATUITY U/S 40A(7 ) OF THE ACT AS THE GRATUITY FUND WAS NOT APPROVED BY THE COMMISSIONER OF INCOME TAX. THEREFORE, THIS GROUND OF APPEAL IS REJECTED. SIMILAR FINDINGS HAS ALSO BEEN GIVEN BY THE LD CIT( A) FOR THE APPEALS OF ASSESSMENT YEARS 2009-10 AND 2012-13. 5. NOW THE ASSESSEE IS IN APPEALS BEFORE US. THE LD A R OF THE ASSESSEE HAS SUBMITTED THAT THE ASSESSEE HAS FILED AN APPLIC ATION IN THE REQUISITE FORM ON 13/5/1996 AND THEREAFTER A LETTER WAS WRITTEN BY THE LIC. THE LIC BEING THIRD PARTY AND CUSTODIAN AND EXECUTOR OF THE FUND, HAS ALSO WRITTEN LETTER. IT WAS CONTENDED THAT IT IS FOR THE REVENUE TO GRANT APPROVAL TO THE ASSESSEE. IT IS SUBMITTED THAT THE ASSESSEE HAS BEE N MAKING THE PAYMENT PENDING APPROVAL FOR THEIR DEPOSITED CONTRIBUTION WI TH THE LIC FOR THE BENEFITS OF THE EMPLOYEES OF THE ASSESSEE. THE CONTR IBUTION MADE BY THE ASSESSEE ULTIMATELY CAME BACK TO THE EMPLOYEES GRA TUITY FUND. IT WAS ALSO THE CONTENTION OF THE LD AR THAT THE SAID GRAT UITY FUND WAS ALLOWED IN THE PREVIOUS YEAR, IN WHICH SUM IS ACTUALLY PAID BY THE ASSESSEE. IT WAS SUBMITTED THAT THE PAYMENT OF GRATUITY WAS MADE AND IT WAS ALSO CONTENDED THAT THE ASSESSEE MADE THE PAYMENT TO LIC BY CHEQUE DATED 29/9/2009 I.E. BEFORE DUE DATE OF FILING OF RETURN BUT THE LIC HAS ISSUED ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 5 RECEIPT ON 01/10/2009. IT WAS ALSO SUBMITTED THAT IS SUE IS COVERED BY THE JUDGMENT OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS TEXTOOL CO. LTD. (2013) 216 TAXMAN 327 AND THE ASSESSEE HAS SUBMITTED THAT SAME IS REQUIRED TO BE UPHELD. 6. ON THE OTHER HAND, THE LD. DR HAS SUBMITTED THAT THE NO STEPS WERE TAKEN BY THE ASSESSEE AFTER FILING THE APPLICATION FOR GRANT OF THE APPROVAL IN VIEW OF SECTION 40A OF THE ACT SINCE 1996 AFTER T HE ALLEGED APPLICATION DATED 13/5/1996. THE LD DR HAS ALSO BROUGHT TO OUR N OTICE THAT IF THE APPROVAL IS NOR GRANTED BY THE REVENUE, THEN THE AS SESSEE WITHIN ITS STATUTORY RIGHT TO FILE THE APPEAL BEFORE THE APPRO PRIATE AUTHORITIES IN ACCORDANCE WITH THE RULES FRAMED UNDER INCOME TAX RUL ES, 1962. IT WAS SUBMITTED THAT THE ASSESSEE WAS CASUAL AND CALLOUS I N PURSUING ITS APPLICATION FOR GRANT OF APPROVAL. IT WAS FURTHER SU BMITTED THAT THE CONDITION MADE IN SECTION 40A (7) OF THE ACT ARE ST ATUTORY AND BINDING AND THE PROVISIONS CANNOT BE READ DOWN AS COMMENCED BY THE ASSESSEE. SINCE THE GRATUITY FUND IS NOT APPROVED AS REQUIRED UNDER THE LAW, THEREFORE, THE CONTRIBUTION MADE BY THE ASSESSEE CA NNOT BE ALLOWED. 7. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. IT IS, THOUGH , DISPUTED THAT THE APPLICATION OF THE ASSESSEE FOR GRANT OF APPROVAL, WAS NOT TRACEABLE IN THE ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 6 OFFICE OF THE REVENUE BUT THE ASSESSEE WAS ABLE TO PRODUCE THE STAMPED COPY OF THE APPLICATION AND THE LETTER SUPPORTING T HE APPLICATION DATED 13/5/1996 BEFORE THE BENCH. IT IS ALSO AN ADMITTED POSITION THAT THE LIC VIDE LETTER DATED 16 TH MAY, 1996 HAS REQUESTED THE REVENUE TO GRANT APPROVAL. IN OUR VIEW, ONCE THE THIRD PARTY I.E. LIC IS REQUESTING THE REVENUE TO GRANT APPROVAL TO THE FUND CREATED FOR T HE BENEFIT OF THE EMPLOYEES IN THE FORM OF APPROVAL OF GRATUITY FUND THEN THE REVENUE CANNOT DISPUTE THAT THE ASSESSEE HAS NOT FILED APPL ICATION FOR GRANT OF APPROVAL OF THE GRATUITY FUND. MOREOVER, IN OUR VIE W, ONCE THE REVENUE IS ACCEPTING THE STATUS OF THE ASSESSEE BEING APPROVED GRATUITY FUND AND HAS BEEN EXTENDED THE BENEFIT OF THE APPROVED GRATUITY FUND AFTER THE APPLICATION WAS INITIALLY FILED ON 13/5/1996, NOW THE REVENUE CANNOT DENY THE BENEFIT MERELY ON THE BASIS OF NON-GRANT OF THE APPROVAL BY THE AUTHORITIES. FOR THE NON ACTION OF THE REVENUE, THE ASSESSEE CANNOT BE DENIED WITH THE BENEFIT OF THE PENDENCY OF THE DEDUC TION ON ACCOUNT OF THE ABOVE CONTRIBUTION MADE TO THE GRATUITY FUND. I N THE SIMILAR FACTS AND CIRCUMSTANCES, THE COORDINATE BENCH IN THE CASE OF NARASUS SPINNING MILLS VS ACIT (2016) 67 TAXMANN.COM 277 RELYING UPO N THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS TEXTO OL CO. LTD. (SUPRA) HAS HELD AS UNDER:- ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 7 8. HAVING CONSIDERED THE MATTER IN THE LIGHT OF THE BACKGROUND FACTS, WE ARE OF THE OPINION THAT THERE IS NO MERIT IN THE APPEAL. TRUE THAT A FISCAL STATUTE IS TO BE CONSTRUED STRICTLY AND NOTHING SHOULD BE ADDED OR SUBTRACTED TO THE LANGUAGE EMPLOYED IN THE SECTION, YET A STRICT CONSTRUCTION OF A PROVISION DOES NOT RULE O UT THE APPLICATION OF THE PRINCIPLES OF REASONABLE CONSTRUCTION TO GIVE EFFECT TO THE PURPOSE AND INTENTION OF ANY PARTICULAR PROVISION OF THE ACT. (SEE : SHREE SAJJAN MILLS LTD. V. CIT [1985] 156 ITR 585/23 TAXMA N 37 (SC). FROM A BARE READING OF SECTIN 36(1)(V) OF T HE ACT, IT IS MANIFEST THAT THE REAL INTENTION BEHIND TH E PROVISION IS THAT THE EMPLOYER SHOULD NOT HAVE ANY CONTROL OVER THE FUNDS OF THE IRREVOCABLE TRUST CREATED EXCLUSIVELY FOR THE BENEFIT OF THE EMPLOYEES. IN THE INSTANT CASE, IT IS EVIDENT FROM THE FINDINGS RECORDED BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL THAT TH E ASSESSEE HAD ABSOLUTELY NO CONTROL OVER THE FUND CREATED BY THE LIC FOR THE BENEFIT OF THE EMPLOYEES O F 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 THE COMMISSIONER WITH EFFECT FROM THE FOLLOWING PREVIOUS YEAR. THUS, THE CONDITIONS STIPULATED IN SECTION 36(1)(V) OF THE ACT WERE SATISFIED. HAVING REGARD TO TH E FACTS FOUND BY THE COMMISSIONER AND AFFIRMED BY THE TRIBUNAL, NO FAULT CAN BE FOUND WITH THE OPINION EXPRESSED BY THE HIGH COURT, WARRANTING OUR INTERFERENCE. ITA 63 TO 65/JP/2016_ M/S MAN STRUCTURAL PVT. LTD. VS ACIT 8 BY RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE SU PREME COURT AND THE COORDINATE BENCH, THE APPEAL OF THE ASSESSEE IS ALL OWED IN RESPECT OF ALL THE ASSESSMENT YEARS. 8. IN THE RESULT, THE ALL THE APPEALS OF THE ASSESS EES ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 16/08/2016. SD/- SD/- HKKXPAN YFYR DQEKJ (BHAGCHAND) (LALIET KUMAR) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ @ JAIPUR FNUKAD @ DATED:- 16 TH AUGUST, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- M/S MAN STRUCTURAL PVT. LTD., JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- THE A.C.I.T., CENTRAL-3, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 63 TO 65/JP/2016) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR