Tamilnadu Maritime Board, CHENNAI V. ACIT, CHENNAI

ITA 862/CHNY/2015

• Counselvise Citation: 86221714 RSA 2015
• Duration Of Justice: 4 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Bench Allotted: B
• Next Hearing Date: 09-07-2015
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2015
• Court: TRIBUNAL
• Department Lawyers: DR B NISCHAL
• Assessee Lawyers: G BASKAR
• Keywords: Business expenditure
• Section: 37

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . . . , . !' , # $ % [ BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ] ./ I.T.A.NO.862/MDS/2015 / ASSESSMENT YEAR : 2010-11 TAMILNADU MARITIME BOARD NO.171, SOUTH KESAVAPERUMAL PURAM OFF GREEN WAYS ROAD RAJA ANNAMALAI PURAM CHENNAI 600 028 VS. THE ASSTT. COMMISSIONER OF INCOME-TAX BUSINESS RANGE II(2) CHENNAI [PAN AAATT 9514 E] ( &' / APPELLANT) ( ()&' /RESPONDENT) / APPELLANT BY : SHRI G. BASKAR, ADVOCATE /RESPONDENT BY : DR. B. NISCHAL, JCIT / DATE OF HEARING : 09 - 0 7 - 2015 ! / DATE OF PRONOUNCEMENT : 21 - 0 8 - 2015 / O R D E R PER N.R.S.GANESAN, JUDICIAL MEMBER THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE COMMISSIONER OF INCOME-TAX (APPEALS)-2, CHENNAI , DATED 29.12.2014 AND PERTAINS TO ASSESSMENT YEAR 2010-11 . 2. THE ONLY ISSUE ARISES FOR CONSIDERATION IS DISALLOW ANCE OF ` 3,69,63,658/- BEING THE CONTRIBUTION MADE TO EMPLOY EES SUPERANNUATION FUND. ITA NO.862/15 :- 2 -: 3. SHRI G. BASKAR, LD. COUNSEL FOR THE ASSESSEE SUBMIT TED THAT TAMILNADU MARITIME BOARD WAS A PART OF TAMILNADU PO RT DEPARTMENT. AFTER ENACTMENT OF TAMILNADU MARITIME BOARD ACT, AN OPTION WAS GIVEN TO THE EMPLOYEES OF THE ERSTWHILE TAMILNADU PORT D EPARTMENT TO WORK UNDER TAMILNADU MARITIME BOARD. REFERRING TO THE G OVERNMENT ORDER DATED 21.11.1996, THE COPY OF WHICH IS AVAILABLE AT PAGE 1 OF THE PAPER BOOK, THE LD. COUNSEL SUBMITTED THAT BY VIRTU E OF SECTION 20(2) OF THE TAMILNADU MARITIME BOARD ACT, THE EMPLOYEES OF THE PORT DEPARTMENT WOULD AUTOMATICALLY BECOME THE EMPLOYEES OF THE TAMILNADU MARITIME BOARD AND HOLD THE OFFICE UNDER THE TAMILNADU MARITIME BOARD BY THE SAME TENURE, REMUNERATION AND RIGHTS AND PRIVILEGES AS TO PENSION AND GRATUITY. AFTER ESTAB LISHMENT OF MARITIME BOARD, TAMILNADU MARITIME BOARD SUPERANNUATION FUND WAS ESTABLISHED BY A DEED DATED 2.8.2013. THE CIT GRAN TED HIS APPROVAL BY AN ORDER DATED 19.3.2014 WITH RETROSPECTIVE EFFE CT FROM 18.5.2011. THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE TOWARDS CONTRIBUTION TO SUPERANNUATION FUND ON THE GROUND T HAT THE SUPERANNUATION FUND WAS NOT APPROVED BY THE CIT FOR THE YEAR UNDER CONSIDERATION. ACCORDING TO THE LD. COUNSEL, IF TH E CLAIM OF THE ASSESSEE COULD NOT BE ALLOWED U/S 36(1)(IV) OR 36 (1)(V) OF THE ACT, IT HAS TO BE ALLOWED U/S 37 OF THE ACT AS AN EXPENDIT URE. THE LD. COUNSEL PLACED HIS RELIANCE ON THE JUDGMENT OF THE MADRAS HIGH COURT ITA NO.862/15 :- 3 -: IN CIT VS KATTABOMMAN TRANSPORT CORPORATION LTD, [2 004] 268 ITR 507. ACCORDING TO THE LD. COUNSEL, THE CLAIM OF TH E ASSESSEE HAS TO BE ALLOWED U/S 37 OF THE ACT. 4. ON THE CONTRARY, DR. B. NISCHAL, LD. DEPARTMENTAL REPRESENTATIVE SUBMITTED THAT THE CIT BY AN ORDER D ATED 19.3.2014 APPROVED THE SUPERANNUATION FUND OF THE ASSESSEE W ITH EFFECT FROM 18.5.2011. IN OTHER WORDS, THE APPROVAL WAS GRANTE D BY THE CIT FOR THE FINANCIAL YEAR 2011-12, THEREFORE, AT THE BEST, THE ASSESSEE MAY BE ELIGIBLE FOR CLAIMING THE DEDUCTION FOR THE ASSE SSMENT YEAR 2012-13. REFERRING TO SECTIONS 36(1)(IV) AND 36(1)(V) OF THE ACT, THE LD. DR SUBMITTED THAT ANY SUM PAID BY THE ASSESSEE AS EMP LOYER BY WAY OF CONTRIBUTION TO APPROVED SUPERANNUATION FUND CAN ON LY BE ALLOWED TO BE CLAIMED AS DEDUCTION WHILE COMPUTING THE TOTAL I NCOME. SINCE THE FUND WAS NOT APPROVED BY THE CIT FOR THE YEAR UNDER CONSIDERATION, ACCORDING TO THE LD. DR, IT CANNOT BE ALLOWED. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITHER SIDE AND ALSO PERUSED THE MATERIAL AVAILABLE ON RECORD. ADM ITTEDLY, BY VIRTUE OF OPERATION OF SECTION 20 OF TAMILNADU MARITIME BOARD ACT, THE EMPLOYEES OF THE FORMER TAMILNADU PORT DEPARTMENT W ERE ALLOTTED TO TAMILNADU MARITIME BOARD ON THE BASIS OF THE SAME S ERVICE CONDITIONS, RIGHTS AND PRIVILEGES. THEREFORE, THE ASSESSEE IS LIABLE TO PAY CONTRIBUTION TO THE SUPERANNUATION FUND OF THE RESP ECTIVE EMPLOYEES. ITA NO.862/15 :- 4 -: NO DOUBT, THE APPROVAL OF THE SUPERANNUATION FUND W AS GRANTED BY THE CIT WITH EFFECT FROM 18.5.2011. THE QUESTION ARISE S FOR CONSIDERATION IS WHEN THE EMPLOYEES OF THE ASSESSEE WERE ALLOTTE D BY GOVERNMENT OF TAMILNADU PORT DEPARTMENT ON THE SAME TERMS AND CONDITIONS, RIGHTS AND PRIVILEGES, WHETHER THE CONTRIBUTION MAD E BY THE ASSESSEE IS ALLOWABLE U/S 37 OF THE ACT OR NOT. AN IDENTIC AL ISSUE WAS CONSIDERED BY THE MADRAS HIGH COURT IN CIT VS KATTA BOMMAN TRANSPORT CORPORATION LTD(SUPRA). IN THE CASE BEFO RE THE MADRAS HIGH COURT, KATTABOMMAN TRANSPORT CORPORATION PAID TO TH E GOVERNMENT IN ORDER TO ENABLE THE GOVERNMENT TO CREDIT THE AMOUNT SO PAID TO THE PROVIDENT FUND ACCOUNT OF THE GOVERNMENT EMPLOYEES WHO WERE AT THE POINT OF TIME WORKING IN THE TRANSPORT CORPORAT ION. THE GOVERNMENT, AFTER RECEIPT OF THE AMOUNT FROM THE TR ANSPORT CORPORATION, CREDITED TO THE PROVIDENT FUND ACCOUNT OF THE CONCERNED EMPLOYEES. IN THOSE CIRCUMSTANCES, THE MADRAS HIG H COURT FOUND THAT THE PAYMENT IS NOT IN ANY WAY AFFECTED BY SEC. 36 OF THE ACT. THE PAYMENT SO MADE IS DEDUCTIBLE UNDER SEC. 37 OF THE ACT, BEING PART OF THE BUSINESS EXPENDITURE. IN THIS CASE ALSO, BY VIR TUE OF OPERATION OF SECTION 20 OF TAMILNADU MARITIME BOARD ACT, THE ERS TWHILE GOVERNMENT EMPLOYEES OF TAMILNADU PORT DEPARTMENT BECAME THE E MPLOYEES OF TAMILNADU MARITIME BOARD. THE GOVERNMENT CLARIFIED IN THE LETTER DATED 21.11.1996 THAT THE EMPLOYEES SO ALLOTTED TO THE TAMILNADU MARITIME BOARD WILL HAVE THE SAME TENURE, REMUNERAT ION, RIGHTS AND ITA NO.862/15 :- 5 -: PRIVILEGES. IN VIEW OF THE STATUTORY PROVISION, T HIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IF THE CLAIM COULD NOT BE A LLOWED U/S 36 OF THE ACT, THE SAME HAS TO BE ALLOWED U/S 37 OF THE ACT. IN OTHER WORDS, THE PAYMENT MADE BY THE ASSESSEE TO THE EXTENT OF ` 3,69,63,658/- HAS TO BE TREATED AS BUSINESS EXPENDITURE IN THE HA NDS OF THE ASSESSEE IN VIEW OF THE JUDGMENT OF THE MADRAS HIGH COURT IN KATTABOMMAN TRANSPORT CORPORATION LTD. (SUPRA). IN VIEW OF THE ABOVE DISCUSSION, WE ARE UNABLE TO UPHOLD THE ORDER S OF THE LOWER AUTHORITIES. THE ASSESSING OFFICER IS DIRECTED T O ALLOW THE CLAIM OF THE ASSESSEE U/S 37 OF THE ACT. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST OF AUGUST, 2015, AT CHENNAI. SD/- SD/- ( . !' ) (A. MOHAN ALANKAMONY) # / ACCOUNTANT MEMBER ( . . . ' ) (N.R.S. GANESAN) / JUDICIAL MEMBER #$ / CHENNAI %& / DATED: 21 ST AUGUST, 2015 RD &' ()*) / COPY TO: 1 . / APPELLANT 4. + / CIT 2. / RESPONDENT 5. ),- . / DR 3. +/' / CIT(A) 6. -01 / GF