The ACIT., Circle-1(1)(1), Vadodara V. M/s. Jyoti Limited, Vadodara

MA 82/AHD/2022

AI Insights

The case revolves around a Miscellaneous Application by the Department challenging the ITAT's earlier decision in ITA No. 1353/Ahd/2014, which pertained to the Assessment Year 2009-10. The Department contended that the ITAT erroneously relied on the Supreme Court's decision in CIT vs. Textool Company Ltd. for setting aside the order passed by the Principal Commissioner of Income Tax under section 263 of the Income Tax Act. The core issue was the interpretation and application of section 36(i)(iv) and section 36(i)(v) of the Act concerning deductions for contributions made to superannuation and gratuity funds, respectively. The ITAT, after reviewing the arguments and the Supreme Court's decision, dismissed the Department's application, affirming that the ITAT had correctly understood and applied the legal principles as intended by the Supreme Court.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 131481 (ITAT-AHMEDABAD)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 03-05-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 23-03-2023
• Assessment Year: 2009-2010
• Appeal Filed On: 06-10-2022
• Other Referred Cases: CIT vs. Textool Company Ltd. 264 CTR 257 (SC)
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 263; 264

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “D” BENCH Before: Ms. Annapurna Gupta, Accountant Member And Shri Siddhartha Nautiyal, Judicial Member Th e ACIT, Circle-1 (1 )(1), Vadodara (Appellant) Vs M/s. Jyoti Ltd. Nanubh ai Amin Marg, Indu strial Area, P. O. Chemi cal Industries, Vadodara-3900 03 PAN: AAA CJ4909 N (Resp ondent) Asses see b y : Shri Man ish J. Sha h, A. R. Revenue by : Shri Dileep Kumar, Sr. D. R. Date of hearing : 24-03 -2 023 Date of pronouncement : 04-05 -2 023 आदेश/ORDER PER : SIDDHARTHA NAUTIYAL, JUDICIAL MEMBER:- This Miscellaneous Application filed by the assessee is against the order passed by ITAT in ITA No. 1353/Ahd/2014 A.Y. 2009-10 vide order dated 13-05-2022. M.A. No. 82/Ahd/2022 (In ITA No. 1353/Ahd/2014) Assessment Year 2009-10 M.A. No. 82/Ahd/2022 (In ITA 1353/Ahd/2014) A.Y. 2009-10 Page No. ACIT vs. M/s. Jyoti Inds. 2 2. The brief background of the case is that the present miscellaneous application has been filed by the Department on the issue that the order passed by ITAT vide ITA No. 1353/Ahd/2014 A.Y. 2009-10 is erroneous since it set aside the order passed by PCIT u/s. 263 of the Act by placing reliance on the case of Hon’ble Supreme Court CIT vs. Textool Company Ltd. 264 CTR 257 (SC). As per the present Miscellaneous Application, the ITAT erred in placing reliance on the aforesaid decision and did not appreciate the fact that in the decision of M/s. Textool Company Ltd. (supra), the deduction u/s. 36(i)(v) of the Act was claimed in respect of contribution made to the gratuity which was approved by the Commissioner of Income Tax, whereas in the case of the assessee M/s. Jyoti Ltd, the deduction u/s. 36(i)(iv) of the Act was claimed in respect of contribution made to superannuation fund which has not been approved by the income tax authority and therefore the case of M/s. Jyoti Ltd. (supra) is covered by the decision of Hon’ble Supreme Court in the case of Textool Company Ltd. (supra) hence the there is apparent mistake in the order dated 13-05-2022 passed by the ITAT in ITA No. 1353/Ahd/2014. 3. We have perused the order passed by the ITAT, the arguments placed by ld. Departmental Representative before us and his submission made in the Miscellaneous Application. In our considered view, the Department has erred in not appreciating that the ITAT in the order dated 13-05-2022 has placed reliance on the decision of Hon’ble Supreme Court in the Textool Company Ltd. supra on the basis that the Supreme Court in the aforesaid decision has held that construction of a provision does not rule out the M.A. No. 82/Ahd/2022 (In ITA 1353/Ahd/2014) A.Y. 2009-10 Page No. ACIT vs. M/s. Jyoti Inds. 3 application of reasonable consideration to give effect to the purpose and intention of any provision of the Act. In this decision, the Supreme Court held that from a reading of section 36(i)(v) of the Act, it is manifest that real intention behind the provisions that the employer should not have control over the funds of the education trust, credited exclusively for the benefits of the employees. In the instant case, the Supreme Court, observed that it is evident from the facts that the assessee had absolutely no control over the amounts credited by the LIC 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. We observe that it was with respect to these observations made by the Hon’ble Supreme Court that the ITAT placed reliance upon the Supreme Court decision in its order. Accordingly, we are of the considered view that in the Miscellaneous Application, the Department has erred in not appreciating the perspective from which reliance was placed by the ITAT on the decision of M/s. Textool Ltd. Company 263 CTR 257 (Supreme Court). Accordingly, in the light of the above observations, we find no infirmity in the order of ITAT and in our considered view the ITAT has correctly placed reliance on the decision of CIT(A) vs. Textool Company Ltd. (supra) while dismissing the order passed by PCIT u/s. 263 of the Act. M.A. No. 82/Ahd/2022 (In ITA 1353/Ahd/2014) A.Y. 2009-10 Page No. ACIT vs. M/s. Jyoti Inds. 4 4. In the above observations, the MA filed by the Department is hereby dismissed. Order pronounced in the open court on 04-05-2023 Sd/- Sd/- (ANNAPURNA GUPTA) (SIDDHARTHA NAUTIYAL) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad : Dated 04/05/2023 आदेश क त ल प अ े षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/ आदेश से, उप/सहायक पंजीकार आयकर अपील य अ धकरण, अहमदाबाद