TMI Blog2006 (8) TMI 99X X X X Extracts X X X X X X X X Extracts X X X X ..... of the contribution made by the appellant-assessee to the Executive Staff Provident Fund? (b) Whether section 40A(9) of the Income-tax Act is applicable to the contribution to the Executive Staff Provident Fund and should not the Tribunal have allowed the deduction claimed under section 37 on the basis of the decision of this hon'ble court in CIT v. Aspinwall and Co. Ltd. reported, in [1993] 204 ITR 225 in the appellant's own case? (c) Whether, on the facts and circumstances of the case was the Tribunal justified in disallowing the amount of Rs. 59,228 being the expenditure incurred by the assessee for giving gifts and presents given to business clients ? (d) Whether on the facts and circumstances of the case the Tribunal is right in holding that the expenditure incurred for giving presents is an entertainment expenditure for the purpose of section 37(2) and not an expenditure allowable under section 37(1) of the Income-tax Act ? (e) Whether on the facts and circumstances of the case was the Tribunal justified in confirming the disallowance of contribution to the Cob Workers Welfare Fund by applying section 43B of the Income- tax Act and in holding that it cannot be al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The question referred in that case was whether the assessee was entitled to claim deduction under section 37(1) of the Income-tax Act in respect of the contribution made to the "unrecognised Executive Staff Provident Fund". In that case, the contention of the Revenue was repelled. It was held that the assessee was entitled to get deduction in respect of the contribution to the Executive Staff Provident Fund. That decision related to the assessment year 1979-80. Later I. T. A. Nos. 21 of 1999 and 25 of 1999 also came up for consideration before this court. The question raised was whether the assessee was qualified and entitled to deduction under section 36(1)(iv) of the Income-tax Act for the contribution made td the Executive Staff Provident Fund. This court in CIT v. Aspinwall and Co. Ltd. [1993] 204 ITR 225, following the earlier decision in Aspinwall and Co. (Travancore) Ltd.'s case [1992] 194 ITR 739 (Ker), answered the reference in favour of the assessee and held that the Tribunal had not committed any error in allowing a deduction of Rs. 52,781 paid by the assessee to the Executive Staff Provident Fund. The contention was raised by the assessee in all these cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eduction shall be allowed in respect of any sum paid by the assessee as an employer towards contribution to a provident fund except where such amount is paid for the purposes of and to the extent provided by or under section 36(1) (iv), section 36 deals with other deductions which states that the deductions provided for in the following clauses shall be allowed in respect of the matters dealt with therein, in computing the income referred to in section 23. Section 36(1)(iv) is extracted below for easy reference : "(iv) any sum paid by the assessee as an employer by way of contribution towards a recognised provident fund or an approved Superannuation fund, subject to such limits as may be prescribed for the purpose of recognising the provident fund or approving the superannuation fund, as the case may be, and subject to such conditions as the Board may think fit to specify in cases where the contributions are not in the nature of annual contributions of fixed amounts or annual contributions fixed on some definite basis by reference to the income chargeable under the head 'Salaries' or to the contributions or to the number of members of the fund ;" 8 Section 37(1) is a general ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or any approved gratuity fund or an approved superannuation fund or for the purpose of and to the extent required by or under any other law." 9 A reading of the explanatory note would show that the intention of the Legislature is to deny the deduction in respect of the sums paid by the assessee as employer towards contribution to any fund, trust, company etc. for any purposes within the limits laid down under the provisions to recognised provident fund. We may in this connection refer to the decision of the apex court in Shree Sajjan Mills Ltd. v. CIT [1985] 156 ITR 585. In that case the apex court affirmed the decision of the Madhya Pradesh High Court ( CIT v. Shree Sajjan Mills Ltd. [1985] 147 ITR 185) and held that for the gratuity to be deductible, the conditions laid down in section 40A(7) had to be fulfilled and that deduction could not be allowed on general principles under any other provisions of the Act relating to computation of income under the head "Profits and gains of business or profession". In other words, section 40A had the effect of notwithstanding anything contained in sections 30 to 39 of the Act. In view of the above, no deduction would be allowed i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no employer-employee relationship and clause (b) of section 43B is not applicable. The assessee also contended that neither section 43A nor section 43B would apply. The assessee's stand is that contribution that has to be paid to the welfare fund is neither tax nor duty and consequently section 43B would not apply. The assessee therefore, contended that disallowance under section 43B of Rs. 69,514 claimed as payment of contribution to the Kerala Coir Workers' Welfare Fund should have been allowed. 13 We find that question No. (e) in I. T. A. No. 21 of 1999 has not been properly considered by any of the authorities. In any view, the impact of the Kerala Coir Workers' Welfare Fund Act and the Scheme as such has not been properly appraised by any of the authorities concerned. In such circumstances, we feel that it would be appropriate that without answering question No. (e) the same be remitted to the a authority for fresh consideration. We therefore, dispose of all the appeals answering questions Nos. (a) and (b) in all these appeals in favour of the Revenue and against the assessee. Questions (c), (d) and (0 are answered against the assessee and in favour of the Revenue. Questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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