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2015 (8) TMI 171 - AT - Income TaxDisallowance on account of premium of group gratuity holding the same not to be allowable u/s 36(1)(v) - CIT(A) confirmed disallowance - Held that:- As find in the earlier round, the matter was referred to the Assessing Officer for verification of the fate of application of the assessee for registration of gratuity scheme. The Assessing Officer enquired from the office of the Commissioner who clearly informed that no such application was pending in that office. In such circumstances in our opinion, the assessee should have taken caution to pursue the matter in the office of the Commissioner or should have produced some evidence before us to show that the application was really pending. In the absence of such evidence only conclusion which can be reached is that the gratuity fund of the assessee is not approved. It was common ground that the funds to which the assessee had contributed were not approved either during the year under consideration or at any time up to the date of making the contributions. Therefore, the contributions made did not qualify for deduction under section 36. Further the deduction which the assessee claimed was admittedly of the nature described in section 36(1)(iv) and (v). Therefore section 37 would not come to the aid of the assessee. From above it becomes clear that if particular fund is not approved then Section 36(1)(iv) would come into operation and such expenditure cannot be allowed. In such situation Sec 37 is not applicable because Hon'ble High Court in case of Sony India P. Ltd V CIT [2006 (6) TMI 76 - DELHI High Court ] has very clearly held that deduction admissible u/s 30 to 36 cannot be claimed u/s 37. Therefore in our opinion, in view of this decision the claim of the assessee has been correctly denied by the authorities below and accordingly we confirm the order of the Ld. CIT(A). - Decided against assessee. Addition of provisions for bad and doubtful debts written off in the computation of book profit u/s 115JB - Held that:- Section 115JB of the Act, provides that any amount credited to the profit and loss account on account of amounts withdrawn from the reserve or provision had to be reduced from the book profit with an exception that if such reserve or provision is out of reserve created prior to or before 1.4.1997 and, such reserve has been created not by way of debit to the profit and loss account, then the same will not be permitted to be reduced from the net profit as per profit and loss account. We have verified the figures from profit and loss account as well as the computation of income and it becomes clear that in all those years the return was filed on the basis of profit and loss account before reducing the provisions of doubtful debts. Therefore these are clearly the provisions made in the earlier years and in the present year the assessee has withdrawn certain sum out of this provision and therefore the same are deductible in terms of proviso to clause (i) to Sec 115 JB. - Decided in favour of assessee. Disallowance on account of premium paid for leave encashment - Held that:- The amount has not be paid by way of provision but by way of premium under a particular scheme under which the Insurance company had computed the leave encashment dues. Therefore it cannot be called a payment towards a provision. In any case once the payment has been made the same is allowable under clause (f) of Sec 43B. Otherwise also the issue stands settled in favour of the assessee in view of the decision of Bharat Earth Movers V. CIT, [2000 (8) TMI 4 - SUPREME Court] in which provision for leave encashment was held to be allowable if the same was based on a particular scheme proportionately with the entitlements earned by the employees. Later on effect of this judgment was nullified by insertion of clause (f) to Sec 43B providing that the amount would be allowable only if the same has been paid. Since the amount has been paid, therefore same is, in our opinion, allowable. Accordingly we set aside the order of the CIT(A) and direct the Assessing Officer to allow this amount. - Decided in favour of assessee. Addition on account of the interest under the ASIDE scheme - Held that:- Interest income does not accrued to the assessee and the assessee is not liable to be taxed on such interest. Therefore we set aside the order of the CIT(A) and delete this addition. See CIT And Another Versus Karnataka Urban Infrastructure Development And Finance Corporation [2006 (2) TMI 114 - KARNATAKA High Court ] - Decided in favour of assessee.
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