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2016 (12) TMI 1418 - ITAT HYDERABADDisallowance of privilege fee etc. - Held that:- The payment of privilege fee/special privilege fee etc., by whatever name called is an allowable expenditure. We direct the AO to allow the privilege fee, special privilege fee and the special privilege force as expenditure of the assessee u/s 37 of the Act. See case of Karnataka State Beverages Corporation Ltd [2016 (3) TMI 461 - KARNATAKA HIGH COURT] - Decided in favour of assessee Deduction under section 80G - contribution to the CM’s Relief Fund - Held that:- We find that the CM’s Relief Fund is an approved fund u/s 80G of the Act but the assessee is required to pay the privilege fee, special privilege fee etc, after setting off its expenditure only from the receipts and we have already held that privilege fee is an allowable expenditure. In these circumstances, the assessee would not be left with any fund to make a donation to C.M’s Relief Fund. Even otherwise, the contribution is an allowable deduction. Therefore, we are of the opinion that this ground of the Revenue becomes infructuous in view of our finding above. Group Leave Encashment claim addition as per provisions of section 43B(f) - Held that:- We find that the assessee’s contention is that the assessee pays the premium after the interest credited by the LIC is reduced from the premium to be paid. We are of the opinion that this contention needs verification. If the interest credited by LIC is taken as income of the assessee, the entire premium payable by the assessee for the next A.Y should be considered as expenditure of the assessee. Therefore, this issue is remitted to the file of the AO for verification of the assessee’s contention and allowing the same in accordance with the law. The net result would, however, be “nil” if the assessee’s contentions are proven to be correct. Addition made u/s 43B(f) - AO has disallowed the same on the ground that the remittance to LIC towards Group Leave Encashment Scheme is a remittance to an unrecognized fund and only recognized PF/Gratuity/Pension are exempt from the operation of section 40A(9) - Held that:- This issue is covered by the decision of the Hon'ble Supreme Court in the case of CIT vs. M/s. Textool Co. Ltd [2009 (9) TMI 66 - SUPREME COURT] held that 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 out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular provision of the Act. As from the findings recorded by the Commissioner and affirmed by the Tribunal that the assessee had absolutely no control over the fund created by the LIC for the benefit 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, 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.
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