TMI Blog1992 (3) TMI 132X X X X Extracts X X X X X X X X Extracts X X X X ..... 9,236 after effecting various additions. On appeal, the appellate officer allowed some grounds and upheld some disallowances. The relevant issues before us are these : The assessee contributed Rs. 1,50,00,000 to M/s. Raasi Cements Employees Welfare Trust and Raasi Cement Executives Welfare Trust and debited to staff welfare expenses account. The Assessing Officer treated the amount as capital contribution and did not allow it as revenue expenditure. On appeal it was confirmed. That apart, the Assessing Officer made enquiry without putting it to the assessee for explanations and added various amounts in addition to the amount of Rs. 60,00,000 as additional income to the returned income. On appeal, these additions were confirmed. The assessee is praying also for consequential depreciation and investment allowance and depreciation at 10 per cent on factory building and 5 per cent on non-factory buildings against which only 5 per cent and 2.5 per cent were allowed. Thus the instant second appeal by the assessee before us. 3.1 The learned Senior Counsel Shri K. R. Ramamani for the representative on behalf of the assessee focussed his submissions on the issues involved that : As regard ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such contribution made pursuant to an agreement with the employees is the requirement under the Industrial Disputes Act violation of which would result in penalty to the defaulter, the assessee is entitled for the allowance of the relief asked for. The appellate officer erred in upholding the conclusion made by the Assessing Officer in treating the amount of Rs. 1,50,00,000 as capital contributions to M/s. Raasi Cement Employees Welfare Trust and M/s. Raasi Cement Executives Welfare Trust and disallowed under section 40A(9).Thus the orders impugned became the target of heavy attack on behalf of the assessee resulting in the effective demonstration of the first ground of appeal that the order of the appellate officer is against law and facts of the case. 3.2 As regards the third ground, the appellate officer erred in upholding the addition of Rs. 60,00,000 made by the Assessing Officer as additional income added to the returned income when clear additions are made on various counts in respect of enquiry by the Assessing Officer. However, this ground is not pressed for. 3.3 Regarding the fourth ground, the assessee is eligible for consequential depreciation and investment allowa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned was well defended by the Revenue. 5. 1 We have heard the respective submissions of both the parties besides going through the facts of the case on record and the orders of the authorities below including the paper-book filed on behalf of the assessee as well as the case laws relied upon by the rival contenders. After doing so, we are of the opinion that it cannot be said that the assessee's submissions are sans substance. Among the case laws relied upon by the parties, the case of India Pistons has more relevance to the issue in question before us. The question therein was as to whether the settlement arrived at could be regarded as a fund required to be set up by or under any other law for the time being in force. It was not the case of the assessee therein that it was required by any law but that it was required to be set up under the ID Act. The Revenue except for contending therein that the ID Act itself does not require the setting up of the Fund was unable to controvert the situation that the Act provides for settlement of industrial disputes which is to be strictly enforced and if a settlement is entered into providing for the setting up of the Fund then it was the o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ributory factor of labour-management co-operation desired to take such welfare measures informed the union that the Company was contemplating the setting up of the Trust for the benefit of its employees and on the basis of settlement arrived at with the Company's employees setting up of a welfare trust was assumed catering to the benefits of all the employees and the workers the latter having also agreed for the settlement. 5.4 It was also further agreed that the Company would set apart a sum of Rupees one crore in the initial year for providing medical relief, having facilities, granting loans to employees, construction of hospital, schools, provision of recreational facilities and other welfare activities. The employees in turn assured the management of the Company that in view of the settlement arrived at, they shall not raise any industrial dispute, or go on strike or press for their demands by any other agitational manner but shall undertake, assure and co-operate, in view of the settlement of the dispute with the management to contribute their mite for the well-being of the company as well as for achieving quality goods and production targets. Pursuant thereto, a Trust Deed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed in the place of viewing that it may be incorrect to opine that if a contractual agreement is entered into with the labour union for setting up of certain welfare scheme even if they do not fall within the realm of ID Act there is no obligation under any law on the part of the management to fulfil that commitment and also further viewing that even if for any reason the contribution to the Trust is hit by section 40A(9) such contributions are saved by section 40A(10). The last limb of section 40A(9) reads as : " or under any other law for the time being in force ". Once there is a valid agreement entered into by the parties enforceable in law against each other it becomes legal obligation though arising out of a contract. Such an obligation falls within the last limb extracted above an exception to section 40A(9). Now coming to the alternative aspect, sub-section (10) appears to be a proviso to sub-section (9) of section 40A. While sub-section (9) provides for disallowance of amounts contributed to the Trusts set up by an employer, sub-section (10) excludes the operation of sub-section (9) under certain circumstances. Notwithstanding whatever is stated in sub-section (9), sub-sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of object, whose imaginative discovery is judicial draftsmanship. We need not always cling to literalness and should seek to endeavour to avoid an unjust or absurd result. We should not make a mockery of legislation. To make sense out of an unhappily worded provision, where the purpose is apparent to the judicial eye some violence to the language is permissible ". If the above principle of interpretation are involved in the instant case, it would be seen that where the creation of trust becomes mandatory because of the provisions of statute and the Company has in fact parted with the funds it would be meaningful if sub-section (9) is interpreted so as not to hit at such trusts herein which appear to be bona fide. Such interpretation will only be in consonance with the object of the section and would be more equitable and justice oriented inference arid it would not result in palpable injustice to the taxpayer. In coming to such conclusion in the instant case, it is not even necessary to cause any violence to the language as laid down by the decision of the S. C. supra, since in our opinion, the section itself is very clean and permits such an interpretation in the issue before ..... X X X X Extracts X X X X X X X X Extracts X X X X
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