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TMI Blog2013 (8) TMI 480X X X X Extracts X X X X X X X X Extracts X X X X ..... ame to the knowledge of the parent company that various dubious methods were being used by the employee Directors, such Directors were changed. The change was effected in September, 2012 and a new management team took over. Only thereafter it came to the knowledge of the parent company that there were delay in filing appeals for the impugned assessment years. Appeals though belated, were filed on 18.10.2012, immediately, when the matter came to their knowledge. In support of the above contention, assessee has filed a letter dated 29.5.2013 from its parent company and also certain other records which do substantiate assessee's contentions in the affidavit filed seeking condonation of delay. 3. Learned D.R. strongly opposed the condonation of delay. According to him, change in management was not a reason for filing the appeal with a delay of 208 days. 4. We have perused the petition for condonation and also heard the contentions of the parties. Assessee, in our opinion, has filed sufficient evidence to show that its employee Directors had misled its parent company in United Kingdom regarding it working as well as tax liabilities. The said Directors had projected huge tax liabilitie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant previous year comprised of salary, rent, recruitment expenses and office maintenance expenses. This finding has not been rebutted by the Revenue. There can be no doubt that these were in the nature of revenue outgo. Admittedly, business which was being set up by the assessee at Trivandrum was only an expansion of its existing line of business. At both place, assessee was only developing software for educational purposes. Once expenditure was of revenue nature and was incurred for expanding existing line of business, in our view, it could have been allowed under Section 37 of the Act. No doubt, assessee's claim was only for one-third of total outgo. However, for this reason alone, a disallowance could not have been made. We are of the opinion that such disallowance was not warranted. Under the circumstances, the said disallowance is deleted. 12. Ground No.2 of the assessee is allowed. 13. Vide its ground No.3, grievance raised by the assessee is that Gratuity payment of Rs. 2,56,659/- to M/s LIC was disallowed on the ground that such Gratuity fund was not approved. 14. Facts apropos are that assessee had paid premium to LIC towards Group Gratuity Fund. As per the A.O., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is no merit in the appeal. 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. (See: Shri Sajjan Mills Ltd. vs. Commissioner of Income Tax, M.P. & Anr. (1985) 156 ITR 585). From a bare reading of Section 36(1)(v) of the Act, it is manifest that the real intention behind the provision is that the employer should not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees. In the instant case, it is evident 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 Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eived could be produced by the assessee only for Rs. 3,32,01,350/-. Ld. CIT(Appeals), based on such remand report of the A.O., held that assessee was eligible for such claim to the extent of Rs. 4,04,75,670/-. 23. Now before us, learned A.R. submitted that at the point of time when the proceedings before CIT(Appeals) were in progress, assessee was having FIRC only for sum of Rs. 4,04,75,670/-. However, according to her, thereafter assessee had received FIRC for the balance amount also and therefore, it would be unfair if the claim for deduction was disallowed. 24. Per contra, learned D.R. supported the order of CIT(Appeals). 25. We have perused the orders and heard the rival submissions. There is no dispute that assessee had produced FIRC for receipt of sale proceeds in foreign currency to the extent of Rs. 4,04,75,670/-. Disallowance of the claim was made for the sole reason that assessee was unable to file FIRC in support of the total export proceeds of Rs. 4,92,05,590/-. Observation of the A.O. that assessee should have set off the loss of its unit in Chennai against the profits of its unit in Trivandrum before claiming deduction under Section 10B is, in our opinion, not just ..... X X X X Extracts X X X X X X X X Extracts X X X X
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