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2015 (10) TMI 2308 - MADRAS HIGH COURT

2015 (10) TMI 2308 - MADRAS HIGH COURT - TMI - Pension fund trust - Whether the assessee had contributed funds need not be approved by the Jurisdictional Commissioner or Chief Commissioner? - whether Tribunal was right in holding that the income would crystallize on approval of assessee's claim for reimbursement by competent authority while dealing with the issue of reimbursement of the amount relating to the issue of free passes for traveling of freedom fighters, etc., by the assessee? - Held t .....

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t should be recognised by the jurisdictional Commissioner. Therefore, it is not open to the Department to take a plea that the provident fund trust should be recognised by the Commissioner/Chief Commissioner of Income Tax, Salem, which is not the purport of the provision. Accordingly, this contention of the Revenue is also negatived.

No question of law, much less substantial questions of law arise for consideration in this appeal. Accordingly, this appeal, filed by the Revenue/appella .....

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cts and in the circumstances of the case the Tribunal was right in holding that the pension fund trust to which the assessee had contributed funds need not be approved by the Jurisdictional Commissioner or Chief Commissioner? ii) Whether on the facts and in the circumstances of the case the Tribunal was right in holding that the income would crystallize on approval of assessee's claim for reimbursement by competent authority while dealing with the issue of reimbursement of the amount relatin .....

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Commissioner/Chief Commissioner, Salem, as per Part A of Schedule IV of the Act and, therefore, the payments made to the pension fund trust has to be disallowed. It was also found that the assessee had shown subsidy towards free passes issued during the financial year as receivable from Government on account of reimbursement. Though the assessee is following mercantile system of accounting, it had not credited the subsidy in the profit and loss account and had not shown the same as income. Accor .....

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e passes and treatment of the same as income, the Tribunal remitted the case to the assessing officer holding that the claim of the assessee is subject to scrutiny by the Social Welfare Department and the income crystallizes only after the claim of the assessee is approved by the competent authority and, therefore, the Assessing Officer was directed to look into the said issue and, thereafter, pass necessary orders. Accordingly, the Tribunal allowed the appeal in part in favour of the assessee. .....

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sioner. It is further submitted that the Tribunal committed in error in remitting the matter back on the issue relating to reimbursement of the amount towards free passes, holding that the income would crystallize only on approval of assessee's claim for reimbursement by the competent authority, when the assessee is following a mercantile system of accounting and the income receivable by the assessee from the Government is to be treated as income of the present financial year. Therefore, it .....

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. For better clarity, the relevant portion of the order is extracted hereinbelow :- "8. The second issue on which the assessee has assailed the order of CIT (Appeals) is with regard to reimbursement of free passes. The assessee is crediting the amounts received from the Government on account of issuance of passes in the year of receipt. The objection raised by the Revenue is that, since the assessee is following mercantile system of accounting, the assessee should offer to tax, reimbursemen .....

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sically handicapped, freedom fighters, etc., under the scheme of Government, the assessee is assured to get the reimbursement of the amount on the issuance of passes itself. In case the claim of the assessee is subject to scrutiny by Social Welfare Department, the income crystalises after the claim of the assessee is approved by the competent authority. The Assessing Officer is directed to look into this issue and thereafter, pass necessary orders in accordance with law." 7. In the light of .....

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ion of the pension fund trust by the jurisdictional Commissioner is not necessary. For better clarity the said Section 36 (1) (iv) is extracted hereinbelow :- "Other deductions. 36. (1) 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 28- * * * * * * * * * (iv) any sum paid by the assessee as an employer by way of contribution towards a recognised provident fund or an approved s .....

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ers of the fund; * * * * * * * * *" 8. It is not in dispute that the Pension Fund Scheme has been jointly floated by the State Transport Corporations, as has been recorded by the Tribunal. The Tribunal has recorded a finding that State Transport Corporations operating in different districts in the State are signatories to the Trust Deed for setting up the Pension Fund Scheme. It is also not in dispute that the said fund has been recognized by the CIT-VII, Chennai. In the above backdrop, a c .....

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assessee of the contributions made to the pension fund on the ground that the pension fund has not been recognised by the jurisdictional Commissioner. 9. The Department has raised a further plea that Section 2 (38) of the Act defines recognised provident fund as one recognised by the jurisdictional Commissioner/Chief Commissioner. For better appreciation of the matter, it is useful to extract Section 2 (38) on which much stress is laid by the learned counsel for the Revenue :- "Definitions. .....

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