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2016 (5) TMI 354 - ITAT KOLKATA

2016 (5) TMI 354 - ITAT KOLKATA - TMI - Addition as fringe benefits u/s 115WB(1)(c) - contribution to the Employees Provident Fund Organisation towards employees Pension Scheme, 1995 - Held that:- The CBDT vide its CIRCULAR NO. 8/2005, dt: 29-8-2005 has clarified that the contribution to approved gratuity fund or provident fund was not chargeable to FBT. In view of the above discussions, we hold that contributions made to the Employees Provident Fund under the Employees Pension Scheme,1995 which .....

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l/2013 - Dated:- 6-5-2016 - Shri P. M. Jagtap, A.M. And Shri S. S. Viswanethra Ravi, J.M. For the Appellant : Shri Sanjoy Mukherjee, JCIT, Sr. DR For the Respondent : None ORDER Per Shri S. S. Viswanethra Ravi, J.M. This appeal is filed by the Revenue having aggrieved by the order dated 22.02.2013 passed by the CIT(Appeals)-XXIV, Kolkata in Appeal No.1165/CIT(A)-XXIV/C-1/12-13 for the assessment year 2006-07 framed under section 115WE(3)/115WG(c) of the I.T.Act. 2. Challenging the above impugned .....

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. 3. Brief facts of the case are that the fringe benefit tax for short FBT assessment was completed u/s. 115WE(3) of the Act on 28.10.2008 determining the value of taxable fringe benefits at ₹ 4,92,016/-. The said order passed under section 115WE(3) was rectified under section 154 of the Act on 29.10.2009. The total value of fringe benefits were revised to ₹ 5,16,476/-. Subsequently the case was reopened as per provision of section 115WG(c) of the Act by issuing notice under section .....

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year 2006-07 on 30.11.2006 as return filed in compliance of notice under section 115WH of the Act. Thereafter, a notice under section 142(1) was issued to the assessee on 16.12.2011. The assessee submitted written explanation in response to the said notices. On scrutiny, the AO found that the assessee had debited an amount of ₹ 1,43,33,150/- to the P&L account for the year ended 31.03.2006 towards contribution to provident fund and other funds which includes a sum of ₹ 1,13,42,85 .....

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er section 2(38) of the Income-tax Act, which does not attract levy of FBT as has been clarified by the question no.38 of the CBDT s Circular No.8/2005 dated 29.08.2005. The AO was of the view that the employer s contribution to the pension fund was fringe benefit and ₹ 1,13,42,857/- was added to the total value of fringe benefits. 6. In first appeal, The assessee contended that the employer s contribution to the Employees Provident Fund is not that of a contribution to any approved supera .....

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ee s contention was that the employer s contribution to the employees provident fund is a statutory contribution to the employee s pension scheme framed by the Government of India under the provisions contained in the Employees Provident Fund & Miscellaneous Provision Act 1952, but does not come under section 2(6) of the Act and such contributions made to Employees Provident Fund Organization under the Employees Pension Scheme, 1995 are not a Fringe Benefit. 9. In this connection, we may ref .....

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uires approval of the Chief Commissioner or Commissioner invariably in pursuance of the Rules contemplated in part B of the Fourth Schedule. Let us examine the fourth schedule provided in the Act. THE FOURTH SCHEDULE PART A RECOGNISED PROVIDENT FUNDS36 [See sections 2(38), 10(12), 10(25), 36(1)(iv), 87(1)(d), 111, 192(4)] Application of Part. 1. This Part shall not apply to any provident fund to which the Provident Funds Act, 1925 (19 of 1925), applies. Definitions. 2. In this Part, unless the c .....

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s not include a personal or domestic servant; (c) "contribution" means any sum credited by or on behalf of any employee out of his salary, or by an employer out of his own moneys, to the individual account of an employee, but does not include any sum credited as interest; (d) "-; (e) "-; (f) "-; (g) "regulations of a fund" means the special body of regulations governing the constitution and administration of a particular provident fund; and (h) "salary&quo .....

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, 38[2014], the conditions set out in the said clause and any other condition which the Board may, by rules specify, in this behalf : Provided further that nothing contained in the first proviso shall apply to the provident fund of an establishment in respect of which a notification has been issued by the Central Government under sub-section (2) of section 16 of the Employees' Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952). PART B APPROVED SUPERANNUATION FUNDS44 [See sec .....

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or] Commissioner may accord approval to any superannuation fund or any part of a superannuation fund which, in his opinion, complies with the requirements of rule 3, and may at any time withdraw such approval, if, in his opinion, the circumstances of the fund or part cease to warrant the continuance of the approval. (2) The 46[Principal Chief Commissioner or] Chief Commissioner or 46[Principal Commissioner or] Commissioner shall communicate in writing to the trustees of the fund the grant of ap .....

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al Commissioner or] Commissioner shall neither refuse nor withdraw approval to any superannuation fund or any part of a superannuation fund unless he has given the trustees of that fund a reasonable opportunity of being heard in the matter. Conditions for approval. 3. In order that a superannuation fund may receive and retain approval, it shall satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe- (a) the fund shall be a fund established under an .....

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ns ; (c) the employer in the trade or undertaking shall be a contributor to the fund ; and (d) all annuities, pensions and other benefits granted from the fund shall be payable only in India. Application for approval. 4. (1) An application for approval of a superannuation fund or part of a superannuation fund shall be made in writing by the trustees of the fund to the Assessing Officer by whom the employer is assessable, and shall be accompanied by a copy of the instrument under which the fund i .....

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oner or] Commissioner may require such further information to be supplied as he thinks proper. (2) If any alteration in the rules, constitution, objects or conditions of the fund is made at any time after the date of the application for approval, the trustees of the fund shall forthwith communicate such alteration to the Assessing Officer mentioned in sub-rule (1), and in default of such communication any approval given shall, unless the 47[Principal Chief Commissioner or] Chief Commissioner or .....

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paid to an employee. 486. Where any contributions made by an employer, including interest on contributions, if any, are paid to an employee during his lifetime in circumstances other than those referred to in clause (13) of section 10, tax on the amounts so paid shall be deducted at the average rate of tax at which the employee was liable to tax during the preceding three years or during the period, if less than three years, when he was a member of the fund, and shall be paid by the trustees to .....

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H SCHEDULE which deals with RECOGNISED PROVIDENT FUNDS under many sections including the sections 2(38) of the Act establishes that this Part-A shall not apply to any provident fund to which the Provident Funds Act, 1925. 12. The PART B describes about APPROVED SUPERANNUATION FUNDS involving sections 2(6), 10(13), 10(25)(iii), 36(1)(iv), 87(1)(e), 192(5), 206 of the Act. This PART B particularly deals with a fund established under an irrevocable trust in connection with a trade or undertaking ca .....

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n in India, where as the assessee is jute manufacturing company to which the provisions of the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 is applicable. It is an Act to provide for the institution of provident funds and pension fund and deposit linked insurance fund for employees in factories and other establishments in India. The said Act applicable to every establishment which is a factory engaged in any industry specified in Schedule-I contained therein and in whi .....

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the Employees' Provident Funds & Miscellaneous Provisions Act, 1952 applies. 2). That under the provisions contained in Section 6A of the said Act, the Central Government has framed a scheme namely The Employees Pension Scheme, 1995 for the purpose of providing pension to the employees of an establishment to which the Act applies. 3). That the company, as an employer, was required to contribute to the Employees' Pension Fund set up under the said statutory Employees' Pension Sch .....

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1,13,42,857/- The relevant evidences for verification of such payment are being produced before your honour for necessary verification. 6). That we are enclosing herewith a copy of The Employees' Pension Scheme, 1995 under the provisions of which the above mentioned contributions were made by the company as an employer. We hope, this proves beyond doubt that the amount paid by the company was a statutory contribution paid to a scheme framed by the Central Government under the provisions of .....

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nefit to the employees of any establishment by giving superannuation pension, retiring pension or permanent total disablement pension. In the present case the assessee s contention was that the employer s contribution to the employees provident fund is a statutory contribution to the employee s pension scheme framed by the Government of India under the provisions contained in the Employees Provident Fund & Miscellaneous Provision Act 195, perusal of the record show that the employees of asse .....

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ent Funds and Miscellaneous Provisions Act, 1952. The relevant part of the scheme reads as under:- "Notification No. G.S.R. 748(E, dated November 16, 1995 - In exercise of the powers conferred by section 6A of the Employees Provident Funds and Miscellaneous Provisions Act, 1952 (19 of 1952), the Central Government hereby makes the following Scheme, namely:- 1. Short title, Commencement and Application - (1) This Scheme may be called the Employees' Pension Scheme, 1995. (2) (a) This Sche .....

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, 1952 applies or is applied under sub-section (3) or sub-section (4) of section 1 or section 3 thereof. 16. In the present case, the assessee has made the contributions for its employees of ₹ 1,13,42,857/- to the Employees Provident Fund under the Employees Pension Fund Scheme, 1995. In this connection a question arose for which CBDT has given explanation which is reproduced herein below: FINANCE ACT, 2005 - FBT Finance Act, 2005 - Explanatory Notes on the Provisions relating to Fringe Be .....

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