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M/s Rajasthan Co-operative Dairy Federation Ltd. Versus The ACIT, Cirle-6, Jaipur

2017 (8) TMI 566 - ITAT JAIPUR

Disallowance of contribution made to LIC Group Gratuity Scheme - addition u/s 36(1)(va) & 40A(7) - Held that:- The assessee had filed an application seeking approval for Employees Group Gratuity Scheme in the year 1992 and when no action was taken, assessee again filed an application on 4/8/2015 on this application the approval was granted. The Revenue has not placed any material on record demonstrating the reasons for non-granting of approval. It is also not in dispute that, this is the first t .....

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favour of assessee. - ITA No. 352/JP/2017 - Dated:- 10-8-2017 - SHRI KUL BHARAT, JM AND SHRI VIKRAM SINGH YADAV, AM For The Assessee : Shri P.C.Parwal (CA) For The Revenue : Shri R.A. Verma (Addl. CIT) ORDER PER SHRI KUL BHARAT, JM. This Appeal by the Assessee is directed against the order of Ld. CIT (Appeals)-2, Jaipur, dated 17.03.2017 pertaining to Assessment Year 2012-13. The Assessee has raised the following ground of appeal :- 1. The Ld. Commissioner of Income Tax (Appeals) has erred on f .....

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ated 29/03/2016. While framing the assessment the Assessing Officer disallowed the claim related to PF Contribution and Contribution to LIC Group Gratuity Scheme and also made addition on disallowance of Prior Period Expenses to ₹ 2,99,213/- and disallowed the wrongly claimed depreciation of ₹ 11,23,123/-. Against this order, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions, partly allowed the appeal. Thereby confirmed the addition made on acc .....

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ime, when the claim has been disallowed in earlier years, such claim was not disallowed. He submitted that the application for approval of gratuity had been filed 14.08.1992, no communication had been received. Under these facts, the assessee again on 04/08/2015 filed an application for approval mentioning the reference of earlier application filed in 1992. Reminder letter was also sent on 11/04/2016 and 10/05/2016. 4.2 Ld. Counsel submitted that the facts are identical as were in the case of M/ .....

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facts of the present case. He opposed the submissions of Ld. Counsel for the assessee. 4.4 We have heard the rival contentions, perused the material available on record. Ld. Counsel for the assessee as made a written submissions. The submissions of the Ld. Counsel for the assessee are reproduced as under:- Submission:- 1. It is submitted that there is no dispute as to the fact that the assessee filed an application for approval of RCDF Employees LIC Group Gratuity Scheme Trust u/r 4 of Part C of .....

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reference of earlier application filed in 1992. Reminder letter was sent on 11.04.2016 (PB 13) and 10.05.2016 (PB 14). Thereafter, PCIT, Jaipur vide order dt. 27.05.2016 (PB 15) granted the approval to the Employees Group Gratuity Assurance Scheme u/r 2 of part C of fourth schedule of IT Act, 1961 with effective from 05-08- 2015. After receipt of the order, assessee filed an application u/s 154 on 14.06.2016 (PB 1) requesting to grant the approval since date of formation of trust, i.e. 14-08-19 .....

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2015 in view of the subsequent application dt. 04.08.2015 made in continuation to earlier application dt. 14.08.1992, the claim of the assessee cannot be disallowed as such approval would relate back to the date of application. 3. It is submitted that in the following cases, where application for approval is made in time but no action is taken on such application, the contribution made to LIC towards the Group Gratuity Scheme has been allowed. M/s Man Structural Pvt. Ltd. Vs. ACIT ITA No.63 to 6 .....

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e AO observed that the gratuity fund is not recognized by the Ld. CIT and therefore, the contribution made by the assessee was disallowed. The respondent revenue vide letter dated 11.12.2014 informed that the record relating to May, 1996 is not available in the office of the revenue, therefore, the assessee filed another application for the grant of approval under Rule 2 part C of the Fourth Schedule to the Act. The said approval was granted by the revenue w.e.f. 23.06.2015 vide letter dated 10. .....

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the revenue but the assessee was able to produce the stamped copy of the application and the letter supporting the application dated 13/5/1996 before the Bench. It is also an admitted position that the LIC vide letter dated 16th May, 1996 has requested the revenue to grant approval. In our view, once the third party i.e. LIC is requesting the revenue to grant approval to the fund created for the benefit of the employees in the form of approval of gratuity fund then the revenue cannot dispute tha .....

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efit of the pendency of the deduction on account of the above contribution made to the gratuity fund. ACIT Vs. Rajasthan State Seeds Corporation Ltd. ITA No. 893/JP/2012 order dt. 17.07.2015 (Jaipur) (Tribunal) (PB 17-27) The assessee paid certain amount to LIC towards premium of group gratuity scheme. The AO asked to submit the copy of approval of the group gratuity scheme in support of their claim of deduction. The assessee replied that it has moved application for its approval in time but for .....

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nate Bench in ITA No. 307/JP/2009 in assessee s own case. As the assessee has applied for its approval in time but formal approval had not been issued by the Department, therefore, there is no fault on the assessee. The identical issue has been decided by the Coordinate Bench, which is squarely application on this year also. Therefore, we uphold the order of ld CIT(A). Against the order of Hon ble Tribunal, department filed an appeal before High Court. The Hon ble Rajasthan High Court vide its o .....

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application either to approve or to reject the same. The same having not been done for the last more than almost 25 years, the assessee could not have been blamed for the same. There is no denial by the AO that application for approval has not been filed by the assessee on 31st March, 1981. Even the AO admits that the application for approval was submitted on 31st March, 1981 and both the Appellate Authorities have come to a definite finding of fact that once an application has been moved for ap .....

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onclusion. Needless to mention that a finding has been given by the Tribunal that the amounts are being disallowed by the learned AO from year to year at least from the asst. yr. 1996-97 i.e. almost 20 years but is being allowed regularly in appeal therefore, for this reason also we reject the claim of the Revenue. 4. Without prejudice to above, it is to submit that if the assessee has no control over the fund created by the LIC for the benefit of its employees, then even if gratuity fund is not .....

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he Act. From a bare reading of sec. 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 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 ultimate .....

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its employees, disallowance u/s 36(1)(v) was not be made. Jaisalmer Central Co-operative Bank Ltd. Vs. JCIT (2013) 158 TTJ 0001 (Jodh.) (Trib.) The Hon ble Tribunal after relying on the decision of Apex Court in case of CIT Vs. Textool Co. Ltd. held that payment made by assessee company directly to LIC towards Group Gratuity Fund is allowable even though the same is not approved by the CIT 5. The AO has relied on the decision of Allahabad High Court in the case of CIT Vs. Electra (Jaipur) P. Ltd .....

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wed by the Revenue. There is nothing placed on record that delay in approval was attributable to the assessee for want of any information. The Hon bel Rajasthan High Court rendered in the case of Pr. Commissioner of Income Tax vs. Rajasthan State Seeds Corporation Ltd., under the identical facts are held as under:- 8. Insofar as disallowance of claim of ₹ 19282605/- is concerned, admittedly, the assessee respondent has claimed to have applied for according approval of Group Gratuity Scheme .....

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Officer admits that the application for approval was submitted on 31st March, 1981 and both the Appellate Authorities have come to a definite finding of fact that once an application has been moved for approval and having not been rejected then the claim could not have been disallowed or the claim could not have been rejected merely because the Commissioner did not accord approval of the same. The assessee cannot be made to suffer for inaction of the revenue, admittedly the respondent assessee i .....

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ason also we reject the claim of the revenue. The Assessing Officer ought not have made a repeated addition merely for this purpose and a litigation of this nature ought not to have come before this court as appeals all throughout is being allowed year after year. On the one hand the revenue does not decide the application for approval and the amount is being disallowed by the Assessing Officer from year to year which is not at all justified. The Revenue is well advised not to make repetitive ad .....

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bed in the Circulars be it old or the latest being in December 2015 is no ground to file such appeals, we though were inclined to levy cost on the Revenue but stop ourselves in doing the same to make it clear to the Revenue to be more careful in future that such kind of litigation deserves to be avoided as the Courts are choked with such frivolous litigation and is not able to concentrate on other important issues. 4.6 In the present case also the assessee had filed an application seeking approv .....

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