TMI Blog2001 (6) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... med by the assessee under section 28 and/or section 37 of the Income-tax Act, 1961 ? (2) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal has been right in law in treating the contribution of Rs. 38,824 to provident fund scheme of Human Resources Organisation Pvt. Ltd. as allowable deduction ?" The relevant assessment year was 1977-78. The assessee had claimed deduction of Rs. 61,962 before the Income-tax Officer on the ground that it was a provision made for gratuity liability. The Income-tax Officer disallowed the claim in view of the provisions of section 40A(7) of the Income-tax Act, 1961. This view was confirmed by the Commissioner (Appeals). Before the Tribunal, the claim was pressed on the groun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffirmative, against the assessee and in favour of the Revenue. The second question referred at the instance bf the Revenue relates to the contribution of Rs. 38,824 by the assessee to the provident fund scheme of Human Resources Organisation Pvt. Ltd. The assessee had claimed the deduction under the provisions of section 36(l)(iv) of the said Act and in the alternative, claimed it under section 37 thereof. The Income-tax Officer had rejected the claim, but the Commissioner (Appeals) had allowed it. The Tribunal allowed the claim following its earlier decision, in which the claim was fully allowed on an alternative ground that it was an expenditure on account of commercial expediency. It was sought to be contended on behalf of the Departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 37(l) of the Act. We may in this context profitably refer to the decision of this court in CIT v. Chotabhai Jethanbhai Patel Tobacco Products Co. Ltd. [1981] 128 ITR 702, in which it was held that the contribution to the provident fund made by the assessee for a period prior to its recognition would be justifiable on the ground of commercial expediency so as to keep the workmen satisfied and to see to it that the workmen got the benefit of the provident fund. Such a payment made for the purpose of earning the profits of business or in the course of earning profits of the business satisfied all the conditions of section 37. The High Court held that the Tribunal in that case was right in holding that the sum paid by the assessee by way ..... X X X X Extracts X X X X X X X X Extracts X X X X
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