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TMI Blog2019 (1) TMI 1407X X X X Extracts X X X X X X X X Extracts X X X X ..... the query in A.Y 2006-07 was submitted. It was submitted that from the reply of the assessee, it is evidently clearly that the AO did raise relevant querries and sought reply of the assessee w.r.t applicability or otherwise of section 40A(9) of the Act. It was submitted that the Tribunal referred to the assessment order for AY 2006-07, however, the said reply has escaped its addition. It was submitted that in Para 14, there was a specific mention of Sec.40A(9) and even the reply of the assessee containing the same language (as was used by the assesse during the course of the Assessment proceedings for the subjected year) was mentioned. In the assessment order, off course, the AO did not mention the Section yet however, there was query and categorical reply thereto citing the Section 40A(9) and there apart, from A.Y 2006-07 to 2011-12, the assesse was continuously allowed the deduction without any variation. Hence, it is self-evident that the predecessor AO did apply his mind by examining the issue in the perspective of Sec. 49A (9). 3. It was further submitted that the Tribunal has also observed in Para 12 Page 15 that "we find that the Pr.CIT(A) has given a clear reasoning and fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore, it is a case of change of opinion, we have gone through the query letter issued by the AO dated 14.10.2013 to which our attention was drawn and available at APB Pg 28-29 and also the response of the assessee dated 28.10.2013 available at APB Pg 30- 32 and we find that there is no specific query and consequent submission regarding general and education reserves as well as provision for gratuity which has been claimed by the assessee. Secondly, our attention was drawn to the assessment order passed by the AO wherein it is mentioned that "On P&L Appropriation Account Rs. 377,566/- transferred to General Reserve and Rs. 15,103/- has been transferred to Education Reserve account as per by laws of Society Act." To our mind, the AO has merely reproduced the accounting entries by way of transfer to general reserve and the education reserve as reflected in the profit/loss appropriation account. The same cannot be read and understood to mean that the AO has examined the allowability of these reserve transfers from the perspective of allowability for tax purposes. In contrast, if we see the claim of deduction under section 80P, the AO, in subsequent paragraph, has stated that "in comp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laiming these deductions towards transfer to reserves since its inception and the same has been allowed and reference was drawn to the assessment order passed for assessment year 2006-07 wherein the similar deduction has been allowed. In this regard, we find that the ld Pr CIT has given a clear reasoning and finding in her order as to why the provisions of section 40A(9) are not attracted in the instant case and her findings are reproduced as under: "The point of the assessee that the reserves created u/s 43 & 48 of the Rajasthan Cooperative Societies Act 2001, qualify for deduction in the Income Tax Act, is not tenable because section 40A(9) specifies the funds contribution to which by the assessee as an Employer can qualify for deduction. As per section 40A(9) any some paid/contributed by a Society registered under the Society Registration Act, 1860 shall only be allowable as a deduction where such some is so paid, for the purpose mentioned in clause (iv) or (iva) or (v) of sub-section 1 of section 36 (1) (iv), or as required by or under any other law for the time being in force. Section 36(1) (iv), (iva) & (v) pertains to contribution towards recognized provident fund or an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udit memo, she has initiated the proceedings under section 263. Rather she has examined the records and independently applied her mind and has come to a conclusion that the assessment order is erroneous and prejudicial to the interest of the revenue. The decisions relied upon by the ld AR are rendered in the peculiar facts of the case and are distinguishable. 15. Regarding the arguments of the ld AR on merit regarding allowability under section 40A(9), section 37(1) and diversion by overriding title, we believe that the same can be examined by the AO and the assessee shall be free to raise the same before the AO. To this extent, we modify the directions of the ld Pr CIT and the same should be read to the effect that claim of the assessee regarding the claim of the deduction towards the transfer to general reserve, education reserve and the provisions for gratuity should be examined afresh as per law after providing reasonable opportunity to the assessee." 7. We find that the contentions of the ld AR have been duly considered by the Co-ordinate Bench while giving its findings. Further, where the contentions advanced by the ld AR during the course of hearing have been duly address ..... X X X X Extracts X X X X X X X X Extracts X X X X
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