TMI Blog2016 (7) TMI 1512X X X X Extracts X X X X X X X X Extracts X X X X ..... trust; Other authorities have committed manifest error in treating the fund as non approved on the basis of order dated 25.6.2012 passed by Commissioner and disregarding specific requirement of law under Section 12AA(2) of Act, 1961. Gratuity fund of Assessee stood deemed to have been registered and that being so subsequent order passed by CIT(Appeals) had no consequence or illegal effect. Hence, Assessee was entitled to claim deduction under Section 36(v). The view taken otherwise in impugned orders, therefore, is illegal, and contrary to law and observing to be set aside. 5% income in term of premium received during concerned assessment years and deduction under Section 80IA and applicability of provision - HELD THAT:- There is no justification for presuming income of 5% as total premium received by Assessee, for the reason that premium received is nothing but allotment of land to entrepreneur and facility of returning expenses incurred by Assessee for development of such industrial land and there is no concept of profit or loss in such determination. Amount paid by allottees represents lease rent etc. and hence assumption of 5% income on such premium is without any b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... poration of India under Group Gratuity Insurance Scheme, on the ground that such scheme was not specifically approved by concerned Commissioner of Income Tax though carried under general approval of Central Government. (ii) Whether the payment made to LIC by way of premium on Insurance Policy under Group Gratuity Insurance Scheme was liable to be treated as payment made to a fund which is deemed to have been approved by the CIT by the reason of efflux of time. (iii) Whether at an any rate actual payment made to the retiring employees, through the mechanism of Insurance Policy issued under Group Gratuity Insurance Scheme launched by Life Insurance Corporation of India should have been considered and allowed as deduction under Section 37 read with Section 43B of the Act ? (iv) Whether addition of amount being 5% of premium collected by Assessee and forfeiture of earnest money/ premium is vitiated due to non-consideration of principle governing accrual of income and other material / information placed on record. (v) Whether the Tribunal was legally justified in upholding taxbility of 5% premium collected by Assessee in its hand without considering obligation / liabilities ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question was represented income from purchase and sale of land and the Revenue s stand in this respect stood upheld both at the level of CIT (A) and ITAT. (C) Short disallowance of deduction under Section 80 IA 4,04,63,639/- On the ground that the profit declared by the appellant included receipts aggregating ₹ 4,04,63,639/- which did not have direct nexus with the running and management of technical parks. 4. Assessee preferred an appeal where Commissioner of Income Tax (Appeals) ( hereinafter referred to as CIT (Appeals) ) not only upheld dis-allowance but enhanced assessed income by taking a view that eligible profit for the purposes of computation of relief under Section 80IA deserved to be reduced by the amount of interest received on unpaid installments of premium from income disclosed by the Tronica City Industrial Model Town Loni, Ghaziabad and Greater Noida Export Promotion Industrial Park etc. with regard to Assessment Year 2006-07. Assessee and Revenue both filed appeals i.e. I.T.A. No. 384 of 2011 by Assessee and I.T.A. No. 398 of 2011 by Revenue. Similarly for Assessment Yea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not be allowed as a deduction in computing the income of the assessee of the previous year in which the sum is so paid. 7. It is admitted by learned counsel appearing for Revenue that the amount claimed to be paid by Assessee under Group Gratuity Insurance Scheme is the actual payment made to LIC and not something which can be said to be a provision made by Assessee for payment of gratuity. Deduction towards gratuity fund is permitted under Section 36(1)(v) which reads as under : - any sum paid by the assessee as an employer by way of contribution towards an approved gratuity fund created by him for the exclusive benefit of his employees under an irrevocable trust; 8. The term approved gratuity fund is defined in Section 2(v) as under : approved gratuity fund means a gratuity fund which has been and continues to be approved by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner in accordance with the rules contained in Part C of the Fourth Schedule; 9. It is not in dispute that no gratuity fund constituted by Assessee has not been approved by Commissioner or Principal Commissioner till date but it is also proved tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cons of the two view, we are of the opinion that by far the better interpretation would be to hold that the effect of non consideration of the application for registration within the time fixed by section 12AA(2) would be a deemed grant of registration. We do not find any good reason to make the assessee suffer merely because the IT Department is not able to keep it officers under check and control, so as to take timely decisions in such simple matters such as consideration of applications for registration even within the large six month period provided by s. 12AA(2) of the Act. 18. We accordingly direct the respondents, subject to any order which may be passed under s. 12AA(3), to treat the petitioner society as an institution duly approved and registered under s. 12AA and to recomputed its income by applying the provision of s. 11 of the Act. Accordingly, a formal certificate of approval will be issued forthwith to the petitioner by the respondent Nos. 2. The writ petition is allowed to the above extent 11. In this view of the matter, gratuity fund of Assessee stood deemed to have been registered and that being so subsequent order passed by CIT(Appeals) had no conseque ..... X X X X Extracts X X X X X X X X Extracts X X X X
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