TMI Blog2023 (5) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... ning to Assessment Year (AY) 2015-16, is directed against the order passed by the Learned Commissioner of Income Tax (Appeals), [in short the ld. CIT ], National Faceless Appeal Centre (in short NFAC ) which in turn arises out of an assessment order passed by Assessing Officer under section 144 r.w.s. 147 of the Income Tax Act, 1961 (hereinafter referred to as the Act ), dated 22.12.2018. 2. The grounds of appeal raised by the assessee are as follows: 1. On the facts and in the circumstances of the case and in law, the learned CIT (Appeals)-I, Surat erred in confirming the action of the ACIT, Valsad Circle, Valsad (for the sake brevity The AO ) in initiating the proceedings u/s 147 of the Act and issuance of notice u/s 148 of the Act and hence, the assessment completed u/s 144 r.w.s. 147 of the Act making disallowance to the extent of Rs.89,632/- purely on change of opinion is bad in law, without jurisdiction, illegal and therefore, liable to be annulled in toto. 2. On the facts and in the circumstances of the case as well in law, the learned CIT (Appeals) erred in confirming the order of the of the ACIT, Valsad Circle, Valsad making disallowance of expenditure of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also enclosed herewith. You will appreciate the very fact that the assessee bank has claimed the said business expenditure on actual payment of premium valued by the LIC under the scheme and not the provision for gratuity and therefore, it is fully allowable under section 36(1)(v) or in the alternative under section 37(1) of the I.T. Act. 5. However, Assessing Officer rejected the contention of the assessee and held that as the assessee did not have approval of the commissioner of Income Tax for its gratuity fund, expenses claimed towards gratuity fund for AY.2015- 16 needs to be disallowed in terms of 36(1)(v) of I.T. Act. Section 2(5) of the I.T. Act, 1961 defines the approved gratuity fund . Further, section 36(1)(v) of the I.T. Act, 1961, provides that any sum paid by the assessee as an employer by way of contribution towards an approved gratuity allowed as a deduction. All these statutory provisions refer to an approved gratuity fund . The approval referred to in the provisions is the approval of the Commissioner of Income Tax, which is required to be obtained in terms of the rules contained in part C of Fourth Schedule to the I.T. Act, 1961 which deals with approv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich an agreement was entered in to between the trustees of the fund and LIC on 31.03.1976 as per Master Policy No. GGI/16073 (PB-22). The assessee has not made provision but made payment before filing of return of income. This claim of the assessee has been allowed in earlier years since inception of fund. The assessee has contended that since the payments has been made to LIC of India is allowable deduction as it was made as per Master Policy Scheme. The assessee has relied on the decision of Co-ordinate Bench of Vishakhapatnam in the case of District Co-Operative Central Bank v. ITO [IT Appeal No. 49 50/Vizag/2012 dated 25.01.2018 wherein after discussing various case laws including Co-ordinate Bench of Ahmedabad in the case of DCIT v. Baroda Gujarat Gramin Bank [I.T. Appeal No. 1479/Ahd/2010 dated 6.8.2010] deduction claim was allowed on the ground that payment made to LIC is not a provision, but actual expenditure claimed under gratuity scheme. Since the assessee has claimed the expenditure same is therefore, liable to be allowed. We further observe that Hon'ble Gujarat High Court in the case of the assessee in its order dated 05.02.2018 in SCA No. 20801 of 2017 [copy fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that since during the relevant previous year the contribution by the assessee towards the gratuity fund was not in an approved gratuity fund the High Court was not justified in affirming the view taken by the Commissioner as also by the Tribunal while answering in favour of the assessee. However, on a query by us as to whether the contribution made by the assessee in the approved gratuity fund credited by the LIC for the employees of the assessee and ultimately the entire amount deposited with the LIC came back to the fund created by the assessee for the benefit of its employees and approved by the Commissioner w.e.f. 25th February, 1983, or not, learned counsel is not in a position to make a categorical statement in that behalf. 8. Having considered the matter in the light of the background facts, we are of the opinion that there is no merit in the appeal. True that a fiscal statute is to be construed strictly and nothing should be added or subtracted to the language employed in the Section, yet a strict construction of a provision does not rule out the application of the principles of reasonable construction to give effect to the purpose and intention of any particular prov ..... X X X X Extracts X X X X X X X X Extracts X X X X
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