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TMI Blog2019 (5) TMI 1979X X X X Extracts X X X X X X X X Extracts X X X X ..... ises actually paid to LIC under Group Gratuity Scheme - Cum Life Insurance Scheme fully allowable under section 37 (1) of the Act and therefore, disallowance of premium under section 36(1)(v) of the Act is without jurisdiction, illegal bad-in-law and not justified. 3. Succinctly, facts as culled out from the orders of lower authorities are that the assessee is Co-operative Bank engaged in the business of banking since its inception in the year 1965. The AO noticed that the assessee has debited a sum of Rs.16,18,050 on account of Group Gratuity-cum Life Insurance Scheme Premium. Therefore, the assessee was asked to furnish the copy of approval for gratuity fund by the Commissioner of income tax. The assessee vide letter dated 20. 01. 2014 submitted that the assessee bank has entered into an agreement with the LIC under the Group Gratuity-cum Life Insurance Scheme since 1976. The copy of the agreement/Master of proposal and Form No. 6200 of LIC dated 31. 03. 1976 was already produced during the course of original assessment proceedings. It would be seen from that the LIC has entered into the said agreement under the Group Gratuity-cum Life Insurance Scheme Only after the Approval of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e copy of the same was provided. Moreover, this scheme was recognized under Income Tax Act, 1961. The Department and has been allowing premium expenditure in the past. The expenditure claimed is not allowable under section 36(1) (v) then it should have been allowed under section 37(1) of the Act. After considering the rival submissions, the Commissioner of Income-tax (Appeals) observed that he is inclined to upheld the action of the AO for the reason that the appellant has failed to produce any evidence in regard to this claim that it has been approved in the CIT, hence, the claim cannot be allowed under section 36 (1) (v) of the Act under which the appellant has been claiming it in the past. So far the contention of the appellant that this has been allowed in the past, is concerned, every year is independent assessment year the and if some claim has been allowed in the past, but disallowed in the present for want of evidence then it has no bearing on the present case. In the circumstances, the addition made by the AO was confirmed. 5. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee submitted that the appellant bank had ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sistently the mercantile matter of the accounting, as duly and clearly recorded in the audited profit and loss account and balance sheet as on 31. 03. 2007 (PB 127 - 128). It was further submitted that the said expenditure rightfully allowed consistently year to year 4 are the earlier years and also in subsequent years and thus, following the ruling of consistency, it is fully allowable as claimed by the assessee in the light of decision in the case of Radhasaomi Satsang Saomi Bagh vs. CIT (1992) 193 ITR 321(SC) . The Hon`ble Gujarat High Court in the case of Taraben Ramanbhai Patel [1995]n 215 ITR 323 (Gujarat) observed that "it is no doubt that strict rule of doctrine of res judicata does not apply to proceeding under the Income Tax Act. At the same time, it is equally true that unless there is a change of circumstances, the authorities will not depart from previous decision at their sweet will in the absence of material circumstances or reasons for such departure. The learned counsel for the assessee further relied in the case of Excel Industries Ltd. [2013] 358 ITR 295 (SC) in support of this contention. The learned counsel for the assessee further supported his view by placing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the trustees of the fund and LIC on 31.03.1976. These documents were produced during the course of original assessment proceedings. The LIC accepted the responsibility to manage the fund only after verifying the Commissioner of Income Tax duly approved that scheme. After examining of such aspects, the petitioners claim for deduction was accepted. It was also pointed out that this is not the first year in which, such claim was made and accepted. The bank has been paying premium under the said scheme year after year since the year 1976." Thus, this observation of the Hon`ble High Court means that the plea of the assessee that gratuity fund was approved by the Commissioner of Income tax. However, since the scheme was framed back in 1976 itself, the assessee has does not have the order so passed by the Commissioner of Income-Tax. Accordingly, the Hon`ble High Court has quashed the reopening of assessment as there was no failure on the part of the assessee. We find that the Department has been allowing such claim year after year and in some years, the assessment has been made under scrutiny. It is just because the assessee is not able to prove the copy of the approval, the claim has bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he 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 from the findings recorded by the Commissioner and affirmed by the Tribunal 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 ultimately came back to the Textool Employees Gratuity Fund, approved by the Commissioner with effect from the following previous year. Thus, the conditions stipulated in Section 36(1)(v) of the Act were satisfied. Having regard to the facts found by the Commissioner and affirmed by the Tribunal, no fault can be found with the opinion expressed by the High Court, warranting our interference. 8. Since in the present case, the facts as identical as the employer bank does not have any control over the funds of the irrevocable trust created exclusively for the benefit of the employees and that the assessee had absolutely no control over the fund created by the LIC for the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n available in E-TDS of ITD system, the AO noticed that the assessee has not claimed the credit of TDS of Rs. 4,02,909 deducted by Bank of Baroda and Rs. 1,21,250 deducted by Union Bank of India. It was explained that the assessee has passed Journal entry for the interest receivable and interest income A/c, net of Rs. 10,91,250 for Union Bank of India and Rs. 16,11,634 from Bank of Baroda net of TDS as they were not aware of exact amount of TDS deducted by the above bank on deposits made with them. Therefore, the assessee has no objection, if the amount of Rs. 1, 21,250 and Rs. 4, 02,909 is added to total income and credit of TDS deducted thereon allowed against payment of taxes. However, the AO viewed that the assessee has excluded exact amount of TDS deducted by the Banks. Therefore, it is established that the bank was aware of the said TDS, otherwise, it would not have been able to exclude the same. The AO further asked the assessee vide order sheet noting dated 13.02.2014 to produce reconciliation of all income with its corresponding TDS. However, the assessee has only submitted details of interest receivables in which amount of Rs.12,12,500 from Union Bank of India and Rs. 20, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s therefore, dismissed. 21. In the result, the appeal of the assessee is partly allowed for this assessment year. I.T.A.No. 827/Ahd/2016 A.Y. 2012-13 22. Ground No. 1 to 3 relates to sustaining the disallowance of expenditure of Rs. 78,00,000/- being the premises actually paid to LIC under Group Gratuity Scheme - Cum Life Insurance Scheme fully allowable under section 37 (1) of the Act and therefore, disallowance of premium under section 36(1)(v) of the Act is without jurisdiction , illegal bad-in-law and not justified. 23. We have heard the rival submissions and perused the relevant material on record. We find that the facts of these grounds of appeal are identical as that for the assessment year 2007-08 except figures. Therefore, following our reasoning and findings as given in respect of Ground No. 3 for the assessment year 2007-08. These grounds of appeal of the assessee stands allowed. 24. In the result, the appeal of the assessee stands allowed. 25. In view of above, appeal of the assessee for the A.Y. 2007-08 in I.T.A.No. 826/Ahd/2016 and appeal in A.Y. 2012-13 in I.T.A.No. 827/Ahd/2016 stands allowed and appeal for the assessment year 2011-12 in I.T.A.No. 842/Ahd/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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