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TMI Blog2024 (5) TMI 1288X X X X Extracts X X X X X X X X Extracts X X X X ..... sing, blending, packing and selling tea. It filed its return of income on 29.11.2014 reporting loss of Rs. 2,23,56,292/-. In the course of assessment, Ld. AO noted that assessee had contributed a sum of Rs. 12,14,720/- to gratuity fund carried in the name of Twinings Private Ltd. group gratuity fund. Ld. AO observed from the tax audit report in Form 3CD at column 21(e) that the auditor has reported that the said fund is yet to receive approval of the concerned Commissioner of Income Tax. Accordingly, since the contribution has been made to unapproved gratuity fund, Ld. AO disallowed the claim u/s. 36(1)(v) of the Act. Aggrieved, assessee went in appeal before the Ld. CIT(A). 4. Assessee made a detailed submission before the Ld. CIT(A) and contended that assessee made payment of contribution to gratuity fund through LIC for which it has submitted copy of Master Agreement along with proof of payment. Master policy No. GG(CA)210547 is dated 12.01.2004 effective from 01.11.2002. According to assessee, it had no control over the fund contribution to the LIC towards gratuity. Assessee receives the gratuity payment from the LIC as per the scheme which is paid directly to the employees as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stituted under the Trust Deed dated 08.12.2022 as an approved gratuity fund which shall take effect from 03.01.2023 was placed on record. The said order is passed by Ld. Pr. CIT, Kolkata which is dated 04.10.2023. Ld. Counsel also submitted that paymnt made to the LIC towards group gratuity scheme is not in doubt and is undisputed. To corroborate the same, he referred to the receipts issued by LIC for the payments made by the assessee, copies of which are placed in the paper book. Ld. Counsel placed reliance on the decision of Hon'ble Supreme Court in the case of CIT Vs. Textool Co. Ltd. (2013) 35 taxmann.com 639 (SC). He also placed reliance on the decision of Coordinate Bench of ITAT, Vizag in the case of the District Coopertive Central Bank Vs. ITO in ITA No. 78/Vizag/2012 dated 25.01.2018. 6. Per contra, Ld. Sr. DR asserted that there is a specific condition stated u/s. 36(1)(v) regarding the fund to be approved by the competent authority for the purpose of claiming deduction. He also submitted that the approval which has been granted now cannot be back dated since the approval granted vide order dated 04.10.2023 is prospective which takes effect from 03.01.2023 and cannot be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enefit 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." 7.2. In terms of the judgment referred above, for applying the principles of reasonable construction to give effect to the purpose and intention of the provision contained in sec. 36(1)(v) and sec. 37(1) of the Act, we delve into the provisions contained in the Act. The relevant provisions and rules are extracted below: (i) Sec. 2(5) which defines approved gratuity fund. The said section is reproduced as under: "(5) "approved gratuity fund" means a gratuity fun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he fund the grant of approval with the date on which the approval is to take effect and where the approval is granted subject to conditions, those conditions. (3) The 1 [ 2 [Principal Chief Commissioner or Chief Commissioner] or [Principal Commissioner or Commissioner]] shall communicate in writing to the trustees of the fund any withdrawal of approval with the reasons for such withdrawal and the date on which the withdrawal is to take effect. (4) The [Principal Chief Commissioner or Chief Commissioner] or 3 [Principal Commissioner or Commissioner]] shall neither refuse nor withdraw approval to any gratuity fund unless he has given the trustees of that fund a reasonable opportunity of being heard in the matter. Conditions for approval. 3. In order that a gratuity fund may receive and retain approval, it shall satisfy the conditions set out below and any other conditions which the Board may, by rules, prescribe- (a) the fund shall be a fund established under an irrevocable trust in connection with a trade or undertaking carried on in India, and not less than ninety per cent of the employees shall be employed in India ; (b) the fund shall have for its sole purpose the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utions by employer, when deemed to be income of employer.- 7. Where any contributions by an employer (including the interest thereon, if any) are repaid to the employer, the amount so repaid shall be deemed for the purposes of income-tax 1 *** to be the income of the employer of the previous year in which they are so repaid. Appeals.- 8.(1) An employer objecting to an order of the 2 [3 [Principal Chief Commissioner or Chief Commissioner] or 4 [Principal Commissioner or Commissioner]] refusing to accord approval to a gratuity fund or an order withdrawing such approval may appeal, within sixty days of such order, to the Board. (2) The appeal shall be in such form and shall be verified in such manner and shall be subject to the payment of such fee as may be prescribed. Particulars to be furnished in respect of gratuity funds.- 8A.The trustees of an approved gratuity fund and any employer who contributes to an approved gratuity fund shall, when required by notice from the 6 [Assessing Officer], furnish within such period, not being less than twenty-one days from the date of the notice, as may be specified in the notice, such return, statement, particulars or information, as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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