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TMI Blog2024 (7) TMI 728X X X X Extracts X X X X X X X X Extracts X X X X ..... provisions of Section 43B of the Act?" Facts: 3. Briefly stated facts of the present case are that the appellant/assessee is a company registered under the Companies Act, 1956. Its certain debentures were purchased by 'LIC Mutual Fund'. A sum of Rs. 9,75,16,996/- accrued towards interest during the assessment year 2009-10 payable to the aforesaid 'LIC Mutual Fund'. Payment of the aforesaid amount of interest was extended for another two years to be ending on 31.3.2011. Since the interest has become payable on accrual basis during the assessment year 2009-10, therefore, the appellant/assessee claimed it as deductible expenditure in its profit and loss account. The assessing officer while passing the assessment order dated 8.12.2011 disallowed the aforesaid amount of interest of Rs. 9,75,16,996/- on unsecured debentures on the ground that it has not been paid within the stipulated period. Aggrieved with the aforesaid assessment order, the appellant/assessee filed an Appeal No. 357/XII/Cir-10/2011-12 before the Commissioner of Income Tax (Appeals) - XII, Kolkata which was partly allowed by order dated 19.8.2013. The appellant/assessee succeeded on the point of deduction of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fe Insurance Company of India was established. Therefore, on this count also the LIC mutual fund should be treated as public financial institution. It was also observed that CIC has treated the LIC mutual fund as a public financial institution in its order dated 28-10-2009 where the issue was raised under the Right to Information Act. The relevant part of the order is reproduced below:- "38. As regards LIC Mutual Fund Assets Management Co. Limited, the respondents have submitted that the ratio of judgment, in the case of Tamil Nadu Road Development company is not applicable to LIC Mutual fund since LIC Mutual Fund is un independent organization and not substantially financed by appropriate government. The submissions of the respondents fall to convince. The LIC of India is a body established, constituted, owned and controlled by Central Government which is the Appropriate Government for the LIC of India and the funding by LIC of India and their general control over the functioning of thee LIC Mutual Fund can be nothing but an indirect funding and control by the Appropriate Government, LIC of India is publics authority having been constituted by an Act of Parliament. LIC of In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ission : 6. Learned counsel for the appellant/assessee submits that 'LIC Mutual Fund' is a trust established under a trust deed dated 20.4.1989 with initial contribution to the trust by the Life Insurance Corporation of India Limited for Rs. 25 crores. The aforesaid 'LIC Mutual Fund' is managed by a company 'LIC Mutual Fund Assets Management Company Limited' incorporated under the Companies Act, 1956. The Life Insurance Corporation of India has been established under the Life Insurance Corporation Act, 1956. Clause (d) of Section 43B read with Explanation 4 (a) of the Act, 1961 and Section 4A of the Companies Act, 1956 leaves no manner of doubt that clause (d) of Section 43B is applicable only to those 'public financial institutions' enumerated under Section 4A of the Companies Act, 1956, in which 'LIC Mutual Fund' does not find mention. Therefore, Section 43B is not applicable with respect to the accrued interest in question. The Tribunal committed a manifest error of law to assume that 'LIC Mutual Fund' is an extended arm of Life Insurance Corporation of India, whereas both the entities are separate legal entities. In support of his submissions, Sri Khaitan has carried us to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the provisions of the Indian Registration Act, 1908 (16 of 1908) executed by the sponsorer in favour of the trustees named in such an instrument. Thus, as per SEBI Mutual Funds Regulations, 1996, 'Mutual Fund shall be constituted in the form of a trust' and the instrument of trust shall be in the form of a deed which shall be duly registered under the Indian Registration Act, 1908. Thus, 'LIC Mutual Fund' is a trust and the trust deed has been duly registered under the Indian Registration Act, 1908. The aforesaid "LIC Mutual Fund" is a trust of movable property, which has been created in terms of Section 6 of the Indian Trust Act, 1882 [hereinafter referred to as 'the Trust Act']. The Life Insurance Corporation of India can, at best, be said to be an author of the trust or settlor of the trust, but the said trust and the Life Insurance Corporation of India both are separate legal entities. While the "LIC Mutual Fund" Trust is governed by the provisions of the Indian Trust Act, 1882 read with SEBI Mutual Fund Regulations, 1996, the Life Insurance Corporation of India is governed by the provisions of the Life Insurance Corporation Act, 1956. 10. Clause (d) of Section 43B of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to specify, by notification in the official gazette, such other institutions as it may think fit to be a 'public financial institution', provided that no institution shall be so specified unless - (i) it has been established or constituted by or under any Central Act, or (ii) not less than 51% of the paid-up share capital of such institution is held or controlled by the Central Government. 12. We find that neither "LIC Mutual Fund" Trust is mentioned in the list given under Sub-section (1) of Section 4A nor the "LIC Mutual Fund" Trust has been established or constituted by or under any Central Act. Therefore, the "LIC Mutual Fund" Trust is not a public financial institution under Section 4A of the Companies Act, 1956. Consequently, Clause (d) of Section 43B of the Act, 1961 is not attracted under the facts and circumstances of the present case. 13. The language of Section 4A of the Companies Act, 1956 and Section 43B of the Act, 1961 being plain and unambiguous, no interpretation can be given, other than what is clearly expressed by the plain language of the aforesaid provisions. The list of public financial institutions given in Subsection (1) of Section 4A of the Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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