2011 (12) TMI 697 - HC - Income Tax

Summary

Issues: Disallowance under Section 43B of the Income Tax Act, 1961 and disallowance towards contribution to the Cooperative Education Fund.

Issue 1: Disallowance under Section 43B of the Act

The Tribunal upheld the order of CIT(A) regarding disallowance under Section 43B for the assessment year 2004-05, stating that the payments were made before the due date for filing the return of income. The tax audit report confirmed the payment of Rs. 13,03,74,047/- before the due date. The Tribunal found no infirmity in the order passed by the CIT(A) and dismissed the appeal on this ground.

Issue 2: Disallowance towards contribution to the Cooperative Education Fund

The Tribunal referred to the statutory provisions of the Multi State Cooperative Society Act and Rule 25 of the Multi State Coop. Society Rules, 2002. It was noted that the respondent assessee, a cooperative society, is required to contribute 1% of net profits annually to the Cooperative Education Fund as mandated by the statute. The Tribunal observed that this contribution is a statutory requirement and should be allowed as a deduction, as it is not an expense but a statutory payment. Previous cases had established that this contribution is not disallowed under Section 43B of the Act. Therefore, the Tribunal dismissed the appeal on this ground as well.

In conclusion, the High Court upheld the decisions of the Tribunal on both grounds, affirming the disallowance under Section 43B and the contribution to the Cooperative Education Fund. The appeal was dismissed accordingly.