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2025 (1) TMI 1468 - AT - Income TaxDisallowances u/s 36(1)(iv) - Contribution made to approved superannuation fund to bridge the gap between actual contribution and actuarial valuations - HELD THAT - As decided in Exide Industries 2022 (9) TMI 1259 - CALCUTTA HIGH COURT amount which was remitted by the respondent assessee is neither towards an initial contribution nor towards an ordinary annual contribution and therefore the ceiling fixed under the rules will not apply to such a contribution. That apart this contribution had to be made considering the peculiar circumstances and it was a one-time payment therefore we are of the view that the learned Tribunal rightly allowed the appeal filed by the assessee. Decided against the Revenue. Excess contribution to approved gratuity fund to part fund the gap in actuarial valuation and actual contribution - As decided in Eastern Equipment and Sales 1990 (11) TMI 27 - CALCUTTA HIGH COURT as relying on Gestetner Duplicators (P) Ltd. 1978 (12) TMI 1 - SUPREME COURT where the Supreme Court while considering the approved provident fund held that if the provident fund contravenes any of the conditions to be satisfied for its recognition the taxing authority may refer the question of withdrawal of recognition to the Commissioner but until the Commissioner acting under the powers reserved to him withdraws such recognition the taxing authority must proceed on the basis that the provident fund has satisfied all the conditions for its recognition in that year any other course is bound to result in chaos and uncertainty which has to be avoided. Decided against the Revenue. Addition u/s 143(1) being sustained at the level of Ld. AO - As the concerned Kolkata Port Trust (Non-contributory Provident Fund) Regulations 1988 notified under the Major Port Trust Act does not specify any due date for this purpose no disallowance u/s 36(1)(va) is warranted on account of the delay in deposit of the contribution. It is not disputed by the A.O. that the deposit was actually made within a couple of days from the artificial due date . Perusal of the column 20(b) of Form 3CD reflects that for most of the months the contribution as deposited well before the artificial due date itself. Therefore in my considered opinion in the absence of any specified due date deduction u/s 36(1)(va) cannot be denied when the contribution has actually been credited in the concerned fund within the following month of contribution. Consequently the disallowance made by the A.O. u/s 36(1)(va) is hereby delete d.
ISSUES PRESENTED and CONSIDERED
The primary issues considered in this judgment are:
ISSUE-WISE DETAILED ANALYSIS Condonation of Delay Relevant Legal Framework and Precedents: The Court considered the reasons provided for the delay in filing the appeals, which included administrative challenges and procedural delays. Court's Interpretation and Reasoning: The Court found the reasons for delay to be genuine and thus condoned the delay, allowing the appeals to be admitted for adjudication. Contributions to Approved Superannuation Fund Relevant Legal Framework and Precedents: Section 36(1)(iv) and Rule 87 of the IT Rules were analyzed, along with the precedent set by the Calcutta High Court in the case of Exide Industries. Court's Interpretation and Reasoning: The Court noted that contributions exceeding the prescribed limits for initial or ordinary annual contributions were not covered by the rules, and no ceiling was fixed for such contributions. The Court relied on the Exide Industries case, which allowed deductions for contributions made to cover shortfalls in actuarial valuations. Key Evidence and Findings: The Court found that the contributions were necessary to ensure the superannuation fund could fulfill its obligations and were not ordinary annual contributions. Application of Law to Facts: The Court applied the principles from Exide Industries, determining that the contributions were deductible. Conclusions: The issue was decided in favor of the assessee, allowing the deductions. Contributions to Approved Gratuity Fund Relevant Legal Framework and Precedents: Section 36(1)(v) and Rule 103 were examined, with reference to the Eastern Equipment and Sales Ltd. case. Court's Interpretation and Reasoning: The Court found that the assessing authority could not question the validity of an approved gratuity fund and that the Commissioner's approval was binding. Key Evidence and Findings: The Court noted that the contributions were made to an approved gratuity fund and were necessary to cover actuarial shortfalls. Application of Law to Facts: The Court upheld the CIT(A)'s findings, allowing the deductions based on the approval of the gratuity fund. Conclusions: The issue was resolved in favor of the appellant, supporting the deductions. Alleged Belated Remittance of Employee's Contribution to Provident Fund Relevant Legal Framework and Precedents: Section 36(1)(va) and the relevant regulations under the Major Port Trusts Act were considered. Court's Interpretation and Reasoning: The Court found that the regulations did not specify a due date for the deposit of employee contributions, and the contributions were made within a reasonable timeframe. Key Evidence and Findings: The Court noted that the contributions were deposited within days of the artificial due date, and the due date specified in the tax audit report was due to software limitations. Application of Law to Facts: The Court determined that the absence of a specified due date in the regulations meant that the disallowance was unwarranted. Conclusions: The disallowance was deleted, and the issue was decided in favor of the assessee. SIGNIFICANT HOLDINGS Preserve Verbatim Quotes of Crucial Legal Reasoning: The Court quoted extensively from the Exide Industries case, emphasizing that contributions exceeding ordinary limits due to actuarial shortfalls are deductible. Core Principles Established:
Final Determinations on Each Issue:
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