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TMI Blog2008 (10) TMI 259X X X X Extracts X X X X X X X X Extracts X X X X ..... Commr., Uttar Pradesh by treating the accumulation as taxable income from other sources. (2) That the learned CIT(A) is fully justified in appreciating the provisions of s. 10(25) r/w s. 2(38) of the IT Act and holding that the contributions made by the members establishment to the trust were allowable as exempt. (3) That the order passed by the learned CIT(A) deserves to be upheld." 3. The assessee in the present case is a trust which was constituted vide a deed dt. 21st Feb., 1984 which was subsequently modified on 30th Aug., 1986. According to the said trust deeds, the PF scheme was framed for the benefits of the employees of M/s Sahara India which was granted recognition by the concerned CIT i.e., CIT (Central), Kanpur with effect from the date on which the fund was created. A return of income for the year under consideration was filed by the assessee trust on 29th Sept., 2003 declaring its total income at nil. During the course of assessment proceedings, it was noticed by the AO that the assessee trust has collected PF contributions from the following business entities other than M/s Sahara India: (i) M/s Sahara India Financial Corporation Ltd. (ii) M/s Sahara India ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1952. It was submitted that this limit of six members has also been withdrawn thereafter by omission of the said proviso meaning thereby that as on date, any number of establishments could participate and become member of common PF which is duly recognized under the Employees' Provident Fund Act, 1952. A reference was also made on behalf of the assessee trust to the provisions of s. 10(25) to point out that income from PF like the one established by the assessee trust to which Provident Fund Act, 1952 applies is exempt from tax as per the said provisions. It was also submitted that as per the provisions of s. 2(38), the recognized PF means the PF which has been and continues to be recognized by the Chief CIT or CIT in accordance with the rules contained in Part A of the Fourth Schedule and also includes PF established under a scheme formed under the Employees' Provident Fund Act, 1952. It was also pointed out that the PF scheme with all its member establishments has been duly registered under s. 17 of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952 by the Central Government vide an order dt. 12th June, 2006 w.e.f. 1st April, 1994. It was further submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sons has also since been withdrawn by omission of proviso by GSR 658(E), dt. 10th Nov., 2005 meaning thereby that on date any establishment can deposit and become member of a common PF which should be duly recognized under the Employees' Provident Fund Act, 1952. As regards the observations of the AO that other member establishments were not recognized by the CIT, I find correspondence has taken place with the CIT for joining of the member establishments in the appellant's PF trust. The CIT (Central), Kanpur also permitted the same but w.e.f. 1st April, 2003 only. This approval was taken as a measure of abundant precaution so that the fund remains both: (a) PF registered under the Employees' Provident Fund Act, 1952, and (b) PF duly recognized by CIT under Part A of the Fourth Schedule. On considering all the facts and circumstances of the case as well as the legal position I am of the considered view that the contribution made by member establishments to a recognized PF are allowable as exempt." 7. The learned Departmental Representative submitted that for availing the benefit of exemption under s. 10(25), it is necessary that the PF has to be created under the Provident ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... relevant material on record. As per cl. (ii) of sub-s. (25) of s. 10, any income received by the trustees on behalf of a recognized PF is exempt from tax. Definition of a "recognized PF" is given in s. 2(38) which reads as under: "2. In this Act, unless the context otherwise requires,- (38) 'recognised PF' means a PF which has been and continues to be recognised by the Chief CIT or CIT in accordance with the rules contained in Part A of the Fourth Schedule, and includes a PF established under a scheme framed under the Employees' Provident Fund Act, 1952 (19 of 1952)." 11. A perusal of the definition given in s. 2(38) as above shows that a PF which has been or continues to be recognized by the Chief CIT or the CIT in accordance with the rules contained in Part A of the Fourth Schedule is said to be a "recognized PF" as per the first limb of the definition given in s. 2(38). Further, as per the second limb of the definition, a recognized PF also includes a PF established under a scheme framed under the Employees' Provident Fund Act, 1952. The definition given in s. 2(38) thus is an inclusive definition and as per the second limb of the said definition which is independent of t ..... 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