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TMI Blog2015 (8) TMI 123X X X X Extracts X X X X X X X X Extracts X X X X ..... allowable under clause (f) of Sec 43B. Otherwise also the issue stands settled in favour of the assessee in view of the decision of Hon'ble Supreme Court in case of Bharat Earth Movers V. CIT, [2000 (8) TMI 4 - SUPREME Court ] in which provision for leave encashment was held to be allowable if the same was based on a particular scheme proportionately with the entitlements earned by the employees. - Decided in favour of assessee. Disallowance of interest on FDRs - Held that:- This issue came up for consideration in the earlier year wherein held that there was no profit motive as the entire fund entrusted and the interest accrued on the deposits in the bank, though in the name of the assessee, had to be applied only for the purpose of welfare of the nation as provided in the guidelines. The whole of the funds belonged to the State Exchequer and the assessee had to channelise them to the objects of the Centrally sponsored scheme of infrastructural development for the mega city of Bangalore. The entire money was received for a public purpose and the end scheme was implemented in accordance with the guidelines of the Central Government. Therefore, in computing the total income of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of the case the ld. CIT(A) is not justified in upholding the addition of ₹ 1,11,537/- on account of disallowance of expenses pertaining to CPF trust. 3. Out of the above Ground No. 4 was not pressed and the same is dismissed as not pressed. Ground No. 1 4. After hearing both the parties we find that during the assessment proceedings AO noticed that assessee has paid a sum of ₹ 68,34,365/- on account of Premium for Gratuity. The assessee was asked to file copy of the order granting approval to the Gratuity Fund. No such certificate was filed but it was claimed that assessee has following the mercantile system of accounting and therefore claim was justified, this claim was not allowed since the funds was not approved. However the alternative submission that amounts already paid to the employees amounting to ₹ 21,56,573/- should be allowed was accepted and disallowance was made for ₹ 46,77,792/-. 5. On appeal the action of the AO was confirmed by the Ld. CIT(A). 6. Before us the Ld. Counsel for the assessee fairly admitted that this issue is covered by the decision of Tribunal in assessee's own case for the earlier year. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons towards a recognized provident fund, an approved superannuation fund or an approved gratuity fund. The provisions of a taxing statute have to be interpreted strictly applying the rule of literal interpretation. Nothing can be added or substituted by implication or intendment. If Parliament has made deductions towards provident fund, superannuation fund or gratuity fund admissible only in cases where such funds are approved, granting deduction of amounts pad into unapproved funds under the cover of section 37 may defeat the legislative intent and frustrate the very purpose underlying the specific provisions made thereunder. The assessee entered into an agreement with the LIC and made contributions towards gratuity and superannuation funds for the benefit of its employees. The assessee made an application to the Commissioner for approval of the fund under the Employees Group Gratuity Scheme (corporate and factory ) which was approved by the Commissioner with effect from September 30,1998. A similar approval for the superannuation scheme was granted by the Commissioner with effect from October 14, 1998. The assessee claimed that the contributions made by it were admissib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt, an amount of ₹ 5,84,754/- was paid as annual premium to the Life Insurance Corporation( LIC for short); a sum of ₹ 50,00,000/- was paid to the LIC as initial contribution in the group Life Assurance Scheme framed by the LIC for the benefit of the employees of the assessee and the remaining amount of ₹ 36,22,224/- was shown as provision for initial contribution. It is common ground that assessee company's gratuity fund, viz., the Textool Company Ltd. Employees Group Gratuity Fund was approved by the Commissioner of Income Tax, coimbatore, w.e.f. 25th February, 1983. While completing assessment, the Assessing Officer allowed a deduction of ₹ 36,22,224/- under section 40A(7) of the Act. However, deduction for the balance amount was disallowed on the ground that payment towards the gratuity fund was made by the assessee directly to the LIC and not to an approved gratuity fund and, therefore, it was not allowable under Section 36(1)(v) of the Act. Therefore following the earlier decision we decide this issue against the assessee. Ground No. 2 10. After hearing both the parties we find that during the assessment proceedings it was noticed that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration in earlier year and same was decided in ITA No. 1226 1227/Chd/2010 vide para 25 which is as under: 25. We have considered the rival submissions carefully and find that Government of India, Ministry of Commerce and Industry, Department of Commerce has sanctioned the grant to the assessee vie letter dated 16.7.2002. Clause 4 of the same reads as under: 4 The release of fund are subject to the following terms and conditions: (i) No administrative expenditure be incurred out of the funds allocated (ii) The account of the implementing agency be kept open for inspection by the sanctioning authority/audit. (iii) The amount received from the Government be kept in a separate head of account of the nodal agency. (iv) No part of the funds be invested except in the scheduled nationalized banks. Any interest accrued be utilized for the scheme. (v) The nodal agency shall submit the report in the prescribed proforma along with the proposal for release of second installment as prescribed in the guidelines. (vi) Audited accounts in support of the expenditure incurred for the ASIDE scheme be submitted within 9 (nine) mohths from the closing of the acc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Chandigarh Bench of the Tribunal in case of H.P. Government Energy Development Agency, Shimla V. ACIT (supra). Therefore following this decision we are of the opinon that the interest income does not accrued to the assessee and the assessee is not liable to be taxed on such interest. Therefore we set aside the order of the CIT(A) and delete this addition. Following the same we decide this issue against the assessee. 18. In the result appeal of the assessee is partly allowed. ITA No.1308/Chd/2012 The appeal by the Revenue is directed against the order dated 24/09/2012 passed by the CIT(A). 19. In this appeal Revenue has raised the following grounds: 1. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the A.O. was not right in apportioning the development cost incurred on 159868 sq. mtrs of marketable land to whole piece of land of 317803 sq. mtrs purchased and developed by the assessee for sale. 2. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in holding that the development made by the assessee in the entire land such as construction of road etc. does not hold good for whole of la ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the land comprising tube well measuring 3000 sq. mtr. could also not be sold and therefore cost of that land was also reduced for working out of cost of land to be sold. Therefore, total balance available areas was only 229511 sq. mtrs. The said area was developed by providing sewerage, roads and other facilities and which also lead to wastage of developed area which was reduced to 69643 sq. mtrs. Thus net saleable area was 159868 sq. mtrs. which gave the average cost of ₹ 2438.77 per. sq. mtr. since the assessee has sold land measuring 65051 sq. mtrs. of land. During the year the profit was reflected accordingly. It was also pointed out that out of the sold area 14148 sq. metrs. was surrendered by the buyers in the immediately succeeding year and loss was booked accordingly which was accepted by the department. The Ld. CIT(A) found force in this submission and decided the issue in favour of the assessee. 22. Ld. DR relied on the contents of the assessment order and vehemently argued that the cost of development was required to be spread in the whole area of land which was available with the assessee and therefore AO rightly spread the cost of whole area. 23. On the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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