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TMI Blog2018 (9) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... aken over; for the period they were employed with the previous employer, on the basis of contract of employment entered into at the time of take over, is not an allowable deduction either u/s. 36(1) (v) r. w. Rules 104 or u/s. 37 of the Act. " 2. We have heard Sri. R. Vijayaraghavan, the learned Counsel appearing for the assessee/appellant and Sri. P. K. Ravindranatha Menon, the learned Senior Counsel appearing for the Revenue. 3. On facts, suffice it to say that the assessee company took over the business of one Trans Asian Shipping Services Pvt. Ltd. The company which was taken over had been exclusively carrying on the agency of Norasia Lines (Malta) Ltd. When the business was taken over, the employees of the earlier company was also t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r. The rule only enables the contribution made by an employer to its employees and there cannot be an inclusion of the contribution made for the previous years, since the employees in those previous years were under another employer. Rule 104 was not noticed by the earlier Division Bench, is the specific contention raised. 5. Pratap Cashew Pvt. Ltd (supra) was a more or less identical situation of a take over of business of three companies; by the assessee as running concerns with all existing rights and liabilities. The workmen employed in the three factories were to be retained in service on the same terms and conditions treating their services as continuous and uninterrupted and the assessee also had the liability to pay compensation or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmine the liability arising under Section 4 of the Act was the clear finding. However the contention of the department that the provision for such liability, in the subject year, eligible for deduction, could only be to the extent of the liability which accrued in that year was refused to be considered for reason of the department having not raised that argument before any of the lower authorities and the question, hence not arising from the order of the Tribunal. Rule 104 was not noticed, presumably in that context. 6. True, Section 104 was not noticed by the Division Bench, but even if it was noticed there would not have been any change in the dictum laid down according to us, on a reading of Rule 104, which is extracted below: "The am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity. 8. Textool Company Ltd. was also concerned with the initial contributions paid directly to the Life Insurance Corporation of India for the purpose of indemnification of the liability to gratuity, payable to the retiring employees, from a trust created for the purpose approved by the Commissioner. Therein, the Hon'ble Supreme Court noticed the fact that only the initial payment was made by the employer directly to the LIC and the trust was formed later as also the approval obtained from the Commissioner subsequently. The later contributions were made directly by the trust to the LIC. It was held that the claim made under Section 36 (1)(v) of the Income Tax Act was perfectly in order. The mere fact that payments were made directly b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und by the Commissioner and affirmed by the Tribunal, no fault can be found with the opinion expressed by the High Court, warranting our interference. " 9. We notice that the Tribunal has also relied on CIT v. Saravana Spinning Mills Pvt. Ltd. [(293) ITR 201] to deny the claim raised under Section 37 of the Income Tax Act. The learned counsel appearing for the appellant assessee submits that the said decision is an authority for the proposition that if there is a claim raised under Section 31 to 36, then there cannot be an alternative plea under Section 37. In the context of our finding in favour of the assessee under Section 36 (1) (v), we do not find any need to look into the decision cited by the Tribunal. On the reasoning above, we f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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