9911796707
TMI Blog1991 (6) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... stitute either machinery or plant? (2) Whether, on the facts and in the circumstances of the case, the provision made towards pension fund was an admissible deduction under section 37 of the Income-tax Act, 1961 ? " Following the decision of this court in CIT v. Bangalore Turf Club Ltd. [1984] 150 ITR 23, the first question is answered in the affirmative and against the Revenue. The relevant assessment years are 1978-79 and 1979-80. The assessee is a statutory corporation ; it has to provide for the payment of pension to its employees ; accordingly, it had made a provision towards the same. The amount of contribution made to the pension fund was allowed under section 37 by the Commissioner (Appeals). The appeals were filed by the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislative intention not to restrict the deductibility of an expenditure towards non-gratuity funds and the fact that only " gratuity was subjected to certain restrictions under section 40A(7), and other payments are to be treated differently. Similarly, in respect of provision for provident fund also, section 37 has been applied to grant the relief, though section 36(1) refers to the subject of a recognised provident fund. The contention of the Revenue has been accepted by the Madras High Court in CIT v. Tube Investments of India Ltd. [1981] 129 ITR 75, wherein it was held that the prohibition against grant of relief under section 37, in respect of the matters covered by section 36, is implicit in the Act, as otherwise, section 36(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n that the Department has accepted the ratio of the earlier decision (vide page 672). Sri K. R. Prasad referred to this decision to contend that the ratio of the decision of this court in Karnataka State Warehousing Corporation's case [1980] 125 ITR 136 should be followed and there is no reason why this Bench should disagree with it and refer the question to a larger Bench. The main question is not free from doubt. Substantial reasoning can be found in support of the rival propositions. In such a situation, a practical approach is to accept the view which is favourable to the assessee, as against the stand of the Revenue. Unless strong reasons exist, normally the earlier decision of a Division Bench should be followed by the subsequent Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this amount was a special liability which, we have noticed before, was created for the first time in 1971. " In CIT v. Chhotabhai Jethabhai Patel Tobacco Products Co. Ltd. [1981] 128 ITR 702, the Gujarat High Court also expressed a similar view with regard to the contributions made to a non-recognised provident fund. The payments to the fund were held to have been made on the ground of commercial expediency and hence deductible under section 37. After referring to a few decisions and the principle applicable to the case, the High Court held at page 707: "It is obvious that, in the instant case, when contribution was made by the assessee-company for the provident fund amount of the employees even when there was no recognised fund in exi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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