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TMI Blog2018 (11) TMI 1918X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee has submitted approval letter of CCIT or CIT, therefore, the expenses of Rs. 2,45,017 were disallowed. 4. Being dissatisfied, the assessee preferred an appeal before the CIT (A). However, CIT (A) upheld the action of the AO on the ground that the assessee has not got approved the Provident Fund approved from Chief CIT/Pr.CIT, so any approval granted by the Provident Fund Commissioner is not relevance as per provisions of section 36(1)(iv) of the Act. 5. Being, aggrieved the assessee filed this appeal before the Tribunal. The learned counsel for the assessee referred the provision of section 2(38) of the Act and submitted that recognized Provident Fund is an inclusive definition and the second condition of Provident Fund established under a scheme framed under the Employees Provident Fund Act, 1952 is independent from the first condition of recognition of the fund by the CCIT as lays down under section 2 (38) of the Act. Therefore, claim of deduction under section 36(1)(iv) of the Act under the scheme framed under Employees Provident Fund or approved by the Commissioner under the Act is allowable. The learned counsel for the assessee further, placed reliance in the case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed under a scheme framed under the Employees Provident Fund Act, 1952 and it has not taken any recognition from the I.T. department u/s 2(38) of the Act. In my view, the assessee satisfies the condition of contributing to Recognized Provident Fund as per section 2(38) of the Act. Reliance is placed on the decision of the Dy. CIT Vs. Sahara India Employees Contributory Provident Fund in ITA No. 1568/DEL/2007 dated 24.10.2008 and relevant para 11 is reproduced hereunder: "11. A perusal of the definition given in section 2(38) as above shows that a provident fund which has been or continues to be // recognized by the Chief Commissioner or the Commissioner in accordance with the rules contained in Part A of the Fourth Schedule is said to be a "recognized provident fund" as per the first limb of the definition given in section 2(38). Further, as per the second limb of the definition, a recognized provident fund also includes a ITA No. 3448/Del/2016 provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952. The definition given in section 2(38) thus is an inclusive definition and as per the second limb of the said definition which is independent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the ITAT Delhi in the case of Udham Singh Nagar Dist. Co -operative Bank Ltd in ITA No. 3107/DEL/2010 vide order dated 08.04.2013. The relevant part is reproduced hereinbelow: "7 Fourth Schedule, and includes a provident fund established under a scheme framed under the Employees' Provident Fund Act, 1952 (19 of 1952)" 8. Thus, the Section is very clear in that it defines a "recognized provident fund" to include a Provident Fund established under a Scheme framed under the Employees' Provident Fund Act, 1952. Now, obviously, the Assessing Officer erred in disallowing the claim of the assessee, inasmuch as in the assessment order, it was not even noted that the Trust of the assessee Bank was a Trust established under a Scheme framed under the Employees' Provident Fund Act, 1952. 9. Once Section 2 (38) of the Act, as above, itself specifically provides a Provident Fund established under a Scheme framed under the Employees' Provident Fund Act, 1952 to be a recognized Provident fund there is no reason for the claim of the assessee to be denied and we find the Ld. CIT (A) to have correctly rectified the error committed by the Assessing Officer." 10. In the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and decision cited therein of Hon`ble High Courts, this grounds of appeal is allowed in favour of the assessee. 9. Ground No. 2 relates to confirming addition of Rs. 1,32,341 of interest received from other than co-operative societies and thereby not granting the proportionate deduction of expenses as claimed by the assessee by offering income of Rs. 2,11,183 in the return of income. 10. Succinct facts are that the AO has disallowed Rs. 3,43,524 pertaining to interest income received from banks other than co-operative societies. It was contended that before CIT (A) that the assessee has himself offered income of Rs.2,11,183 after deducting proportionate interest expenses Rs. 50,053 in the original return. However, in the revised computation of income under the head income from other source, the assessee has offered interest income at Rs. 3,43,524 and claimed proportionate interest expenses at Rs. 65,819 @ 19.16%. Thus, net interest income of Rs. 2,77,205 was offered to tax as against original interest income of Rs. 2,11,183. However, the AO has computed disallowance of interest income at Rs. 3,43,524 and on the basis of his computation of income from original return of income in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nks at Rs. 2,61,236 after claiming financial expenses of Rs. 50,053 However, proportionate expenses are at Rs. 65,819 resulting into net taxable income at Rs. 2,77,705 asper revised working filed before the AO. The CIT (A) has allowed deduction of double addition made by the AO by considering original return as base in which interest income of Rs. 2,11,183 was already offered to tax. However, CIT (A) has denied proportionate interest expenses of Rs. 65,819. This has resulted that addition of Rs. 1,32,341 i.e. [ 3,43,524- 2,11,183] has been remained in the to total income. Learned counsel , therefore, placing reliance in the case of The Kabilpore Peoples Co-operative Society Ltd. v. ITO Ward-2 Navsari [I.T.A.No. 806/Ahd/2015 dtd. 21.01.2017 (Ahmedabad -Trib)] and Shree Dhansobhavak Co-operative Credit Society Ltd. v. ITO Ward- 5 [I.T.A.No. 3375/Ahd/2016 dtd. 28.08.2018] has submitted that only net interest income is taxable hence, deduction of proportionate interest expenses should have been allowed by the Ld. CIT (A). 13. The ld. Sr. DR supported the order of lower authorities. 14. We have heard the rival submissions and perused the relevant material on record. We find that that ..... 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