9911796707
TMI Blog2014 (4) TMI 1328X X X X Extracts X X X X X X X X Extracts X X X X ..... tion made being fund set apart for the security of the salary of the managers of the primary agricultural societies - HELD THAT:- This issue is squarely covered in favour of the assessee in the case of The Barmer Central Cooperative Bank Ltd. [ 2013 (8) TMI 763 - ITAT JODHPUR ] held that the amount is to be contributed to a fund and the fund is not being managed by the assessee. The assessee may be trustee of that fund but it cannot apply the fund as per his own will. The interest, if any, earned on this fund is also to be credited to that fund, it is therefore, clear that funds stand diverted at the source and therefore, this cannot be considered as an appropriation of income but it is an expenditure. Thus the CIT(A) was justified in deleting the addition. Appeal of the assessee is allowed. X X X X Extracts X X X X X X X X Extracts X X X X ..... n compliance to the direction of Registrar of Cooperative Society, Rajasthan. 3. That the petitioner may kindly be permitted to raise any additional or alternative ground at or before the time of hearing. 4. The petitioner prays for justice & relief." 6. Ground Nos. 3 & 4 are general in nature, so do not require any comments on our part. The first issue vide Ground No. 1 relates to the confirmation of addition made by the Assessing Officer on account of premium paid to the LIC for Gratuity Fund. 7. During the course of hearing, learned counsel for the assessee at the very outset stated that this issue is covered in favour of the assessee vide judgment of the Hon'ble Supreme Court in the case of CIT Vs. Textool Co. Ltd. reported at (2013) 216 Taxman 327. 8. Learned D.R. in his rival submissions, although, supported the orders of the authorities below, but could not controvert the aforesaid contention of the learned counsel for the assessee. 9. We have considered the submissions of both the parties and carefully gone through the material available on record. It is noticed that the issue under consideration is squarely covered in favour of the assessee vide aforesaid re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fund was set apart for the security of the salary of the Managers of the Primary Agricultural Societies and not for the Managers of the assessee-bank. It was further stated that the assessee had no control over the fund which could be used in accordance with the directions of the Registrar and as such the same was charged on the income of the assessee and was allowable expenses. Reliance was placed on the judgments of the Hon'ble Bombay High Court in the case of CIT Vs. Bombay State Road Transport Corporation reported in 106 ITR 303 and in the case of Amalgamated Electricity Co. Ltd. Vs. CIT reported in 97 ITR 334. 14. The learned CIT(A), after considering the submissions of the assessee, sustained the addition made by the Assessing Officer by observing in para 6.3 of the impugned order as under:- 6.3. I have gone through the facts of the case and it is observed that as per terms and condition for appointment of Managers of primary agricultural lending Co-operative Society, it is a responsibility of Registrar of Co-operative Societies, Rajasthan to create a primary salary fund at the level of the primary Society. It further provides that the society shall contribute 75% of m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution of Rs. 49,50,000/- in the year under consideration is in accordance with terms and conditions laid down in the Circular dated 26-7-2004 in F. No. 97(26)/Bank-3/2002. Thirdly, it is relevant to note here that salary security fund a fund available to primary societies for loan on payment of interest and the balance fund is available to the Central Bank for utilization in its business. Thus, it can be said that contribution to salary security fund was an application of income and not a charge to the business of the appellant. Under the above facts and circumstances, I therefore, hold that the appellant is not able to prove with the documentary evidence that no amount was available in primary salary fund maintained at level of primary societies; that the appellant has contributed in accordance to terms and conditions and percentage provided in the order dated 2-7-2004 r.w. 26-7- 2004 and that contribution to salary security fund is an application of income and not charge to business of the year under consideration as fund was meant to provide loan to the primary society for payment of salary to Managers in case their fund is not sufficient. The contribution claimed to make b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... In the said case on similar issue, the addition was deleted by the Ld. CIT(A) by observing as under:- "Allowability of contribution by the Apex Bank for PAC Mangers salary is a statutory liability which is crystallized at the end of every yean The contribution however, once made become at the disposal of Registrar of Cooperative Society which is payable as and when demanded by the Registrar Cooperative Society along with interest on it Thus, it is not contingent liability but a statutory liability which is crystallized at the end of every year and hence the liability is allowable." 2.7 Against the said order, the Department preferred an appeal in JTA NO.1277/JP/2010 wherein vide order dated 22/07/2011, the order of the Ld. CIT(A) was upheld by observing in para 3.6 of the said order as under: "3.6 We have heard both the parties. The Hon'ble Apex Court in the case of Sri Venkata Satyanarayana Rice Mill Contractors Co. vs CIT 223 ITR 101 has stated that it is to be seen as to whether the payment is compulsory for the assessee to make or not but whether it was expended out of consideration of commercial expediency. Any contribution made by the assessee to ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
