Madras High Court
Kattabomman Transport Corporation ... vs Commissioner Of Income-Tax on 28 March, 2000
Equivalent citations: [2000]245ITR153(MAD)
JUDGMENT N.V. Balasubramanian, J.
1. There are two tax cases ; one at the instance of the assessee and another at the instance of the Revenue.
2. Tax Case No. 2129 of 1984 is at the instance of the assessee and the following question of law has been referred by the Tribunal for our consideration :
"Whether, on the facts and circumstances of the case, the Appellate Tribunal was right in law in holding that the payment of Rs. 12,500 to the flag day fund was not an allowable deduction ?"
3. In so far as the reference at the instance of the Revenue is concerned, the following questions of law have been referred to us by the Tribunal in relation to the assessment of income of the assessee for the assessment year 1977-78 for our consideration :
"(i) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that the sum of Rs. 13,14,124 being the contribution towards provident fund is allowable under section 3G(l)(iv) of the Income-tax Act, 1961 ?
(ii) Whether the Appellate Tribunal's view that a provident fund exempted from the operation of the Employees' Provident Funds Scheme, 1952, under Section 17 would also be a provident fund under the Provident Funds Act, 1952, for the purpose and within the meaning of Section 2(38) of the Income-tax Act, and, consequently, no further recognition by the Commissioner of Income- tax is required, is correct in law ?"
4. In so far as the question referred by the Tribunal at the instance of the assessee is concerned, it is fairly submitted that the question raised is to be answered in favour of the assessee in view of the decision of this court in the case of CAT v. Cheran Transport Corporation Ltd, [1996] 219 ITR 203 and the decision of the Supreme Court in Sri Venkata Satyanarayana Rice Mill Contractors Co. v. CIT [1997] 223 ITR 101 and following the said decisions, we hold that the Tribunal was not correct in holding that the payment of Rs. 12,500 made by the assessee towards the flag day contribution was not an allowable deduction. Hence, the question of law referred at the instance of the assessee is required to be answered in the negative and, accordingly, we answer the question in favour of the assessee and against the Revenue.
5. In so far as the questions of law referred at the instance of the Department is concerned, the issue that arises is as to whether the assessee is entitled to a deduction of a sum of Rs. 13,14,124 being the contribution made towards provident fund under the provisions of Section 36(l)(iv) of the Income-tax Act. The Income-tax Officer disallowed the contribution made on the ground that the contribution was made towards an unrecognised provident fund. But, the Tribunal, however, held that the provident fund to which the contribution was made was one established under the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952, and though there was no recognition granted by the Commissioner of Income-tax to the said fund, yet, the assessee would be entitled to the deduction of the amount of contribution made to the fund on the ground that it was a provident fund constituted under the provisions of the Employees' Provident Fund and Miscellaneous Provisions Act, 1952. However, during the pendency of a reference before this court, the Commissioner of Income-tax, Madurai, by his proceeding's in C. No. 1613(2) of 1977-78 dated September 14, 1978, has granted the recognition to the provident fund established by the assessee with effect from April 1, 1977. The assessment year concerned is the year 1977-78 and the recognition made in his order dated September 14, 1998, would govern the assessment proceedings for the assessment year 1977-78 as well.
6. In view of the recognition granted by the Commissioner of Income-tax, Madurai, we hold that the view of the Tribunal that the assessee is entitled to the deduction of the contribution made to the provident fund is sustain-able in law, though on different reasons. Accordingly, we answer the questions referred to us in the affirmative, against the Revenue and in favour of the assessee. There will be no order as to costs.