Ita/161/2009 Assam Frontier Employees Pension Fund v. Commissioner Of Income Tax-Xi, Kolkata & Anr

ORDER IN THE HIGH COURT AT CALCUTTASPECIAL JURISDICTION (INCOME TAX)ORIGINAL SIDE OD – 1 A.F.R. ITA/161/2009ASSAM FRONTIER EMPLOYEES PENSION FUNDVERSUSCOMMISSIONER OF INCOME TAX-XI, KOLKATA & ANR. BEFORE: The Hon'ble Justice SURYA PRAKASH KESARWANI The Hon'ble Justice RAJARSHI BHARADWAJ Date : 5[th] December 2023. Appearance:Mr. Abhratosh Majumdar, AdvocateMs. Nilanjana Banerjee Pal, Advocate… for appellant.Ms. Smita Das De, Advocate… for respondents. 1.Heard Sri Abhrotosh Majumdar, learned counsel for the appellant/assesseeand Ms. Smita Das De, learned senior standing counsel for the respondents/ Income Tax Department.and Ms. Smita Das De, learned senior standing counsel for the respondents/ Income Tax Department. 2.This appeal has been admitted by order dated 08.07.2009, on the followingsubstantial question of law:-substantial question of law:- “In view of the admitted position that there was no formal order ofwithdrawal of approval in respect of the pension fund of the assesseeby the Commissioner of Income Tax, whether the Tribunal belowsubstantially erred in law in holding that the assessee is not entitled to the exemption under Section 10(25)(iii) of the Income Tax Act,1961? Facts:- 3.Briefly stated, facts of the present case are that the assess is a pensionfund which was accorded recognition/approval by the Commissioner ofIncome Tax, Central-I, Kolkata vide order dated 29.09.1985 under Rule 2(1)of Part-B of the Fourth Schedule to the Income Tax Act, 1961 [hereinafterreferred to as “the Act 1961”]. Thus, the fund of the assessee was approvedunder the Rules as contained in Part-B of the Fourth Schedule [hereinafterreferred to as “the Rules”]. The order of approval is reproduced below:-fund which was accorded recognition/approval by the Commissioner ofIncome Tax, Central-I, Kolkata vide order dated 29.09.1985 under Rule 2(1)of Part-B of the Fourth Schedule to the Income Tax Act, 1961 [hereinafterreferred to as “the Act 1961”]. Thus, the fund of the assessee was approvedunder the Rules as contained in Part-B of the Fourth Schedule [hereinafterreferred to as “the Rules”]. The order of approval is reproduced below:- “Under Rule 2(1) of the Part-B of the Fourth Schedule to theIncome Tax Act, 1961 approval is hereby accorded to Assam FrontierEmployee’s Pension Fund constituted under the Trust Deed 12-07-1994. The approval of the Fund maintained by the above-namedemployer will take effect from 30-01-1995. The approval of the Fund will be subject to the condition thatthe Trustee shall file before the Commissioner every year within threemonths from the date of the closing of the annual accounts of theFund the following statements:- (a)Statement of accounts of the Fund. (b)A statement showing date-wise contributions made to thefund and details of date-wise investment of suchcontributions by the Trustees.fund and details of date-wise investment of suchcontributions by the Trustees. (c)Statement showing the details of payment made to thebeneficiaries/employees during the year.beneficiaries/employees during the year. 4. (d)Statement showing the details of tax deducted at sourceand date of payment of the same by the Trustees to thecredit of the Central Government as required under Rule6 of Part-B of the Fourth Schedule to the Income-tax Act.and date of payment of the same by the Trustees to thecredit of the Central Government as required under Rule6 of Part-B of the Fourth Schedule to the Income-tax Act. And any other conditions that may be imposed in future in thelight of changes in the Income-tax Law and Rules and othercircumstances.” The assessing officer passed an order dated 24.12.2007 under Section143(3) of the Act 1961, denying exemption to the assessee under Section10(25)(iii) of the Act 1961. Relevant portion of the aforesaid assessmentorder is reproduced below:- “The approval order of the Fund was subject to condition thatthe Trustee should file various statements as mentioned in the order, And any other conditions that may be imposed in future in thelight of changes in the Income-tax Law and Rules and othercircumstances.” The assessing officer passed an order dated 24.12.2007 under Section143(3) of the Act 1961, denying exemption to the assessee under Section10(25)(iii) of the Act 1961. Relevant portion of the aforesaid assessmentorder is reproduced below:- “The approval order of the Fund was subject to condition thatthe Trustee should file various statements as mentioned in the order, before the Commissioner every year within date of the closing ofthe annual accounts of the Fund. During the course of hearing on14.08.07, the A/R was asked to produce evidence of submission ofrequisite documents/statement before the Commissioner accordingly.In view of non-submission of evidence, a show cause letter dated29-11-2007 was issued to the assessee and the relevant portionof the show cause is as follows:- … In response to show cause dated 29.11.07, the assessee fundreiterated as “we have already confirmed you vide our letter dated10[th] October, 2007 that we are searching the file containing thesaid submission letter but still we are unable to find the same”. In spite of having reasonable time to produce the evidence of submission of documents (submission of documents within specified time as mentioned in the approval order is theboundary condition of the approval of the Fund), the assesseefailed to produce the same. It is evident from the facts andcircumstances of the case that the assessee Fund did not complyto the conditions of approval and therefore the Fund looses itsrecognition. Hence exemptions u/s 10(25)(iii) claimed by theFund is rejected.” 5.The assessing officer, thus, assessed the liability to tax of the assessee toRs.6,41,011/- and interest under Section 234B of Rs.2,11,530/-, totalingRs.8,52,541/-. 6.Aggrieved with the assessment order, the appellant assessee filed an appealunder Section 246A of the Act 1961, which was allowed by the CIT (A) by adetailed and well discussed order dated 24.04.2008. Relevant portion ofthe aforesaid order of CIT (A) is reproduced below:-under Section 246A of the Act 1961, which was allowed by the CIT (A) by adetailed and well discussed order dated 24.04.2008. Relevant portion ofthe aforesaid order of CIT (A) is reproduced below:- “(5.3)I have quite carefully considered the submissions made bythe A.R. of the appellant in respect of the issues raised in GroundNos. 2 and 3. I have also given thoughtful consideration to thereasoning of the A.O., as recorded in the impugned order. The orderdated 29.9.1995 under Rule 2(1) of Part-B of Fourth Schedule to theAct passed by then C.I.T., Central-1, Kolkata is also perused.Finding substantial force in the arguments put forth by the A.R. ofthe appellant, it is observed at the outset that the action of the A.O.amounting to treating the appellant as an unapproved fund andthereafter denying the exemption u/s. 10(25)(iii) of the Act, isnot legally sustainable. The provisions contained in Rule 2 ofPart-B of Fourth Schedule are found to be quite unambiguousand I see no doubt in interpreting the same. The power to accord approval to any Superannuation Fund as well as towithdraw such approval, besides the power to prescribe the date ofcommencement of the fund as well the conditions subject to whichthe approval is granted, has been conferred upon the ChiefCommissioner or Commissioner of Income Tax. It goes withoutsaying that none of the powers as referred above, can beexercised by any authority below the rank of Chief Commissioneror Commissioner. The referred Rule further lays down that theChief Commissioner or Commissioner shall withdraw theapproval with the reasons for such withdrawal and also the dateon which the withdrawal has to take effect. The said Rule alsoprovides that refusal or withdrawal of approval has to be madeonly after reasonable opportunity of being heard in the matterhas been given to the trustees by the Chief Commissioner orCommissioner. In this view of the matter, I have no hesitation inobserving that the A.O. seems to have exceeded his mandate intreating the appellant-fund as an unapproved one, despite the factthat the approval accorded by the competent authority has not so farbeen withdrawn or refused by him. There is no stipulation in theorder dated 29[th] September, 1995 of the competent authority givingthe approval that if the conditions listed therein are not met by theappellant, such approval would be deemed to have been withdrawn. (5.3.1)It is further observed that the documents/statements etc.were to be furnished by the appellant before the C.I.T. and not beforethe A.O. If the A.O. had noticed that the conditions prescribed in theapproval were not being fulfilled by the appellant, he could havebrought this fact into the notice of the competent authoritysuggesting for withdrawal of the approval granted to the appellant-fund. Nothing of this sort has been done by the A.O. It may beclarified at this stage that the deemed withdrawal has been provided in Rule 4(2), in a case where there is any alteration inthe rules, constitution, objects or conditions of the fund afterthe date of application for approval has been made before theA.O. Here also, the deemed withdrawal is subject to the order ofthe Chief Commissioner or Commissioner and not automatic atthe end of the A.O. The power with the A.O. to call for returns,statements, particulars or information through a notice has beengiven only in Rule 10 and there also, there is no provisionempowering the A.O. to withdraw or undo the approval accordedby a superior authority. The A.O. was not prevented to call for suchdocuments/statements etc. by virtue of powers conferred upon himin Rule 10 and thereafter put the matter before the competentauthority for withdrawal of the approval, in case he found anydiscrepancy or non-compliance of the conditions. The fact that theappeal against withdrawal of approval lies with the Board furtherpoints out unequivocally that the A.O. is not vested with any power towithdraw/refuse the approval granted by the competent authority.Be that so; A.O.’s subsequent action in denying the exemption u/s.10(25)(iii) on the purported ground is not sustainable in the eyes oflaw. The contention of the appellant that so long as the approvalunder Rule 2(1) is not withdrawn by the competent authority whogranted it, the A.O. has no choice but to allow the exemption underSection 10(25)(iii) is not inappropriate and I am inclined to agree withit. It is further observed that the A.O. is not precluded at any point oftime to bring the fact of non-compliance of the prescribed conditionsby the appellant-fund, to the notice of the competent authoritygranting the approval with the suggestion for withdrawal of the samewith effect from the date, which the A.O. thinks appropriate based onfacts gathered from detailed verification. (5.3.2) In view of above discussion, it is held that the action of theA.O. in denying the exemption u/s. 10(25)(iii) is not in order. TheA.O. is directed to allow the requisite exemption in accordance withthe provisions of law accordingly.” (5.3.2) In view of above discussion, it is held that the action of theA.O. in denying the exemption u/s. 10(25)(iii) is not in order. TheA.O. is directed to allow the requisite exemption in accordance withthe provisions of law accordingly.” 7.Aggrieved with the aforesaid order of the CIT (A), the Income Tax Officer,Ward 32(1), Kolkata filed an appeal before the Income Tax AppellateTribunal ‘C’ Bench, Kolkata being ITA No.1345/Kol/2008 ,which was allowed by the ITAT by order dated 13.03.2009 and the order ofthe CIT (A) was set aside by recording the findings as under:-Ward 32(1), Kolkata filed an appeal before the Income Tax AppellateTribunal ‘C’ Bench, Kolkata being ITA No.1345/Kol/2008 ,which was allowed by the ITAT by order dated 13.03.2009 and the order ofthe CIT (A) was set aside by recording the findings as under:- “Since the assessee failed to comply with the conditions as laid downby the CIT for claiming deduction u/s. 10(25)(iii) we are of theconsidered opinion that the A.O. was justified in denying suchexemption to the assessee and the Ld. CIT(A) was not justified ingranting the same. The order of the Ld. CIT(A) is, therefore, set asideand that of the A.O. is restored.”by the CIT for claiming deduction u/s. 10(25)(iii) we are of theconsidered opinion that the A.O. was justified in denying suchexemption to the assessee and the Ld. CIT(A) was not justified ingranting the same. The order of the Ld. CIT(A) is, therefore, set asideand that of the A.O. is restored.” 8.Along with the paper book, the appellant/assessee has also filed copy of aletter dated 28.05.2009 submitted before the Commissioner of IncomeTax–XI, Kolkata bearing acknowledgement, which is reproduced below:-letter dated 28.05.2009 submitted before the Commissioner of IncomeTax–XI, Kolkata bearing acknowledgement, which is reproduced below:- “Reference to the order of C.I.T-1 dtd. 29.09.1995 (a photocopy of thesame is enclosed for your ready reference), we are accordinglyattaching herewith the following documents:same is enclosed for your ready reference), we are accordinglyattaching herewith the following documents: a)Statement of accounts of the fund as on 31.03.2005. b)Statement showing date-wise contributions made to the fundand details of date-wise investment of such contributions duringthe F.Y. 2004-05.and details of date-wise investment of such contributions duringthe F.Y. 2004-05. c)Statement showing the detail of payment made to thebeneficiaries/employees during the F.Y. 2004-05.beneficiaries/employees during the F.Y. 2004-05. d)Statement showing the detail of tax deducted at source duringthe F.Y. 2004-05.the F.Y. 2004-05. Since our file has been transferred from C.I.T-I, to C.I.T-XI, we aresubmitting the documents here.”submitting the documents here.” 9.The aforesaid letter has not been disputed before us by learned counsel forthe respondents. It has also not been disputed before us by learnedcounsel for the respondents that the afore-quoted approval order dated29.09.1995 has neither been withdrawn nor rescinded, rather it continuedfor the relevant assessment year 2005-06.the respondents. It has also not been disputed before us by learnedcounsel for the respondents that the afore-quoted approval order dated29.09.1995 has neither been withdrawn nor rescinded, rather it continuedfor the relevant assessment year 2005-06. 10.Aggrieved with the order of the ITAT dated 13.03.2009 in ITANo.1345/Kol/2008, the assessee has filed the present appeal, which wasadmitted by this Court by order dated 08.07.2009 on the afore-quotedsubstantial question of law.No.1345/Kol/2008, the assessee has filed the present appeal, which wasadmitted by this Court by order dated 08.07.2009 on the afore-quotedsubstantial question of law. Submission on behalf of the Appellant/Assessee 10.Aggrieved with the order of the ITAT dated 13.03.2009 in ITANo.1345/Kol/2008, the assessee has filed the present appeal, which wasadmitted by this Court by order dated 08.07.2009 on the afore-quotedsubstantial question of law.No.1345/Kol/2008, the assessee has filed the present appeal, which wasadmitted by this Court by order dated 08.07.2009 on the afore-quotedsubstantial question of law. Submission on behalf of the Appellant/Assessee 11.Learned counsel for the appellant submits that the prescribed authority toissue approval order under Section 10(25)(iii) of the Act 1961 read withRule 2(1) of the Rules is the Commissioner of Income Tax who had grantedapproval of the fund by the afore-quoted order dated 29.09.1995 and thatorder has neither been withdrawn nor cancelled. Under the circumstances,the Income Tax Officer / assessing officer had no jurisdiction to pass theassessment order denying exemption and to assess the assessee to tax withissue approval order under Section 10(25)(iii) of the Act 1961 read withRule 2(1) of the Rules is the Commissioner of Income Tax who had grantedapproval of the fund by the afore-quoted order dated 29.09.1995 and thatorder has neither been withdrawn nor cancelled. Under the circumstances,the Income Tax Officer / assessing officer had no jurisdiction to pass theassessment order denying exemption and to assess the assessee to tax with respect to the fund in question. Reliance is placed upon two judgments ofHon'ble Supreme Court in Gestetner Duplicators Pvt. Ltd. v. Commissionerof Income Tax, West Bengal reported in (1979) 2 SCC 354 [Para 3 and 12]and Industrial Infrastructure Development Corporation (Gwalior) MadhyaPradesh Limited v. Commissioner of Income Tax (Gwalior), Madhya Pradeshreported in (2018) 4 SCC 494 [Para 16-21]. 12.Learned counsel for the appellant has carried us to the afore-quotedapproval order, the assessment order, the order of the CIT (A) and theimpugned order of the ITAT as well as the Rules and more particularlyRules 2, 3, 4, 8 and 10 of the Rules.approval order, the assessment order, the order of the CIT (A) and theimpugned order of the ITAT as well as the Rules and more particularlyRules 2, 3, 4, 8 and 10 of the Rules. Submission on behalf of the Respondents / Income Tax Department 13.Learned counsel for the respondents submits that since the assessee couldnot submit any proof despite show-cause notice that he has complied withthe conditions attached to the approval order, therefore, the assessingofficer was justified to deny exemption to the assessee under Section 10(25)of the Act 1961 read with the Rules. Reliance is placed upon a judgment ofKarnataka High Court in Commissioner of Income Tax, Mangalore v. M/s.Manipal Academy of Higher Education reported in (2013) 357 ITR 114(Gujarat).not submit any proof despite show-cause notice that he has complied withthe conditions attached to the approval order, therefore, the assessingofficer was justified to deny exemption to the assessee under Section 10(25)of the Act 1961 read with the Rules. Reliance is placed upon a judgment ofKarnataka High Court in Commissioner of Income Tax, Mangalore v. M/s.Manipal Academy of Higher Education reported in (2013) 357 ITR 114(Gujarat). Decision and Finding 14.We have carefully considered the submissions of learned counsel for theparties and perused the record of the appeal.parties and perused the record of the appeal. 15.Before we may proceed to consider rival submissions of learned counsel forthe parties, it would be appropriate to reproduce Section 10(25)(iii) of theAct 1961 and Part-B of the Fourth Schedule to the Act, as under:- Section 10(25)(iii) “10. In computing the total income of a previous year of any person,any income falling within any of the following clauses shall not beincluded- . . . (25)(i) . . . (ii) . . . (iii) any income received by the trustees on behalf of an approved superannuation fund;” “PART – B APPROVED SUPERANNUATION FUNDS Definitions. 14.We have carefully considered the submissions of learned counsel for theparties and perused the record of the appeal.parties and perused the record of the appeal. 15.Before we may proceed to consider rival submissions of learned counsel forthe parties, it would be appropriate to reproduce Section 10(25)(iii) of theAct 1961 and Part-B of the Fourth Schedule to the Act, as under:- Section 10(25)(iii) “10. In computing the total income of a previous year of any person,any income falling within any of the following clauses shall not beincluded- . . . (25)(i) . . . (ii) . . . (iii) any income received by the trustees on behalf of an approved superannuation fund;” “PART – B APPROVED SUPERANNUATION FUNDS Definitions. 1. In this Part, unless the context otherwise requires, "employer","employee”, "contribution" and "salary" have, in relation tosuperannuation funds, the meanings assigned to those expressionsin rule 2 of Part A in relation to provide funds. Approval and withdrawal of approval. 2 (1) The Chief Commissioner or Commissioner] may accord approvalany superannuation fund or any part of a superannuation fundwhich, in his opinion, complies with the requirements of rule 3, andmay at any time withdraw such approval, if, in his opinion, thecircumstances of the fund or part cease to warrant thecontinuance of the approval. (2) The "[Chief Commissioner or Commissioner] shall communicate inwriting to the trustees of the fund the grant of approval with the dateon which the approval is to take effect, and, where the approval isgranted subject to conditions, those conditions. (3) The "[Chief Commissioner or Commissioner] shall communicate inwriting to the trustees of the fund any withdrawal of approval withthe reasons for such withdrawal and the date on which thewithdrawal is to take effect. (4) The "[Chief Commissioner or Commissioner] shall neither refusenor withdraw approval to any superannuation fund or any part of asuperannuation fund unless he has given the trustees of that fund areasonable opportunity of being heard in the matter. Conditions for approval. 3. In order that a superannuation fund may receive and retainapproval, it shall satisfy the conditions set out below and any otherconditions which the Board may, by rules, prescribe- (a) the fund shall be a fund established under an irrevocabletrust in connection with a trade or undertaking carried on inIndia, and not less than ninety per cent of the employees shallbe employed in India;trust in connection with a trade or undertaking carried on inIndia, and not less than ninety per cent of the employees shallbe employed in India; (b) the fund shall have for its sole purpose the provision ofannuities for employees in the trade or undertaking on theirretirement at or after a specified age or on their becomingincapacitated prior to such retirement, or for the widows,children or dependants of persons who are or have been suchemployees on the death of those persons;annuities for employees in the trade or undertaking on theirretirement at or after a specified age or on their becomingincapacitated prior to such retirement, or for the widows,children or dependants of persons who are or have been suchemployees on the death of those persons; (c) the employer in the trade or undertaking shall be acontributor to the fund; andcontributor to the fund; and (d) all annuities, pensions and other benefits granted from thefund shall be payable only in India. Application for approval. (c) the employer in the trade or undertaking shall be acontributor to the fund; andcontributor to the fund; and (d) all annuities, pensions and other benefits granted from thefund shall be payable only in India. Application for approval. 4. (1) An application for approval of a superannuation fund or part ofa superannuation fund shall be made in writing by the trustees of thefund to the [Assessing] Officer by whom the employer is assessable,and shall be accompanied by a copy of the instrument under whichthe fund is established and by two copies of the rules [and, where thefund has been in existence during any year or years prior to thefinancial year in which the application for approval is made, also twocopies of the accounts of the fund relating to such prior year or years(not being more than three years immediately preceding the year inwhich the said application is made)] for which such accounts havebeen made up, but the [Chief Commissioner or Commissioner] mayrequire such further information to be supplied as he thinks proper. (2) If any alteration in the rules, constitution, objects orconditions of the fund is made at any time after the date of theapplication for approval, the trustees of the fund shall forthwithcommunicate such alteration to the [Assessing] Officer mentioned insub-rule (1), and in default of such communication any approvalgiven shall, unless the [Chief Commissioner or Commissioner]otherwise orders, be deemed to have been withdrawn from the dateon which the alteration took effect. Contributions by employer when deemed to be income of employer.5. Where any contributions by an employer (including the interestthereon, if any) are repaid to the employer, the amount so repaid shallbe deemed for the purpose of income-tax [***] to be the income of theemployer of the previous year in which it is so repaid. Deduction of tax on contributions paid to an employee. 6. Where any contributions made by an employer, includinginterest on contributions, if any, are paid to an employee during hislifetime [in circumstances other than those referred to in clause (13) ofsection 10], [tax] on the amounts so paid shall be deducted at theaverage rate of [tax] at which the employee was liable to [tax] during thepreceding three years or during the period, if less than three years,when he was a member of the fund, and shall be paid by the trustees tothe credit of the Central Government within the prescribed time and insuch manner as the Board may direct. Deduction from pay of and contributions on behalf of employee tobe included in return. 7. Where an employer deducts from the emoluments paid to anemployee or pays on his behalf any contributions of that employee to anapproved superannuation fund, he shall include all such deductions orpayments in the return which he is required to furnish under [***]section 206. Appeals. 8. (1) An employer objecting to an order of the [Chief Commissioner orCommissioner] refusing to accord approval to a superannuation fund oran order withdrawing such approval may appeal, within sixty daysof such order, to the Board. (2) The appeal shall be in such form and shall be verified in suchmanner and shall be subject to the payment of such fee as may beprescribed. Liability of trustees on cessation of approval. 9. If a fund or a part of a fund for any reason ceases to be anapproved superannuation fund, the trustees of the fund shallnevertheless remain liable to tax on any sum paid on account ofreturned contributions (including interest on contributions, if any), in so far as the sum so paid is in respect of contributions made before thefund or part of the fund ceased to be an approved superannuation fundunder the provisions of this Part. Particulars to be furnished in respect of superannuation funds. (2) The appeal shall be in such form and shall be verified in suchmanner and shall be subject to the payment of such fee as may beprescribed. Liability of trustees on cessation of approval. 9. If a fund or a part of a fund for any reason ceases to be anapproved superannuation fund, the trustees of the fund shallnevertheless remain liable to tax on any sum paid on account ofreturned contributions (including interest on contributions, if any), in so far as the sum so paid is in respect of contributions made before thefund or part of the fund ceased to be an approved superannuation fundunder the provisions of this Part. Particulars to be furnished in respect of superannuation funds. 10. The trustees of an approved superannuation fund and anyemployer who contributes to an approved superannuation fund shall,when required by notice from the [Assessing] Officer, within suchperiod, not being less than twenty-one days from the date of the notice,as may be specified in the notice, furnish such return, statement,particulars or information, as the [Assessing] Officer may require. Provisions relating to rules. 11. (1) In addition to any power conferred by this Part, the Board maymake rules- (a) prescribing the statements and other information to besubmitted along with an application for approval;submitted along with an application for approval; (b) prescribing the returns, statements, particulars, orinformation which the [Assessing] Officer may require from thetrustees of an approved superannuation fund or from theemployer;information which the [Assessing] Officer may require from thetrustees of an approved superannuation fund or from theemployer; (c) limiting the ordinary annual contribution and any othercontributions to an approved superannuation fund by anemployer;contributions to an approved superannuation fund by anemployer; [(cc) regulating the investment or deposit of the moneys of anapproved superannuation fund:approved superannuation fund: Provided that no rule made under this clause shall requirethe investment of more than fifty per cent of the moneys ofsuch fund in Government securities as defined in section 2 ofthe Public Debt Act, 1944 (18 of 1944);] (d) providing for the assessment by way of penalty of anyconsideration received by an employee for an assignment of,or creation of a charge upon, his beneficial interest in anapproved superannuation fund;consideration received by an employee for an assignment of,or creation of a charge upon, his beneficial interest in anapproved superannuation fund; (e) determining the extent to, and the manner in, whichexemption from payment of [tax] may be granted in respect ofany payment made from a superannuation fund from whichapproval has been withdrawn;exemption from payment of [tax] may be granted in respect ofany payment made from a superannuation fund from whichapproval has been withdrawn; (f) providing for the withdrawal of approval in the case of a fundwhich ceases to satisfy the requirements of this Part or of therules made thereunder; andwhich ceases to satisfy the requirements of this Part or of therules made thereunder; and (g) generally, to carry out the purposes of this Part and to securesuch further control over the approval of the superannuationfunds and the administration of approved superannuationfunds as it may deem requisite.such further control over the approval of the superannuationfunds and the administration of approved superannuationfunds as it may deem requisite. (2) All rules made under this Part shall be subject to the provisionsof section 296.” (f) providing for the withdrawal of approval in the case of a fundwhich ceases to satisfy the requirements of this Part or of therules made thereunder; andwhich ceases to satisfy the requirements of this Part or of therules made thereunder; and (g) generally, to carry out the purposes of this Part and to securesuch further control over the approval of the superannuationfunds and the administration of approved superannuationfunds as it may deem requisite.such further control over the approval of the superannuationfunds and the administration of approved superannuationfunds as it may deem requisite. (2) All rules made under this Part shall be subject to the provisionsof section 296.” 16.Perusal of the assessment order and more particularly the relevant portionafore-quoted, leaves no manner of doubt that the assessing officer hasdenied exemption to the assessee fund on the finding that “the Fundlooses its recognition. Hence exemption u/s 10(25)(iii) claimed by theFund is rejected.” The CIT (A) well considered the relevant provisions ofthe Rules and recorded a finding with reference to the statutory provisionthat the powers conferred under the Rules upon the Chief Commissioner orCommissioner cannot be exercised by any authority below the rank of theChief Commissioner or Commissioner. It was further observed that the Rule provides that the Chief Commissioner or Commissioner may withdrawthe approval with reasons for such withdrawal and also the date on whichthe withdrawal has taken effect. Refusal or withdrawal of approval has tobe made only after reasonable opportunity of being heard in the matter hasbeen given to the Trustee by the Chief Commissioner or Commissioner.The CIT (A) in paragraph 5.3.1 of its order has also considered the provisionof Rule 4(2) – deemed withdrawal, and held that the deemed withdrawal issubject to the order of the Chief Commissioner or Commissioner and notautomatic at the end of the assessing officer. He also found that there is noprovision empowering the assessing officer to withdraw or undo anapproval accorded by a superior authority. 17.We find that the findings recorded by the CIT (A), based on relevantprovisions of the Rules, were neither considered nor set aside by the ITAT.By the impugned order, the ITAT has set aside the order of the CIT (A), onthe ground that since the assessee has failed to comply with the conditionslaid down by the CIT for claiming deduction under Section 10(25)(iii) of theAct 1961, therefore, the assessing officer was justified in denying suchexemption to the assessee. We find that the conclusion reached by theTribunal is totally erroneous, contrary to the statutory provisions and thesettled position of law. The Tribunal being a creation of statue is bound bythe statutory provisions and it cannot travel beyond it so as to upholdwithdrawal of approval by the Assessing Officer who has not been conferredpower to stop continuance of approval and consequently deny exemption 18.Section 10(25)(iii) of the Act 1961 provides for exemption of any incomereceived by the Trustee on behalf of an approved superannuation fund.Approval is granted in accordance with the provisions of the Rules afore-quoted. Rule 2(1) confers power upon the Chief Commissioner orCommissioner of Income Tax to withdraw such approval, if, in his opinion,the circumstance of the fund or part ceases to warrant continuance of theapproval. It is an admitted fact of the case that the approval of theassessee fund granted by the competent authority i.e. Commissioner ofIncome Tax vide order dated 29.09.1995 has continued for the assessmentyear in question i.e. AY 2005-06 and it has neither been withdrawn norcancelled.received by the Trustee on behalf of an approved superannuation fund.Approval is granted in accordance with the provisions of the Rules afore-quoted. Rule 2(1) confers power upon the Chief Commissioner orCommissioner of Income Tax to withdraw such approval, if, in his opinion,the circumstance of the fund or part ceases to warrant continuance of theapproval. It is an admitted fact of the case that the approval of theassessee fund granted by the competent authority i.e. Commissioner ofIncome Tax vide order dated 29.09.1995 has continued for the assessmentyear in question i.e. AY 2005-06 and it has neither been withdrawn norcancelled. 19.No power has been conferred upon the assessing officer under the Rules tohold that the fund looses its recognition to deny exemption under Section10(25)(iii) of the Act 1961 claimed by the assessee. Even the order ofwithdrawal of exemption has been made appealable under Rule 8 of theRules, which goes to show that the power conferred upon the ChiefCommissioner or Commissioner of Income Tax for withdrawal of exemptionunder Rule 4(2) of the Rules is a quasi judicial function. Undisputedly, theapproval granted to the appellant/assessee has not been withdrawn orcancelled. Therefore, the assessing officer cannot look behind the approvaland cannot hold that the approval looses its effect on account of allegednon-submission of certain financial statements by the assessee.hold that the fund looses its recognition to deny exemption under Section10(25)(iii) of the Act 1961 claimed by the assessee. Even the order ofwithdrawal of exemption has been made appealable under Rule 8 of theRules, which goes to show that the power conferred upon the ChiefCommissioner or Commissioner of Income Tax for withdrawal of exemptionunder Rule 4(2) of the Rules is a quasi judicial function. Undisputedly, theapproval granted to the appellant/assessee has not been withdrawn orcancelled. Therefore, the assessing officer cannot look behind the approvaland cannot hold that the approval looses its effect on account of allegednon-submission of certain financial statements by the assessee. 20.The question whether the Tribunal erred in law in holding that the assesseeis not entitled to exemption under Section 10(25)(iii) of the Act 1961 in theabsence of withdrawal of the order approving the fund of the assessee,stands answered from bare perusal of the provisions of the Rules afore-quoted and Section 10(25)(iii) of the Act 1961. Section 10(25)(iii) of the Act1961 clearly mandates that any income received by the Trustees on behalfof an approved superannuation fund shall not be included in computingthe total income of a previous year of any person. The approval has beengranted under the Rules afore-quoted. It is admitted case of therespondents that the approval continued during the assessment year inquestion. No power has been conferred upon the assessing officer tointerfere with the order of approval granted by the Chief Commissioner orCommissioner of Income Tax. Therefore, the assessment order as upheldby the ITAT, holding that the fund loses its recognition and henceexemption under Section 10(25)(iii) of the Act 1961 claimed by the Fund isrejected; is without jurisdiction. 21.In Gestetner Duplicators Pvt. Ltd. (supra) the Hon’ble Supreme Courtconsidered the question as to whether the Tribunal was right in holdingthat the provident fund maintained by the assessee satisfies the conditionslaid down in Rule 4(c) of the Fourth Schedule to Part-A of the Income TaxAct, 1961. The question was answered by the Hon’ble Supreme Court asunder :considered the question as to whether the Tribunal was right in holdingthat the provident fund maintained by the assessee satisfies the conditionslaid down in Rule 4(c) of the Fourth Schedule to Part-A of the Income TaxAct, 1961. The question was answered by the Hon’ble Supreme Court asunder : “12. Dealing next with the second question it seems to usclear that having regard to our view on the proper construction ofthe expression ‘salary’ occurring in Rule 2(h) of Part A of theFourth Schedule to the Act it must be held that the Tribunal wasright in holding that the Provident Fund maintained by theassessee satisfied the condition laid down in Rule 4(c) of Part A ofthe Fourth Schedule and that question also must be answered infavour of the assessee and against the Revenue. However, wewould like to make some observations with regard to the trueimpact of the recognition granted by the Commissioner of IncomeTax to a Provident Fund maintained by an assessee. The facts inthe present case that need be stressed in this behalf are that it wasas far back as 1937 that the Commissioner of Income Tax hadgranted recognition to the Provident Fund maintained by theassessee under the relevant rules under 1922 Act, that suchrecognition had been granted after the true nature of thecommission payable by the assessee to its salesmen under theircontracts of employment had been brought to the notice of theCommissioner and that said recognition had continued to remainin operation during the relevant assessment years in question; thelast fact in particular clearly implied that the Provident fund of theassessee did satisfy all the condition laid down in Rule 4 of Part Aof the Fourth Schedule to the Act even during the relevantassessm4ent years. In that situation we do not think that it wasopen to the taxing authorities to question the recognition in any ofthe relevant years on the ground that the assessee’s ProvidentFund did not satisfy any particular condition mentioned in Rule 4.It would be conducive to judicial discipline and themaintaining of certainty and uniformity in administering thelaw that the taxing authorities should proceed on the basisthat the recognition granted and available for any particular assessment year implies that the Provident Fund satisfies allthe conditions under Rule 4 of Part A of the Fourth Scheduleto the Act and not sit in judgment over it. There is amplepower conferred upon the Commissioner under Rule 3 of PartA of the Fourth Schedule to withdraw at any time therecognition already granted if, in his opinion, the ProvidentFund contravenes any of the conditions required to besatisfied for its recognition and if during assessmentproceedings for any particular assessment year the taxingauthority finds that the Provident Fund maintained by anassessee has contravened any of the conditions of recognitionhe may refer the question of withdrawal of recognition to theCommissioner but until the Commissioner acting under thepowers reserved to him withdraws such recognition the taxingauthority must proceed on the basis that the Provident Fundhas satisfied all the requisite conditions for its recognition forthat year, any other course is bound to result in chaos anduncertainty which has to be avoided.” 21. In Industrial Infrastructure Development Corporation (Gwalior) MadhyaPradesh Limited (supra) the Hon’ble Supreme Court again considered thepower to cancel/withdraw/recall the registration certificate under Section12A of the Act of 1961 by an authority who has not been conferred withsuch power and held as under: “17. In our considered opinion, the CIT had no express 21. In Industrial Infrastructure Development Corporation (Gwalior) MadhyaPradesh Limited (supra) the Hon’ble Supreme Court again considered thepower to cancel/withdraw/recall the registration certificate under Section12A of the Act of 1961 by an authority who has not been conferred withsuch power and held as under: “17. In our considered opinion, the CIT had no express power of cancellation of the registration certificate oncegranted by him to the assessee under Section 12-A till 1-10-2004. It is for the reasons that, first, there was no expressgranted by him to the assessee under Section 12-A till 1-10-2004. It is for the reasons that, first, there was no express provision in the Act vesting the CIT with the power to cancel theregistration certificate granted under Section 12-A of the Act,Second the order passed under Section 12-A by the CIT is aquasi-judicial order and being quasi-judicial in nature, it couldbe withdrawn/recalled by the CIT only when there was expresspower vested in him under the Act to do so. In this case therewas no such express power. 18. Indeed, the functions exercisable by the CIT under Section12-A are neither legislative and nor executive but as mentionedabove they are essentially quasi-judicial in nature. 19. Third, an order of the CIT passed under Section 12-A doesnot fall in the category of “orders” mentioned in Section 21 of theGeneral Clauses Act. The expression “order” employed in Section21 would show that such “order” must be in the nature of a“notification”, “rules” and “bye laws”, etc. [See Indian NationalCongress (I) v. Institute of Social Welfare.] 20. In other words, the order, which can be modified orrescinded by applying Section 21, has to be either executive orlegislative in nature whereas the order, which the CIT is required topass under Section 12-A of the Act, is neither legislative nor anexecutive order but it is a “quasi-judicial order.” It is for thisreason, Section 21 has no application in this case.” 22. Learned counsel for the respondent has heavily relied upon the judgment ofKarnataka High Court in the case of Commissioner of Income Tax,Mangalore vs. M/s. Manipal Academy of Higher Education. We find thatthe judgment relied by the learned counsel for the respondent is of no help to the respondents, rather it is against them. Relevant portion of theaforesaid judgment is reproduced below: 20. In other words, the order, which can be modified orrescinded by applying Section 21, has to be either executive orlegislative in nature whereas the order, which the CIT is required topass under Section 12-A of the Act, is neither legislative nor anexecutive order but it is a “quasi-judicial order.” It is for thisreason, Section 21 has no application in this case.” 22. Learned counsel for the respondent has heavily relied upon the judgment ofKarnataka High Court in the case of Commissioner of Income Tax,Mangalore vs. M/s. Manipal Academy of Higher Education. We find thatthe judgment relied by the learned counsel for the respondent is of no help to the respondents, rather it is against them. Relevant portion of theaforesaid judgment is reproduced below: “11. A reading of the aforesaid provisions makes it very clearthat if an assessee invests its funds in immovable property asaforesaid and satisfies one of the requirements of law, then he isentitled to the exemption as per the notification issued. Whetherthe assessee has complied with the conditions stipulated inthe exemption order, before it could claim exemption is amatter, which has to be investigated by the AssessingAuthority. It is only on the Assessee satisfying the conditionsstipulated in the exemption order, it would be entitled toexemption. In the event there is a violation of the terms andconditions of the exemption order, the Assessing Authoritywould be justified in not extending the benefit of exemptionbut at the same time the Assessing Authority cannot ignorethe order of exemption. Therefore, on enquiry if he is satisfiedthat the assessee is not entitled to exemption as he hasviolated the terms and conditions of exemption order, he hasto bring the said fact to the notice of the prescribed authority.Thereafter, the prescribed authority is under an obligation toissue a show cause notice to the assessee to show-cause, whythe order of exemption should not be rescinded. After hearingthe assessee, if the prescribed authority decides to rescind theexemption granted, they are at liberty to pass such an orderand a copy of the said order is to be communicated both to theassessee as well as the Assessing Authority. It is on receipt ofsuch an order rescinding the exemption order, the AssessingAuthority could proceed to assess the assessee and raise ademand for payment of tax. This is the procedure prescribedund