I.t.a v. T. Stanes & Company Ltd. [105 Itr 251

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR.JUSTICE ANTONY DOMINIC &THE HONOURABLE MR. JUSTICE SHAJI P.CHALY TUESDAY, THE 21ST DAY OF JULY 2015/30TH ASHADHA, 1937 ITA.No. 73 of 2014 ------------------------- AGAINST THE ORDER IN ITA 381/2013 of I.T.A.TRIBUNAL,COCHIN BENCH DATED 11-10-2013 APPELLANT/RESPONDENT/REVENUE: ---------------------------------------------------- THE COMMISSIONER OF INCOME TAX TRIVANDRUM. BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/APPELLANT/RESPONDENT/ASSESSEE: ------------------------------------------------------------------------ STATE BANK OF TRAVANCORE, HEAD OFFICE, TAX CELL, POOJAPPURA TRIVANDRUM. R. BY ADV. SRI.P.BALAKRISHNAN (E) R. BY ADV. SRI.MOHAN PULIKKAL R. BY ADV. SRI.P.P.NARAYANAN THIS INCOME TAX APPEAL HAVING BEEN FINALLY HEARD ON 21-07-2015, THECOURT ON THE SAME DAY DELIVERED THE FOLLOWING: ITA.No. 73 of 2014 APPENDIX PETITIONER'S ANNEXURES: ANNEXURE A: TRUE COPY OF THE ORDER OF THE ASSESSING OFFICERU/S 143(3) DATED 22.12.2008. ANNEXURE B: TRUE COPY OF THE ORDER OF THE COMMISSIONER OFINCOME TAX (APPEALS) DATED 30.3.2013. ANNEXURE C: TRUE COPY OF THE ORDER OF THE INCOME TAXAPPELLATE TRIBUNAL DATED 11.10.2013. ANNEXURE D: TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGHCOURT DATED 15.12.2009. ANNEXURE E: TRUE COPY OF THE JUDGMENT OF THE HON'BLE HIGHCOURT DATED 30.11.2011. // TRUE COPY // P.A. TO JUDGE ANTONY DOMINIC & SHAJI P. CHALY, JJ. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A.No.73 of 2014 - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 21[st] day of July, 2015 Antony Dominic, J. JUDGMENT This appeal filed by the Revenue is directed against the order passedin ITA 381/13 on the file of the Income Tax Appellate Tribunal, CochinBench. On facts it is seen that during the assessment year 2006-2007, theassessee had contributed Rs.1.5 crores to medical benefit scheme for thebenefit of its retired employees. This amount was disallowed by theAssessing Officer. However, the Commissioner of Income Tax set aside theorder of the Assessing Officer and allowed deduction. Revenue preferredan appeal before the Tribunal which was dismissed by the impugned order.It is accordingly that this appeal is filed and the question of law framed iswhether on the facts and circumstances of the case and also in the light ofSection 40A(9) of the Income Tax Act, the assessee is entitled to claimdeduction of the contribution made by it. 2. We heard the counsel for the appellant and the learned counselappearing for the respondent. : 2 : 3. While the Standing Counsel for the Revenue contended that inthe light of Section 40A(9) of the Act the Tribunal could not haveallowed deduction under Section 37 of the Act, the learned counsel forthe assessee relied not only on Section 37 of the Act but also on thejudgment of the Madras High Court in Commissioner of Income Tax,.Madras II v. T. Stanes & Company Ltd. [105 ITR 251] 4. We have considered the submissions made. Section 37provides that any expenditure (not being expenditure of the naturedescribed in Section 30 to 36 and not being in the nature of capitalexpenditure or personal expenses of the assessee) laid out or expendedwholly or exclusively for the purpose of the business or profession shallbe allowed in computing the income chargeable under the head 'Profitsand gains of business or profession'. It was in the context of thisprovision that the Madras High Court rendered its judgment in T.Stanes& Company Limited (supra). However, Section 40A provide for 'expensesor payments not deductible in certain circumstances', to the extent it isrelevant reads thus: “(1) The provisions of this section shall have effectnotwithstanding anything to the contrary contained in any other provision of this Act relating to the “(1) The provisions of this section shall have effectnotwithstanding anything to the contrary contained in any other provision of this Act relating to the computation of income under the head 'profits and gainsof business or profession'. (9) No deduction shall be allowed in respect of any sumpaid by the assessee as an employer towards the settingup or formation of, or as contribution to, any fund, trust,company, association of persons, body of individuals,society registered under the Societies Registration Act,1860 (21 of 1860), or other institution for any purpose,except where such sum is so paid, for the purposes and tothe extent provided by or under clause (iv) or clause (v) ofsub-section (1) of section 36, or as required by or underany other law for the time being in force.] 5. Section 40A which starts with the non obstante clause. Prior to its amendment by Finance Act 2011, as per sub section (9) introducedby Finance Act, 1984 with effect from 1.4.1980, deduction of onlypayments for the purposes and the extent provided was permitted.Assessee does not have a case that the contribution made by it to thepension fund is payment which is permitted under Section 36. If that beso, in view of Section 40A(9), the payment made by the assessee couldnot have been allowed to be deducted and its disallowance by theAssessing Officer, is perfectly in line with the statutory provisions. Wemay also add that since sub section 9 was added to Section 40A by : 4 : Finance Act, 1984, the judgment of the Madras High Court in T.Stanes &Company Limited (supra) rendered in the context of assessment years1959-1960 to 1964-1965 has no relevance in so far as the case of theassessee is concerned. In such circumstances, answering the question of law in favour ofthe Revenue, this appeal is allowed. Sd/- ANTONY DOMINIC JUDGE jes Sd/- JUDGE SHAJI P. CHALY