THE PUNJAB STATE CO-OPERATIVE BANK EMPLOYEES PENSION FUND TRUST,CHANDIGARH vs. DCIT, CHANDIGARH
In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that it is the purpose of the fund, not the individual fund, that needs to be notified in the Official Gazette. It also noted that the proposed transfer of corpus funds to LIC was not implemented and subsequent approvals were granted.
What were the facts?
The assessee established a pension fund for its employees, which was approved under Section 10(23AAA) of the Income-tax Act. The Assessing Officer denied exemption, citing lack of official gazette notification and amendments to the pension scheme regarding corpus fund transfer.
What were the issues?
Whether the fund was eligible for exemption under Section 10(23AAA) despite not being individually notified in the gazette and whether amendments to the pension scheme invalidated the exemption.
Which sections of the Income-tax Act were involved?
Section 10(23AAA),Section 11
AI-generated summary — verify with the full judgment below
आदेश/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 2.11.2016 of the Commissioner of Income Tax (A)-2, Chandigarh [hereinafter referred to as ‘CIT(A)’] agitating the confirmation of the addition made by the Assessing officer denying the benefit of approval of exemption from income tax of the funds established by the assessee as per the provisions of section 10(23AAA) of the Income- tax Act, 1961 (in short 'the Act').
ITA No. 183/Chd/2017- The Punjab State Cooperative Bank Employees Pension Fund Trust, Chandigarh 2
The brief facts relating to the issue under consideration are that the
assessee established a fund for the benefit of pension to its employees. The
fund was approved u/s 10(23AAA) of the Act by the Principal
Commissioner of Income Tax (PCIT) vide order dated 4.1.2013 for the
purpose of exemption u/s 11 of the I.T. Act from Income tax. However,
the Assessing officer denied the exemption to the assessee observing that
assessee / fund was not duly notified in the official gazette by the CBDT
for the said purpose and further that the assessee had made certain
amendments in its pension scheme, whereby, it decided to transfer the
corpus funds to LIC. The AO observed that the said amendment in the
pension scheme was not in accordance with the objects earlier mentioned
in the trust deed /pension scheme. Further, that in Form No.10 submitted,
the assessee had not mentioned the purpose of accumulation of the funds.
He, therefore, denied the exemption to the assessee.
The assessee unsuccessfully contested the matter before the CIT(A).
We have heard the rival contentions and have also gone through the
provisions of section 10(23AAA) of the Act. So far as the first objection
of the Assessing officer that the assessee / funds had not been notified in
the official gazette of India, in our view, the said objection or contention
of the Revenue is not tenable. The relevant provisions of section 10
(23AAA) of the Act are reproduced as under:- “23. Incomes not included in total income …… (23AAA) any income received by any person on behalf of a fund established, for such purposes as may be notified by the Board in the Official Gazette, for the welfare of employees or their dependants and of which fund such employees are members if such fund fulfils the following conditions, namely :—
ITA No. 183/Chd/2017- The Punjab State Cooperative Bank Employees Pension Fund Trust, Chandigarh 3
(a) the fund— (i) applies its income or accumulates it for application, wholly and exclusively to the objects for which it is established; and (ii) invests its funds and contributions and other sums received by it in the forms or modes specified in sub- section (5) of section 11; (b) the fund is approved by the Principal Commissioner or Commissioner in accordance with the rules made in this behalf: Provided that any such approval shall at any one time have effect for such assessment year or years not exceeding three assessment years as may be specified in the order of approval;
A perusal of the above provisions reveal that it is not the individual
assessee / applicant, rather, the purpose for which fund can be established,
has to be notified by the Central Government. The Ld. Counsel for the
assessee has brought our attention to the page 15 of the paper book which
is copy of the Notification No. S.O. 672(E) dated 27.7.1995, whereby,
Central Government has notified the purposes for which fund can be
established as per the provisions of section 10(23AAA) of the Act. The
above provisions of section 10(23AAA) of the Act read with the
notification issued by the Central government (supra) reveals beyond doubt
that it is not the assessee but the purposes which are required to be notified
and which, otherwise, have been duly notified vide aforesaid notification
bearing S.O. 672(E)(F No. 142/16/95-TPL) and 33/2011 dated 27.7.1995.
So far as the observation that the assessee had changed its objects, Ld.
Counsel for the assessee has submitted that the objects of the assessee have
not been changed and only it was decided that the corpus funds be
transferred to the LIC for the purpose of implementation of the scheme.
However, the contributors / employees did not agree with the same and the
said change has never been implemented. The Ld. Counsel has further
ITA No. 183/Chd/2017- The Punjab State Cooperative Bank Employees Pension Fund Trust, Chandigarh 4
submitted that even the decision to transfer of the corpus fund to the LIC
was as per the statutory provisions and no illegality was committed by the
assessee even otherwise, in this respect. However, as on today, the funds
have not been transferred to LIC. The Ld. counsel has further invited our
attention to the approval issued to the fund by the PCIT for subsequent
assessment years 2014-15 and 2015-16, which showed that the fund
continued to subsist for the subsequent years and the PCIT after
examining the relevant provisions has further granted the approval to the
assessee. So far as the contention that the assessee was supposed to
declare the purpose of accumulation of funds in form No.10 is concerned,
the Ld. Counsel for the assessee has submitted that, in fact, the assessee
was not required to file the form No.10 itself. That even otherwise the
purpose of accumulation was specifically mentioned in the approval letter
issued by the PCIT that the fund obviously, was for pension scheme of the
employees.
In view of this, we do not find any justification for the lower
authorities in making the impugned additions for the year under
consideration. The orders of the lower authorities are set aside and the
Assessing officer is directed to grant the exemption to the assessee in
respect of the fund established under the pension scheme as per the
relevant provisions of seciton10(23AAA) of the I.T. Act.
In the result, the appeal of the assessee is hereby allowed.
Order pronounced in the Open Court on 05.10.2018
Sd/- Sd/- अ�नपूणा� गु�ता संजय गग� (ANNAPURNA GUPTA) (SANJAY GARG ) लेखा सद�य/ Accountant Member �या�यक सद�य/ Judicial Member Dated : 05.10. 2018 Rkk
ITA No. 183/Chd/2017- The Punjab State Cooperative Bank Employees Pension Fund Trust, Chandigarh 5
आदेश क� ��त�ल�प अ�े�षत/ Copy of the order forwarded to : 1. अपीलाथ�/ The Appellant 2. ��यथ�/ The Respondent 3. आयकर आयु�त/ CIT 4. आयकर आयु�त (अपील)/ The CIT(A) 5. �वभागीय ��त�न�ध, आयकर अपील�य आ�धकरण, च�डीगढ़/ DR, ITAT, CHANDIGARH 6. गाड� फाईल/ Guard File
आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar
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