Commissioner of Income Tax vs J and J Dechane Labs (P.) Ltd.

T.N.C. Rangarajan, J.—The Appellate Tribunal has referred the following question for the opinion of this court :

"Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in holding that Part A of the Fourth Schedule of the Income Tax Act, 1961, and rule 75 of the Income Tax Rules do not apply to the contributions made under a scheme framed under the Employees'' Provident Funds Act, 1952 ?"

In computing the income of the previous year relevant to the assessment years 1978-79 to 1980-81, the Income Tax Officer disallowed the contribution made by the assessee to the provident fund of its managing director on the ground that it was not a recognised provident fund. On appeal, this disallowance was confirmed. On further appeal, the Appellate Tribunal found that the provident fund is established under a statutory scheme and, therefore, no further recognition by the Commissioner was necessary under Schedule IV to the Act for the purpose of allowing deduction u/s 40A(5) of the Act. It is not in dispute that the provident fund was actually established under a statute. In the present case, the conclusion of the Tribunal that further recognition under the Income Tax Act was not required for allowing the contribution made to the said provident fund is obviously correct. In the circumstances, we answer the question in the affirmative, i.e., against the Revenue and in favour of the assessee.