THE ISSUE BEFORE THE COURT IS – Whether contribution made by a bank towards Retired Employees Benefit Scheme in view of Section 40A(9) deserves to be allowed, if such payment is not permitted u/s 36 of I-T Act. NO is the verdict.
Facts of the case:
The Revenue preferred the present appeal challenging the order, whereby the ITAT had allowed the contribution made by assessee bank towards the Retired Employees Benefit Scheme in view of the provisions contained u/s 40A(9) of Income Tax Act.
On appeal, the HC held that,
++ it is found that that the very similar question of law as raised in the present appeal was raised by the revenue before this Court in the case of the assessee itself, in the context of the A.Y 2006-07. In the said judgment in CIT v. State Bank of Travancore – 2015-TIOL-1786-HC-KERALA-IT, this Court has observed that: “….Section 40A starts with the non-obstante clause. Prior to its amendment by the Finance Act, 2011, as per sub-section (9) introduced by the Finance Act, 1984, with effect from April 1, 1980, deduction of only payments for the purposes and the extent provided was permitted. The assessee does not have a case that the contribution made by it to the pension fund is payment which is permitted u/s 36. If that be so, in view of section 40A(9), the payment made by the assessee could not have been allowed to be deducted and its disallowance by the AO is perfectly in line with the statutory provisions….”;
++ it is seen that despite the said binding judgment, the counsel for the assessee submitted that in the case of P. Balakrishnan v. Travancore Cochin Chemicals, this Court has already considered the very same issue and that following the aforesaid judgment, the assessee’s own case was decided in their favour, by the Tribunal for the A.Ys 2000-01 to 2005-06. He has also made detailed reference to the order of the Tribunal in I.T.A.861 of 2005 concerning the A.Y 2002-03. However, having regard to the binding precedent in the case of the assessee itself in CIT v. State Bank of Travancore, we are not inclined to place reliance on the judgment relied on by the counsel for the assessee. Accordingly, the question is answered against assessee.
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