{"id":3631,"date":"2011-09-02T10:31:11","date_gmt":"2011-09-02T05:01:11","guid":{"rendered":"http:\/\/itatonline.org\/archives\/?p=3631"},"modified":"2011-09-02T10:31:11","modified_gmt":"2011-09-02T05:01:11","slug":"maharashtra-state-warehousing-corporation-vs-acit-itat-pune-no-s-40a9-disallowance-for-statutory-corps-as-their-service-regulations-have-force-of-law","status":"publish","type":"post","link":"https:\/\/itatonline.org\/archives\/maharashtra-state-warehousing-corporation-vs-acit-itat-pune-no-s-40a9-disallowance-for-statutory-corps-as-their-service-regulations-have-force-of-law\/","title":{"rendered":"Maharashtra State Warehousing Corporation vs. ACIT (ITAT Pune)"},"content":{"rendered":"\n\n
Click here to download the judgement (MSWC_40A_9_deduction.pdf) <\/strong> <\/a><\/p><\/td>\n<\/tr>\n<\/table>\n


\nNo s. 40A(9) disallowance for statutory corps as their Service Regulations have “force of law<\/em>”
\n<\/strong><\/p>\n

The assessee, a corporation set up under a State Act, made a contribution of Rs. 16.77 lakhs, in its capacity as employer and as per the service regulations<\/em>, to the “MSW Karmachari Welfare Fund”. The AO & CIT (A) took the view that the payment, being to a “fund<\/em>“, was hit by s. 40A (9)<\/em> and not allowable as a deduction. In the appeal to the Tribunal, the assessee claimed that its service regulations had the “force of law”<\/em> and s. 40A (9) did not apply. HELD allowing the appeal:<\/p>\n

S. 40A(9) provides that no deduction shall be allowed in respect of “any sum paid by the assessee as an employer … as contribution to any fund … except where such sum is so paid … as required by or under any other law for the time being in force<\/em>“. In the case of statutory corporations, the regulations providing for the terms and conditions of employment and conditions of service have the force of law<\/strong>. There is no distinction in principle between a person directly under the employment of the Government and a person under the employment of a statutory corporation. Consequently, the service regulations framed by the assessee by which it agreed to make payment to the Fund carried statutory force and fell within the expression \u201cas required by or under any other law<\/em>\u201d<\/strong> for purposes of s. 40A(9). (U. P. Warehousing Corporation<\/strong> 1980 3 SCC 459 followed)<\/p><\/blockquote>\n

\nSee also State Bank of Travancore<\/strong> 124 ITD 332 (Coch), India Pistons<\/strong> 26 ITD 413 (Mad), Bata India<\/strong> 85 ITD 257 (Kol) & Rassi Cement<\/strong> 45 ITD 233 (Hyd) where payments to employee trusts as per “settlements<\/em>” and “standing orders<\/em>” were held allowable.\n<\/div>\n","protected":false},"excerpt":{"rendered":"

S. 40A(9) provides that no deduction shall be allowed in respect of “any sum paid by the assessee as an employer … as contribution to any fund … except where such sum is so paid … as required by or under any other law for the time being in force<\/em>“. In the case of statutory corporations, the regulations providing for the terms and conditions of employment and conditions of service have the force of law<\/strong>. There is no distinction in principle between a person directly under the employment of the Government and a person under the employment of a statutory corporation. Consequently, the service regulations framed by the assessee by which it agreed to make payment to the Fund carried statutory force and fell within the expression \u201cas required by or under any other law<\/em>\u201d<\/strong> for purposes of s. 40A(9). (U. P. Warehousing Corporation<\/strong> 1980 3 SCC 459 followed)<\/p>\n

Read more ›<\/a><\/div>\n

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