PCIT-1 Vs Exide Industries Limited (Calcutta High Court)
The Calcutta High Court decided a Revenue appeal filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, Kolkata, relating to Assessment Year 2004-05. The substantial question of law concerned whether an ad hoc or lump sum interim contribution to an approved pension fund was eligible for deduction where the Act permits deduction of initial and annual contributions.
The dispute related to the disallowance of Rs. 9,14,70,000 contributed by the assessee to an approved superannuation fund. The Assessing Officer disallowed the deduction on the ground that deduction for contributions to a superannuation fund is governed by Section 36(1)(iv) of the Income Tax Act read with Rule 87 and Rule 88 of the Income Tax Rules, 1962, which prescribe limits for ordinary annual contributions and initial contributions.
The assessee contended before the Commissioner of Income Tax (Appeals) that Rule 87 governs ordinary annual contributions while Rule 88 governs initial contributions in respect of past services. According to the assessee, the impugned lump sum contribution was neither an ordinary annual contribution nor an initial contribution and, therefore, the limits prescribed under Rules 87 and 88 were inapplicable. The Commissioner of Income Tax (Appeals) rejected the contention and dismissed the appeal.
