PCIT Vs Syama Prasad Mookherjee Port (Calcutta High Court)
Summary: The Calcutta High Court dismissed the Revenue’s appeal under Section 260A of the Income Tax Act, 1961, concerning Assessment Year 2020-21 and upheld the ITAT Kolkata order dated November 18, 2024. The dispute principally concerned disallowance of Rs.564,49,19,729/- towards contribution to the Superannuation Fund.
The assessee, formerly known as the Kolkata Port Trust, filed its return for AY 2020-21 declaring total income of Rs.227,13,00,220/-. The assessment was completed under Section 143(3) read with Section 144B, determining assessed income at Rs.780,81,75,188/-. Among the additions and disallowances made by the Assessing Officer were Rs.564,49,19,729/- towards Superannuation Fund contribution, Rs.1,31,23,083/- towards contribution to Calcutta Port Officers’ Club, Rs.21,13,100/- under Section 14A(2) read with Rule 8D, and Rs.5,35,626/- as deemed profit under Section 41.
The CIT(A), NFAC deleted the disallowances relating to the Superannuation Fund and Calcutta Port Officers’ Club, while confirming the Section 14A and Section 41 additions. The Revenue appealed to the ITAT only against deletion of the Superannuation Fund disallowance. The ITAT followed the principles laid down by the Calcutta High Court in Exide Industries Ltd. and Eastern Equipment & Sales Ltd.
The Assessing Officer had treated the contribution exceeding the 27% ceiling under Rule 87 of the Income-tax Rules, 1962 as disallowable. The assessee contended that the payment was necessitated by a severe actuarial deficit and was an extraordinary ad hoc interim contribution intended to bridge the gap between actual contributions and actuarial liabilities. The CIT(A) and ITAT accepted that the payment was neither an ordinary annual contribution under Rule 87 nor an initial contribution under Rule 88.
