Contribution to Fishermen’s Welfare Fund though held as Unconstitutional, eligible for IT Deduction: Kerala HC [Read Judgment]

Contribution - Taxscan

The Kerala High Court has recently held that the contribution made to the Fishermen’s Welfare Fund is eligible for income tax deduction though the same has been held as unconstitutional by the Supreme Court in Koluthara Exports Ltd. v. State of Kerala and Others.

The question before the division bench comprising Justice K Vinod Chandran and Justice Ashok Menon was that whether the assessee is entitled to the deduction on contributions paid towards Fishermen’s Welfare Fund, which Fund was declared unconstitutional by the judgment of the Supreme Court in Koluthara Exports Ltd. v. State of Kerala and Others.

The Tribunal concluded the issue in favour of the assessee by holding that deduction is available on the contribution made to the Fishermen’s Welfare Fund.

Dismissing the departmental appeal, the bench noted that the Fund itself was declared unconstitutional by a decision of the Honourable Supreme Court.

“We find that the Honourable Supreme Court while declaring the Fund to be unconstitutional also directed that the amount of contributions already paid will not be liable to be refunded to the contributors. In such circumstances, there is no question of a refund to the assessee and as found by the Tribunal, when the contributions were made, there was a valid fund created. The contribution so made to the Fishermen’s Welfare Fund Board having not been refunded as specifically interdicted by the Honourable Supreme Court, the same would also be employed for the welfare of the fishermen,” the bench said.

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