IN THE HIGH COURT AT CALCUTTA SPECIAL JURISDICTION (Income Tax) (Original Side) Coram: THE HON’BLE JUSTICE RAJARSHI BHARADWAJ, And THE HON’BLE JUSTICE UDAY KUMAR Reserved on : 07.08.2026. Pronounced on : 21.08.2026 ITA 50 of 2026 With GA 2 of 2026 Principal Commissioner of Income Tax 5 Kolkata …Appellant -VS- Syama Prasad Mookherjee Port Kolkata. ….Respondent Present:- Mr. Soumen Bhattacharjee, Adv. Ms. Shardhya Ghosh, Adv. …for the appellant Mr. Arvind P Datar, Sr. Adv. Mr. Sriram Venkatavaradan, Adv. Mr. Rabindra Kumar Mitra, Adv. Mr. Tamogna Saha, Adv. ….. for the Respondent Rajarshi Bharadwaj, J: 1. The appellant has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), challenging the order dated November 18, 2024 passed by the Learned Income Tax Appellate Tribunal (ITAT), Kolkata Bench “B”, for the assessment year AY 2021-22, on the substantial questions of law formulated at the time of admission. 2. The facts in a nutshell are that the assessee-respondent, formerly known as the Kolkata Port Trust (KoPT), is an Artificial Juridical Person with a history ITA 50 of 2026 -2- of providing essential port services for nearly 150 years since its establishment in the year 1870. For the Assessment Year (AY) 2021-22, the assessee filed its return of income on March 11, 2022, declaring a total income of Rs.212,86,43,210/-. This return was initially processed under the provisions of Section 143(1) of the Income-tax Act, 1961. Subsequently, the case was selected for scrutiny under the Computer Assisted Scrutiny Selection (CASS) system, leading to the issuance of a notice under Section 143(2) of the Act on June 29, 2021. The assessment was completed by the Assessing Officer (AO) under Section 143(3) read with Section 144C of the Act through an assessment order dated December 23, 2022. In the said assessment order, the AO determined the total assessed income to be Rs.861,71,07,384/- after making a substantial disallowance on account of the assessee's contribution to the approved Superannuation Fund under Section 37 read with Section 43B of the Act, amounting to Rs. 648,84,64,174/-. 3. Being aggrieved by this disallowance, the assessee-respondent preferred an appeal before the Learned Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC). The Ld. CIT(A) allowed the assessee's appeal and deleted the contested addition of Rs.648,84,64,174/- on account of contributions to the Superannuation Fund by placing reliance on various case laws. Dissatisfied with the decision of the Ld. CIT(A), the revenue preferred a second appeal before the Learned Income Tax Appellate Tribunal (ITAT), Kolkata Bench. While the Department's grounds before the ITAT erroneously referenced a contribution of Rs.208,86,57,648/-, the appeal was substantively directed against the CIT(A)'s deletion of the actuarial deficit funding for the Superannuation Fund. 4. The ITAT, following the legal principles established by the Hon’ble Calcutta High Court in the cases of PCIT v. Exide Industries Ltd (2023) and Eastern Equipment Sales Ltd. or CIT v. Eastern Equipment & Sales Limited reported in 71 taxmann.com 226(Cal), confirmed the decision of the Ld. CIT(A) and deleted the additions. Regarding the superannuation and gratuity ITA 50 of 2026 -3- funds, the ITAT observed that the remitted amounts were intended to bridge the gap between actual contributions and actuarial valuations. The Tribunal held that such payments were neither initial contributions nor ordinary annual contributions, meaning the ceilings fixed under the respective rules did not apply. The revenue, thereafter, approached this Court under Section 260A of the Act, asserting that the ITAT was not justified in deleting the aforementioned disallowances. 5. Learned counsel appearing for the appellant raises the issue on the following substantial questions of law that have been admitted: i. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in upholding the order of the Ld. CIT(Appeals), NFAC, Delhi deleting the disallowance of Rs. 648,84,64,174/- made by the A.O. on account of contributions towards Superannuation Fund in excess of limit fixed under Rule 87 by considering it as an exceptional onetime payment and failing to consider that such excess contribution to meet shortfall in fund balance was a regular practice over past several years and as such was rightly considered by the A.O. as regular contribution? ii. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT erred in upholding the order of the Ld. CIT(Appeals), NFAC, Delhi by placing reliance on the decision of the Hon'ble Calcutta High Court in the case of Exide Industries reported in [2023] 146 taxmann.com 21 (Cal) and failing to appreciate that the facts of the instant case are different from that of Exide Industries as in the case of the assessee, the excess contribution to meet shortfall in fund balance was a regular practice over past several years and not a onetime exception? iii. Whether the order of the Learned Tribunal is perverse, arbitrary, and contrary to the provisions of the Income Tax Act, 1961, and deserves to be set aside? ITA 50 of 2026 -4- 6. We have heard the appellant-revenue and Learned Senior Counsel for the respondent-assessee at length. Since the issues involved are pure questions of law, this Court proceed to decide the appeal on merits. 7. The Assessing Officer (AO) disallowed Rs. 648,84,64,174 on account of contributions made to the Superannuation Fund in excess of the 27% ceiling fixed under Rule 87 of the Income-tax Rules, 1962. The assessee submitted that the contribution was necessitated to meet a severe deficit revealed by an actuarial valuation of the Superannuation Fund. For several preceding years, the assessee could not fully fund the required contribution due to a persistent procedural fund crunch. Consequently, the contribution in the financial year 2021-22 was an extraordinary ad hoc interim payment meant to cover both current and past year deficiencies, aligning the fund's assets with its real actuarial liabilities. The CIT(Appeals) and the ITAT correctly held that since these payments were ad hoc interim contributions made specifically to bridge the gap in actuarial valuation, they were neither ordinary annual contributions under Rule 87 nor initial contributions under Rule 88. The ITAT relied on the High Court decision in Exide Industries Ltd. (supra), which established that the statutory ceiling of Rule 87 does not apply to extraordinary contributions made to address actuarial deficits. 8. The revenue argued before this Court that the case of Exide Industries Ltd. (supra) is distinguishable because the assessee's practice of funding shortfalls was a regular, recurring method of operation over past years, rather than an exceptional one-time payment. This Court is unable to accept the revenue's contention. The legal nature of a contribution is defined by its purpose i.e., remedying an actuarial deficit and not by how many years the deficit takes to be fully addressed. A persistent deficit caused by past funding constraints cannot convert ad hoc gap-filling payments into ordinary annual contributions. To superimpose the Rule 87 ceiling on necessary, actuarially-backed funding of an approved fund would compromise the solvency of the fund and is contrary to the scheme of Section 36(1)(iv) of the Act. The ITAT committed no error in upholding ITA 50 of 2026 -5- the deletion of the disallowance. We answer substantial questions of law (1) and (2) in negative, i.e., against the appellant revenue and in favour of the respondent assessee. The deletion of the disallowance of Rs.648,84,64,174/- is hereby upheld. 9. Regarding the overall validity of the ITAT order, herein being question no.3, while the revenue disputes the findings on superannuation and gratuity, the order itself is not perverse or arbitrary in a legal sense. The ITAT reached its conclusions by placing reliance on jurisdictional high court precedents, such as Exide Industries (supra) and Eastern Equipment & Sales Ltd (supra).While the application of those precedents to the specific facts of the superannuation and gratuity issues may be contested, the ITAT’s reliance on existing judicial interpretations ensures the order remains a reasoned legal document rather than an arbitrary one. We answer substantial question (3) in the negative, i.e., against the revenue and in favour of the assessee. 10. The findings of the Tribunal concerning the superannuation fund contributions and the overall non-perversity of the order are upheld. Therefore, the appeal filed by the revenue against the impugned order dated November 18, 2024, passed by the Income Tax Appellate Tribunal relating to the Assessment Year 2020-2021 is devoid of any merit. Accordingly, we answer substantial questions (1), (2) and (3) in the negative, i.e., against the revenue and in favour of the assessee. 11. There shall be no order as to costs. 12. Urgent certified copy, if applied for, be supplied upon compliance with requisite formalities. (RAJARSHI BHARADWAJ, J ) (UDAY KUMAR , J) Kolkata 21.08.2026 PA(BS)