DCIT, CIRCLE-7(1), DELHI, DELHI V. EXL SERVICE. COM (INDIA) PRIVATE LIMITED, DELHI

ITA 4625/DEL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the Commissioner of Income Tax (Appeals), which had deleted certain disallowances made under section 43B of the Income Tax Act, 1961. The disallowances pertained to amounts related to gratuity, bonus, and leave encashment which were claimed by EXL Service.Com (India) Pvt. Ltd. The CIT(A) had accepted the assessee's contention that these payments were made before the filing of the return, based on bank statements and other documents. The Revenue challenged this decision, arguing that the AO was not given an opportunity to verify these claims. The Tribunal agreed that the AO should verify the actual dates of payments and remanded the case back to the AO for this purpose.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 474644 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-03-2025
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2018-2019
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: SURENDER PAL
• Assessee Lawyers: DHRUV SETH
• Section: 250; 143(1); 43B

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘B’: NEW DELHI BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI MANISH AGARWAL, ACCOUNTANT MEMBER ITA No.4625/Del/2024 (ASSESSMENT YEAR 2018-19) DCIT, Circle-7(1), Delhi. Vs. EXL Service.Com (India) Private Limited, 414, Fourth Floor, DLF Jasola, Tower-B Plot No.10 and 11, South East Delhi, Delhi. PAN: AAACE5174C (Appellant) (Respondent) Assessee by Shri Dhruv Seth, Adv. Department by Shri Surender Pal, CIT-DR Date of Hearing 19/03/2025 Date of Pronouncement 26/03/2025 O R D E R PER MANISH AGARWAL, AM: This appeal is filed by the Revenue against the order of ld. Commissioner of Income Tax (Appeals), Addl./JCIT(A) -12 Mumbai [in short “Ld. CIT(A)], vide order u/s 250 of the Income Tax Act, 1961 (in short “The Act”) dated 02.08.2024 in appeal No. CIT(A) Delhi- 22/10498/2019-20 for the Assessment Year 2018-19. 2. Brief facts of the case are that in the instant case the CPC passed an order u/s 143(1) of the Act on 21/02/2020 making certin 2 ITA No.4625 /Del/2024 DCIT vs. EXL Service.Com (India) Pvt. Ltd. adjustments to the income declared by the assessee. Against the said intimation order, an appeal was filed by the assessee which was decided by the Addl./JCIT (Appeals) – 12, Mumbai National Faceless Appeals Centre on 13.08.2023 wherein substantial relief was allowed. 3. Aggrieved by the said order of Addl./JCIT (Appeals)-12, Mumbai, revenue is in appeal before the Tribunal by taking following grounds of appeal: “1. Ld. CIT(A) has erred in deleting the addition of Rs. 13,77,80,885/- made on account of amount mismatch in respect of amount disallowed u/s 43B of the Act in any preceding year but allowable during the Previous Year. 2. The appellant craves leave to add, alter or amend any/all of the grounds of appeal before or during the course of the hearing of the appeal.” 4. Before us, ld. CIT DR argued that from the perusal of the order of ld. CIT(A) it could be seen that ld. CIT(A) has deleted the disallowances made u/s 43B on the basis of the information and explanation made by the assessee which also include the copies of the bank statements indicating the payment of gratuity of Rs.7,99,98,857/- made before the filing of the return of income. The ld. CIT(A) also accepted the contention of the assessee that the gross amount disallowed by CPC also include the bonus and leave encashment amounting to Rs. 4,62,63,996/- and Rs. 1,15,48,892/- respectively, which were incurred during the year and paid to its employees before filing the ITR however, these facts were not confronted to the assessing officer. He thus prayed that in the interest of justice, the matter may be sent back to the file of the AO for making verification of the fact that the payments were made before of the filing 3 ITA No.4625 /Del/2024 DCIT vs. EXL Service.Com (India) Pvt. Ltd. of return in respect of all the expenses claimed such as bonus, leave encashment and Gratuity as no opportunity was provided by ld. CIT(A) to the AO before accepting the contention of the assessee. 5. On the other hand, ld.AR stated that ld. CIT(A) has coterminous power and had duly verified the date of payments which all were falling before the filing of return of income. He thus prayed for the confirmation of the appellate order. 6. We have considered the submissions of both the parties. After careful consideration of the facts, we find that the ld. CIT(A) has deleted the disallowance on the basis of the submission of the assessee without referring the same to the AO for his comments on merits. Once, any material is submitted before ld. CIT(A) which requires verification on the part of the AO, it is incumbent on the part of the CIT(A) to refer the said material to the AO for his comments. In the instant case this has not been done by the ld. CIT(A). Apparently the contention of the assessee seems to be correct however, the fact remains that the date of payments of bonus, leave encashment and gratuity needs to be examined by the AO. Accordingly, we remand the case back to the file of the AO with the direction of making verification of the actual date of payments and if the same found to be paid on or before the due date of filing of return of income or actual date of filing of return of income, whichever is earlier, no disallowance is required to be made u/s 43B of the Act. With these directions, ground of appeal of the revenue is partly allowed for statistical purposes. 4 ITA No.4625 /Del/2024 DCIT vs. EXL Service.Com (India) Pvt. Ltd. 7. In the result, appeal of the Revenue is partly allowed for statistical purposes. Order pronounced on 26.03.2025. Sd/- Sd/- (MAHAVIR SINGH) (MANISH AGARWAL) VICE PRESIDENT ACCOUNTANT MEMBER Dated: 26/03/2025 PK/Ps Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI "