M/s. Fasttrack Packers Pvt. Ltd., Sangamner V. Asst. CIT, Central Circle 1(1), Pune

ITA 1043/PUN/2013

• Counselvise Citation: 104324514 RSA 2013
• Duration Of Justice: 1 year(s) 6 month(s) 16 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2007-2008
• Appeal Filed On: 09-05-2013
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: VERMA
• Section: 143(3); 153A; 132

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE MS. SUSHMA CHOWLA, JUDICIAL MEMBER AND SHRI R.K. PANDA, ACCOUNTANT MEMBER ITA NOS.1043 & 1044/PN/2013 (ASSESSMENT YEARS: 2007-08 & 2008-09) M/S. FASTTRACK PACKERS PVT. LTD., 48/A, KASARA DUMALA, AKOLE ROAD, SNAGAMNER 422605 DIST. AHMEDNAGAR. PAN: AAACF9531G . APPELLANT VS. THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE 1(1), PUNE . RESPONDENT APPELLANT BY : SHRI NIKHIL PATHAK RESPONDENT BY : SMT. M.S. VERMA, CIT DATE OF HEARING : 19-11-2014 DATE OF PRONOUNCEMENT : 25-11-2014 ORDER PER SUSHMA CHOWLA, JM: BOTH THE APPEALS FILED BY THE ASSESSEE ARE AGAINST TWO DIFFERENT ORDERS OF CIT(A)-I, PUNE, BOTH DATED 20.03.2013 RELATING TO ASSESSMENT YEARS 2007-08 AND 2008-09 PASSED UNDER SECTION 153A R.W.S. 143(3) OF THE INCOME TAX ACT. 2. SIMILAR GROUNDS OF APPEAL WERE RAISED IN BOTH THE YEARS , WHICH READ AS UNDER: 1] THE LEARNED CIT(A) ERRED IN CONFIRMING THE DISALLOW ANCE IN RESPECT OF GROUP GRATUITY INSURANCE PREMIUM OF RS. 5 ,31,293/- MADE U/S 40A(9) OF THE INCOME TAX ACT WITHOUT APPREC IATING THAT NO INCRIMINATING EVIDENCE WAS FOUND IN RESPECT OF THE ITA NOS.1043 AND 1044/PN/2013 M/S. FASTTRACK PACKERS PVT. LTD. 2 SAID TRANSACTION AND HENCE, THE ADDITION MADE IN THIS RESPECT IN THE ASST. COMPLETED U/S 153 A WAS NOT JUSTIFIED IN LAW. 1.1] THE LEARNED CIT(A) ERRED IN HOLDING THAT THE GROU P GRATUITY INSURANCE PREMIUM WAS NOT ALLOWABLE SINCE THE FUND TO W HICH THE AMOUNT WAS PAID WAS NOT APPROVED BY THE CIT AND HENCE, THE SAID EXPENDITURE WAS NOT ALLOWABLE AS A DEDUCTION. 1.2] THE LEARNED CIT(A) ERRED IN NOT APPRECIATING THAT THE FUND TO WHICH THE CONTRIBUTION WAS MADE HAD APPLIED FOR APP ROVAL TO THE CONCERNED CIT AND HENCE, THERE WAS NO REASON TO MAKE THE DISALLOWANCE U/S 40A(9). 1.3] WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ASS ESSEE SUBMITS THAT IN CASE, IN FUTURE, THE SAID FUND IS APPROVED B Y THE CONCERNED CIT, THE DISALLOWANCE MADE U/S 40A(9) MAY KIN DLY BE DELETED. 2] THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE ABOVE GROUNDS OF APPEAL. 3. THE ISSUE RAISED IN THE PRESENT APPEAL IS WITH REGARD T O DISALLOWANCE OF GROUP GRATUITY INSURANCE PREMIUM OF RS.5,31,2 93/- MADE UNDER SECTION 40A(9) OF THE ACT. 4. BOTH THE APPEALS RELATING TO SAME ASSESSEE ON IDENT ICAL ISSUE WERE HEARD TOGETHER AND ARE BEING DISPOSED OF BY THIS CONSOLID ATED ORDER FOR THE SAKE OF CONVENIENCE. THE FACTS IN BOTH THE YEARS U NDER APPEAL ARE IDENTICAL. HOWEVER, WE MAKE A REFERENCE TO THE FACTS IN IT A NO.1043/PN/2013 ON THE ISSUE. 5. THE BRIEF FACTS OF THE CASE ARE THAT, SEARCH AND SEIZUR E ACTION UNDER SECTION 132 OF THE ACT WAS CONDUCTED UPON MALPA NI GROUP OF CASES ON 06.10.2009 AND A WARRANT OF AUTHORIZATION UNDER SECTION 132(1) O F THE ACT WAS EXECUTED IN CASE OF ASSESSEE ALSO. THE ASSESSIN G OFFICER THEREAFTER, ISSUED NOTICE UNDER SECTION 153A OF THE ACT A ND IN RESPONSE TO THE SAME, THE ASSESSEE FILED RETURN OF INCOME DECLARING AN INCOME OF RS.6,34,003/-. THE ASSESSING OFFICER ON THE PERUSAL OF THE P ROFIT & LOSS ITA NOS.1043 AND 1044/PN/2013 M/S. FASTTRACK PACKERS PVT. LTD. 3 ACCOUNT NOTED THAT THE ASSESSEE HAD DEBITED A SUM O F RS.5,31,293/- AS GROUP GRATUITY INSURANCE PREMIUM. THE AUDITOR IN THE AUD IT REPORT I.E. IN COLUMN 17(J) HAD SUGGESTED DISALLOWANCE UNDER SECTION 40A(9) OF THE ACT. THE ASSESSEE WAS ASKED TO JUSTIFY ITS CLAIM WITH RE GARD TO THE GROUP GRATUITY INSURANCE PREMIUM. IN RESPONSE, THE ASSESSEE C LAIMED THAT THE SAID AMOUNT WAS CONTRIBUTED TO LIC BY FORMING THE TRUS T. HOWEVER, THE CIT TILL DATE HAD NOT ISSUED ANY APPROVAL OF THE SAID TRUS T. SINCE THE AMOUNT HAD BEEN PAID TO LIC, THE PLEA OF THE ASSESSEE W AS FOR THE SAID CLAIM TO BE ALLOWED TO THE ASSESSEE. THE ASSESSING OFFICER IN VIEW OF THE PROVISIONS OF SECTION 36(V) AND 40A(9) OF THE ACT, OBSERVED THAT THE SAID DEDUCTION WAS NOT ALLOWABLE TO THE ASSESSEE AS THE BASIC CONDITION CONTEMPLATED UNDER THE ACT WAS NOT FULFILLED. THE ASSESSIN G OFFICER DISALLOWED A SUM OF RS.5,31,293/-. THE SAID DISALLOWANCE MADE BY THE ASSESSING OFFICER WAS UPHELD BY THE CIT(A), AGAINST WHICH, TH E ASSESSEE IS IN APPEAL. 6. SHRI NIKHIL PATHAK APPEARED FOR THE ASSESSEE AND MRS. M.S. VERMA , CIT APPEARED FOR THE REVENUE AND PUT FORWARD THEIR CONTENTIONS. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION HAD CLAIMED DEDUCTION ON ACCOUNT OF GROUP GRATUITY INSURANCE PREMIUM AMOUNTING TO RS.5,31,293/-. THE SAID AMOUNT HAS CLAIMED BY THE ASSESS EE WAS CONTRIBUTED TO LIC BY FORMING A TRUST. UNDER THE PROVIS IONS OF SECTION 36 (V) OF THE ACT ANY SUM PAID BY THE ASSESSEE BY WAY O F CONTRIBUTION TOWARDS AN APPROVED GRATUITY FUND CREATED FOR THE EXCLU SIVE BENEFIT OF THE EMPLOYEES, UNDER IRREVOCABLE TRUST, IS ALLOWABLE AS A DEDUC TION. HOWEVER, UNDER THE PROVISIONS OF SECTION 40A(9) OF THE ACT , THERE IS A ITA NOS.1043 AND 1044/PN/2013 M/S. FASTTRACK PACKERS PVT. LTD. 4 PROHIBITION IN ALLOWING THE SAID CLAIM. THE RELEVANT PROVISION S OF SECTION 40A(9) OF THE ACT READ AS UNDER: NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ANY SUM PA ID BY THE ASSESSEE AS AN EMPLOYER TOWARDS THE SETTING UP OR FO RMATION OF, OR AS CONTRIBUTION TO, ANY FUND, TRUST, COMPANY, ASSOCIATIO N OF PERSONS, BODY OF INDIVIDUALS, SOCIETY REGISTERED UNDER THE SO CIETIES REGISTRATION ACT, 1860 (21 OF 1860), OR OTHER INSTITUTI ON FOR ANY PURPOSE, EXCEPT WHERE SUCH SUM IS SO PAID, FOR THE PU RPOSES AND TO THE EXTENT PROVIDED BY OR UNDER CLAUSE (IV) OR CLAUSE (V) OF SUB- SECTION (1) OF SECTION 36, OR AS REQUIRED BY OR UNDER ANY OTHER LAW FOR THE TIME BEING IN FORCE. 8. IT IS PROVIDED UNDER THE SAID SECTION OF 40A(9) OF THE A CT THAT, NO CONTRIBUTION TO ANY FUND, ETC. WOULD BE ALLOWED EXCEPT TO T HE EXTENT AS PROVIDED UNDER CLAUSE (IV) OR (V) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. UNDER THE PROVISIONS OF SECTION 36 (1) (V) OF THE ACT, IT IS PR OVIDED THAT THE CONTRIBUTION BY THE EMPLOYER SHOULD BE TOWARDS AN APPR OVED GRATUITY FUND WHICH HAS BEEN CREATED BY THE EMPLOYER FOR THE BEN EFIT OF ITS EMPLOYEES, UNDER IRREVOCABLE TRUST. ADMITTEDLY, THE ASSE SSEE IN THE PRESENT CASE BEFORE US HAD FORMED A TRUST FOR THE SAID PURPOSE. HOWEVER, THE SAID TRUST HAS NOT BEEN APPROVED BY THE CIT AND CONSEQUENTLY, THE AUTHORITIES BELOW HAD DENIED THE DEDUC TION IN VIEW OF THE PROVISIONS OF SECTION 40A(9) OF THE ACT. THE LEARNED AU THORIZED REPRESENTATIVE FOR THE ASSESSEE FAIRLY BEFORE US ADMITTED THAT NO SUCH APPROVAL HAS BEEN RECEIVED FROM THE CIT TILL DATE. HENCE, IN THE ABSENCE OF ANY APPROVAL GRANTED BY THE CIT TO THE GRATUITY FUND CREATED BY THE ASSESSEE, THE CONTRIBUTION MADE BY THE ASSESSEE TOWARD S SUCH GROUP GRATUITY SCHEME IS NOT ALLOWABLE AS A DEDUCTION IN VIEW OF T HE PROVISIONS OF SECTION 36(V) OF THE ACT R.W.S. 40A(9) OF THE ACT. UPH OLDING THE ORDER OF CIT(A), WE DISMISS THE GROUNDS OF APPEAL RAISED BY THE ASSESSEE. ITA NOS.1043 AND 1044/PN/2013 M/S. FASTTRACK PACKERS PVT. LTD. 5 9. THE FACTS AND ISSUE IN ITA NO.1044/PN/2013 ARE IDENTIC AL TO THE FACTS AND ISSUE IN ITA NO.1043/PN/2013 AND OUR DECISION IN ITA NO.1043/PN/2013 SHALL APPLY MUTATIS MUTANDIS TO ITA NO.1044/PN/2013. 10. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEE ARE DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF NOVEMBER, 2014. SD/- SD/- (R.K. PANDA) (SUSHMA CHOWLA) ACCOUNTANT MEMBER JUDICIAL MEMBER PUNE, DATED: 25 TH NOVEMBER, 2014. GCVSR COPY OF THE ORDER IS FORWARDED TO : - 1) THE ASSESSEE; 2) THE DEPARTMENT; 3) THE CIT(A)-I, PUNE; 4) THE CIT-I, PUNE; 5) THE DR A BENCH, I.T.A.T., PUNE; 6) GUARD FILE. BY ORDER //TRUE COPY// ASSISTANT REGISTRAR I.T.A.T., PUNE