The DCITAnand Circle, Anand V. Swiss Glass Coat Equipments Ltd., Anand

ITA 107/AHD/2013

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 0493 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2013
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 10-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D K SINGH

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD , .. , '# ' $ BEFORE SHRI MUKUL KR.SHRAWAT, JUDICIAL MEMBER AND SHRI T.R.MEENA, ACCOUNTANT MEMBER ./ I.T.A. NO.107/AHD/2013 ( % & '& / ASSESSMENT YEAR : 2009-10) DY.CIT ANAND CIRCLE ANAND % / VS. M/S.SWISS GLASS COAT EQUIPMENT LTD. H-106, GIDC ESTATE VITHAL UDHYOGNAGAR TAL. & DIST.ANAND ./ ./ PAN/GIR NO. : AACCS 6297 G ( / APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI D.K.SINGH, SR.D.R. / RESPONDENT BY : MS.URVASHI SHODHAN / DATE OF HEARING : 07/03/2013 !'# / DATE OF PRONOUNCEMENT : 15/3/13 $% / O R D E R PER SHRI MUKUL KR. SHRAWAT, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE ARISING FRO M THE ORDER OF LD.CIT(A)-IV, AHMEDABAD DATED 26 TH OCTOBER-2012 PASSED FOR A.Y. 2009-10 AND THE SUBSTANTIVE GROUND IS REPRODUCED B ELOW:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT(A) ERRED DELETING THE ADDITION OF ` 11,78,527/- BEING THE AMOUNT DISALLOWED BY THE AO IN VIEW OF P ROVISIONS OF SECTION 36(1)(V) R.W.S. 40A(7) OF THE ACT WITHOUT A PPRECIATING THE FACT THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF ANY PROVISION MADE BY THE ASSESSEE FOR THE PAYMENT OF GRATUITY TO HIS EMPLOYEES ITA NO.107/AHD/ 2013 DY.CIT VS. SWISS GLASS COAT EQUIPMENT LTD. ASST.YEAR - 2009-10 - 2 - ON THEIR RETIREMENT OR ON TERMINATION OF THEIR EMPL OYMENT FOR ANY REASON. 2. FACTS IN BRIEF AS EMERGED FROM THE CORRESPONDIN G ASSESSMENT ORDER PASSED U/S.143(3) OF THE IT ACT DATED 19.12.2 011 WERE THAT THE ASSESSEE-COMPANY HAS DEBITED A AMOUNT OF GRATUITY O F RS.11,78,527/-. THE AO HAD ASKED THE ASSESSEE TO FURNISH THE APPROV AL OF THE GRATUITY FUND GRANTED BY THE CONCERNED AUTHORITY. IN THE AB SENCE OF FURNISHING OF ANY APPROVAL GRANTING THE GRATUITY FUND, THE AO HAS INVOKED THE PROVISIONS OF SECTION 40A(7) OF THE IT ACT AND DISA LLOWED THE SAME. 3. WHEN THE MATTER WAS CARRIED BEFORE THE FIRST APP ELLATE AUTHORITY, THE MATTER WAS DISCUSSED IN SOME DETAIL AND THE CLA IM WAS ALLOWED IN THE FOLLOWING MANNER:- 6.1. IT IS AN UNDISPUTED FACT THAT THE APPELLANT H AS ALREADY FILED AN APPLICATION WITH THE DEPARTMENT FOR APPROVAL OF THE GRATUITY FUND ON 12 TH APRIL, 2006. THE APPROVAL OF THE FUND HAS NOT BEE N RECEIVED TILL DATE. IT IS NOT THE FAULT OF THE APP ELLANT THAT IT DID NOT GET THE APPROVAL OF THE AUTHORITIES ONCE NECESSARY DOCUMENTS ALONG WITH LETTER REQUESTING FOR THE APPROVAL OF TH E GRATUITY FUND HAVE ALREADY BEEN SUBMITTED. A COPY OF THE LETTER SUBMITTED BEFORE THE DEPARTMENT HAS BEEN PLACED ON RECORD. CONSIDE RING THE DECISION OF THE HONBLE I.T.A.T., AHMEDABAD, AS REL IED UPON BY THE APPELLANT, I AM OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER IS NOT JUSTIFIED IN MAKING DISALLOWANCE OF THE PAYMENT OF CONTRIBUTION MADE TO THE GRATUITY FUND U/S.36(1)(V) R.W.S. 40A(7) OF THE ACT BECAUSE THE FAULT IN NOT GETTING THE APPROV AL OF THE GRATUITY FUND CANNOT BE ATTRIBUTED TO THE APPELLANT. THE DI SALLOWANCE OF RS.11,78,527/- MADE BY THE ASSESSING OFFICER IS, AC CORDINGLY, DELETED. THIS GROUND OF APPEAL IS ALLOWED. ITA NO.107/AHD/ 2013 DY.CIT VS. SWISS GLASS COAT EQUIPMENT LTD. ASST.YEAR - 2009-10 - 3 - 4. FROM THE SIDE OF THE REVENUE, LD.SR.DR MR.D.K.SI NGH APPEARED AND ARGUED THAT THE LANGUAGE OF THE ACT CLEARLY STA TES THAT THE CLAIM CAN BE ALLOWED ONLY IF THE SCHEME IS APPROVED. LD.DR HAS PLEADED THAT IN THE PRESENT CASE, THE ADMITTED FACTUAL POSITION WAS THAT THE SAID GRATUITY FUND SCHEME WAS NOT APPROVED. ONCE THE APPROVAL WA S NOT IN THE HANDS OF THE ASSESSEE, THEREFORE NOT ENTITLED FOR THE ALL EGED CLAIM. FOR THIS LEGAL PROPOSITION, RELIANCE WAS PLACED ON CIT VS. PETROLE UM AND MINERALS (P) LTD. (1991) 187 ITR 560 (BOM) AND SHREE SAJJAN MILL S LTD. VS. CIT & ANR. (1985) 156 ITR 585(SC). 5. ON THE OTHER HAND, FROM THE SIDE OF THE ASSESSEE , LD.AR MS.URVASHI SHODHAN HAS PLACED RELIANCE ON AN ORDER OF THE ITAT C BENCH AHMEDABAD BEARING ITA NO.1479/AHD/2010 FOR A. Y.2006-07 IN THE CASE OF THE DCIT VS. BARODA GUJARAT GRAMIN BAN K (ERSTWHILE PANCHMAHAL VADODARA GRAMIN BANK LTD.) DATED 06.08. 2010. 6. HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE VIEW THAT THIS ISSUE HAS ALREADY BEEN DEALT WITH BY THE RESPECTED COORDINATE BENCH IN THE FOLLOWING MANNER:- 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND M ATERIAL AVAILABLE ON RECORD. SECTION 40A(7) OF THE IT ACT PROVIDES THAT SUBJECT TO PROVISION OF CLAUSE (B), NO DEDUCTION SH ALL BE ALLOWED IN RESPECT OF ANY PROVISION MADE BY THE ASSESSEE FOR P AYMENT OF GRATUITY TO HIS EMPLOYER ON THEIR RETIREMENT OR ON TERMINATION OF THEIR EMPLOYMENT FOR ANY REASON. IT IS CLEAR FROM THE ABOVE PROVISION THAT SECTION 40A(7) OF THE IT ACT WOULD A PPLY IN RESPECT OF THE PROVISION ONLY. HOWEVER, IN THE CASE OF THE ASSESSEE, THE ITA NO.107/AHD/ 2013 DY.CIT VS. SWISS GLASS COAT EQUIPMENT LTD. ASST.YEAR - 2009-10 - 4 - ASSESSEE CLAIMED DEDUCTION OF THE EXPENDITURE ON AC COUNT OF ACTUAL EXPENSES CLAIMED UNDER THE HEAD GRATUITY CONTRIBUTI ON. ITAT AHMEDABAD BENCH IN THE CASE OF NEW BHARAT ENGINEERI NG WORKS (JAM) LTD. (SUPRA) HELD DISALLOWANCE UNDER S. 40A(7) GRATUITY ACTUAL PAYMENT OF FUNDS TO LIC AND NOT MERE PROVI SION NOT HIT BY S. 40A(7) CIT VS. GUJARAT MACHINE TOOLS (I TA 666/AHD/1985) FOLLOWED. HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. BITONI LAMPS LTD. 144 TAXMAN 33 HELD THAT SECTION 40A(7) OF THE INCOME-TAX ACT, 1961 BUSIN ESS DISALLOWANCE GRATUITY ASSESSMENT YEAR 1979-80 ASSESSEE- COMPANY CLAIMED DEDUCTION UNDER SECTION 40A(7)(B)(I ) ON ACCOUNT OF GRATUITY ACTUALLY DEPOSITED IN FUND CREA TED BY IT WHETHER SUCH A CLAIM COULD ONLY HAVE BEEN DISALLOWE D IF IT HAD BEEN PROVED THAT GRATUITY, IN RESPECT OF WHICH SAID PAYMENT HAD BEEN MADE, HAD NOT BECOME PAYABLE DURING PREVIOUS Y EAR HELD, YES WHETHER IN ABSENCE OF SUCH A CASE MADE OUT BY REVENUE, TRIBUNAL WAS RIGHT IN HOLDING THAT GRANT OF APPROVA L OF GRATUITY FUND WAS NOT RELEVANT FOR PURPOSE OF INSTANT CASE A S SAID DEDUCTION WAS NOT BEING CLAIMED ON ACCOUNT OF ANY P ROVISION AND AMOUNT OF GRATUITY WAS AN ALLOWABLE DEDUCTION HELD, YES. 6.1. RESPECTFULLY FOLLOWING THE ABOVE DECISION OF T HE TRIBUNAL, WE FIND NO FORCE IN THIS GROUND OF THE REVENUE, HENCE DISMI SSED. 7. IN THE RESULT, REVENUES APPEAL IS DISMISSED. SD/- SD/- ( &..'# ) ( ' ' ( ) $ )* $ ( T.R. MEENA ) ( MUKUL KR. SHRAWAT ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 15/ 03 /2013 &.., .*../ T.C. NAIR, SR. PS ITA NO.107/AHD/ 2013 DY.CIT VS. SWISS GLASS COAT EQUIPMENT LTD. ASST.YEAR - 2009-10 - 5 - ') * +,- .'-' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. , -. / / CONCERNED CIT 4. / () / THE CIT(A)-IV, AHMEDABAD 5. 234 **-., -.#, 5'$,$ / DR, ITAT, AHMEDABAD 6. 467 8 / GUARD FILE. ')% / BY ORDER, 2 * //TRUE COPY// // 0 ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD 1. DATE OF DICTATION DATED .. 7.3.13 (DICTATION-PAD 5 PAGES ATTACHED) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 8.3.13 OTHER MEMBER 3. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S15.3.13 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 15.3.13 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 9. DATE OF DESPATCH OF THE ORDER