M/S. PODAR LITERACY AND EDUCATION TRUST, BANGALORE V. DY CIT, CC--1(4), MUMBAI

ITA 1293/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3999 (ITAT-MUMBAI)
• Duration Of Justice: 9 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 11-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: TEJAL
• Keywords: Charitable institution

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘C‘ BENCH MUMBAI BEFORE: SHRI M.BALAGANESH, ACCOUNTANT MEMBER & MS. KAVITHA RAJAGOPAL, JUDICIAL MEMBER ITA No.1293/Mum/2021 (Asse ssment Year :2014-15) M/s. Podar Literacy and Education Trust 103/1, Basavanapura Off. Basavanapura Road Bangalore – 560 083 Vs. DCIT, Central Circle-1(4) Room No.902, Pratishtha Bhavan, Mumbai – 400 020 PAN/GIR No.AAATP9197P (Appellant) .. (Respondent) Assessee by Shri Siddharth Kothari & Ms. Tejal Saraf Revenue by Shri Sunil A Umap Date of Hearing 20/04/2022 Date of Pronouncement 25/04/2022 आदेश / O R D E R PER M. BALAGANESH (A.M): This appeal in ITA No.1293/Mum/2021 for A.Y.2014-15 arises out of the order by the ld. Commissioner of Income Tax (Appeals)-47, Mumbai in appeal No.CIT(A)-47/10302/19-20 dated 03/11/2020 (ld. CIT(A) in short) against the order of assessment passed u/s.153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 27/12/2019 by the ld. Dy. Commissioner of Income Tax, Central Circle- 1(4), Mumbai (hereinafter referred to as ld. AO). ITA No.1293/Mum/2021 M/s. Podar Literacy and Education Trust 2 2. The assessee has raised a legal ground challenging the jurisdiction of the ld. AO to make disallowance on account of provision for gratuity made on actuarial valuation in the assessment framed u/s.143(3) r.w.s. 153A of the Act without any incriminating material found during the course of search. Apart from this, assessee has also challenged the said disallowance on merits. 3. We have heard rival submission and perused the materials available on record. Admittedly, there was a search and seizure action u/s.132(1) of the Act on 09/01/2018 in the premises of the assessee group, pursuant to which proceedings u/s.153A of the Act were initiated on the assessee. The original return of income was filed by the assessee for the A.Y.2014- 15 on 27/09/2014 which was duly processed u/s.143(1) of the Act. Hence, as on the date of search, the assessment for the A.Y.2014-15 was unabated / concluded. The law is very well settled that in respect of concluded assessments on the date of search, the same could be disturbed only if there is some incriminating material found during the course of search. Reliance in this regard is placed on the decision of the Hon’ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645(Bom) and the decision of the Hon’ble Delhi High Court in the case of Kabul Chawla reported in 234 Taxman 300. We find from the perusal of the assessment order, the ld. AO had resorted to make disallowance on account of provision for gratuity which was made on the basis of actuarial valuation, without making any reference to seized / incriminating material found during the course of search. Hence, respectfully placing reliance on the aforesaid decisions and more especially the fact that assessment for A.Y.2014-15 had been concluded assessment, the disallowance made on account of provision for gratuity on an actuarial valuation basis in the absence of any ITA No.1293/Mum/2021 M/s. Podar Literacy and Education Trust 3 incriminating material found during the course of search is hereby quashed. Accordingly, the legal ground raised by the assessee challenging the jurisdiction to disturb the concluded assessment is hereby allowed. 3.1. Even on merits, we find that assessee had made provision for gratuity and leave encashment only on an actuarial valuation basis which is an ascertained liability and which becomes an allowable expenditure to be treated as an application of funds for charitable purposes. It is not in dispute that assessee is a public charitable trust duly registered u/s.12AA of the Act and was claiming exemption u/s.10(23C) of the Act. This sum would be entitled to be claimed as application of funds for charitable purposes. We further find that this issue was also subject matter of adjudication by this Tribunal in assessee’s own case for A.Yrs. 2015-16 and 2016-17 in ITA Nos.67 & 68/Mum/2021 dated 25/01/2022 wherein this Tribunal had deleted the disallowance made thereon. Hence, the assessee succeeds on merits also. 4. In the result, appeal of the assessee is allowed. Order pronounced on 25/04/2022 by way of proper mentioning in the notice board. Sd/- (KAVITHA RAJAGOPAL) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 25/ 04 /2022 KARUNA, sr.ps ITA No.1293/Mum/2021 M/s. Podar Literacy and Education Trust 4 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//