Appeal details
Counselvise Citation
132924914 RSA 2010
Assessee PAN
Bench
Appeal Number
Duration Of Justice
1 year(s) 1 month(s) 17 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
30-01-2012
Appeal Filed By
Department
Order Result
Dismissed
Bench Allotted
DB
Next Hearing Date
19-01-2012
Assessment Year
2003-2004
Appeal Filed On
13-12-2010
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL, RAJKOT BENCH, RAJKOT. BEFORE SHRI T. K. SHARMA (JM) AND SHRI A. L. GEHL OT AM). ITA NO.1329/RJT/2010. (ASSESSMENT YEAR 2003-04.) THE A.C.I.T., VS. M/S.MORBI VEGETABLE PRODUCT S LTD., CIRCLE-5, RAJKOT. VEGETABLE ROAD, RAJKOT. PAN:AABCM4867H.. (APPELLANT) (RESPONDENT) REVENUE BY : SHRI M. K. SINGH, D. R. ASSESSEE BY : SHRI D. M. RINDANI, C.A. DATE OF HEARING : .19-01-2012. DATE OF PRONOUNCEMENT : 30-01-2012. O R D E R. PER A. L. GEHLOT (A.M.) : THIS APPEAL IS FILED BY THE REVENUE AGAINST THE APPELLATE ORDER OF COMMISSIONER OF INCOME TAX (APPE ALS)-IV, RAJKOT DATED 06- 09-2010 ASSESSMENT YEAR 2003-04.. 2. THE EFFECTIVE GROUNDS RAISED IN APPEAL ARE REPRO DUCED AS BELOW:- (1) THE LD. CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.304870/-MADE BY THE AO BY DISALL OWING THE EXPENDITURE ON SETTLEMENT DIFFERENCE ON ACCOUNT OF NON FULFILLMENT OF CONTRACT UNDER THE HEAD MANUFACTURING AND SELLI NG EXPENSES. (2) THE LD. CIT(A)-IV, RAJKOT HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.252785/- MADE BY THE AO BY DISAL LOWING THE PROVISION FOR CONTRIBUTION DUE TO GRATUITY TRUST ON THE LIABILITY SIDE OF THE BALANCE SHEET. 3. THE BRIEF FACTS OF THE FIRST GROUND ARE THAT DUR ING ASSESSMENT PROCEEDINGS, THE AO NOTICED THAT THE ASSESSEE CLAIMED RS.304870/ - AS EXPENDITURE ON ACCOUNT OF SETTLEMENT DIFFERENCE ON ACCOUNT OF NON FULFILLMENT OF CONTRACT. THE AO INVOKED EXPLANATION TO SEC. 37 (1) OF THE ACT. THE CIT(A) DELETED THE SAID ITA 1329-RJT-2010. A. Y. 2003-04. 2 ADDITION ACCEPTING ASSESSEES EXPLANATION THAT THE EXPENDITURE WAS IN NATURE OF ROUTINE BUSINESS EXPENDITURE. AFTER HEARING LD. R EPRESENTATIVES OF THE PARTIES, WE FIND THAT EXPENDITURE CLAIMED WAS IN NATURE OF BUSI NESS EXPENDITURE AND NOT IN NATURE OF PENALTY FOR VIOLATION OF ANY LAW. THEREF ORE, EXPLANATION TO SEC.37(1) IS NOT APPLICABLE. THE ORDER OF CIT(A) IS IN ACCORDANC E WITH LAW LAID DOWN BY THE APEX COURT IN THE CASE OF CIT VS. SHANTILAL (P) LTD . 144 ITR 57 (SC), CITED BY THE LD. A.R. THEREFORE, THE ORDER OF CIT(A) THEREFORE CONFIRMED. 4. THE FACTS OF THE SECOND GROUND ARE THAT THE AO D ISALLOWED RS.252785/- CLAIMED BY ASSESSEE IN RESPECT OF PROVISIONS MADE F OR CONTRIBUTION TO GRATUITY TRUST U/S.40A(7) OF THE ACT. THE CIT(A) DELETE THE SAID ADDITION OBSERVING AS UNDER:- 4.2 I HAVE CAREFULLY CONSIDERED THE FINDING GIVEN BY THE ASSESSING OFFICER AND THE SUBMISSION OF THE AR OF THE APPELLA NT. I FIND FORCE IN THE SUBMISSION OF THE AR OF THE APPELLANT. I HAVE ALSO PERUSED THE LEDGE ACCOUNT AS WELL AS THE APPROVAL GRANTED BY THE LD. CIT, RAJKOT TO THE APPELLANTS GRATUITY TRUST. AS SUCH, AS PER THE PRO VISION OF SECTION 40A(7), SINCE THE PROVISION IS MADE FOR THE PURPOSE OF PAYM ENT BY WAY OF CONTRIBUTION TOWARDS THE APPROVED GRATUITY FUND THA T HAS BECOME PAYABLE DURING THE PREVIOUS YEAR, THE SAME WOULD BE ELIGIBL E FOR DEDUCTION. AS ALREADY STATED BY THE AR OF THE APPELLANT, THE PAYM ENT OF THE PROVISION SO MADE HAS ALSO BEEN EFFECTED BEFORE FILING OF THE RE TURN. IN VIEW OF THE FACTS AND CIRCUMSTANCES OF THE CASE, THE ADDITION O F RS.2,52,785/- IS HEREBY ORDERED TO BE DELETED. 5. AFTER HEARING LEARNED REPRESENTATIVES OF PARTIES , WE FIND THAT CLAIM OF ASSESSEE IS IN ACCORDANCE WITH SECTION 40A(7) OF TH E ACT. THE GRATUITY FUND WAS APPROVED BY CIT, RAJKOT. SINCE CLAIM OF ASSESSEE I S IN ACCORDANCE WITH LAW, WE THEREFORE, DID NOT FIND ANY INFIRMITY IN THE ORDER OF CIT(A). THE ORDER OF CIT(A) IS CONFIRMED ON THE ISSUE. 6. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 30-01-2012. SD/- SD/- ( T. K. SHARMA ), ( A. L. GEHLOT ), JUDICIAL MEMBER. ACCOUNTANT MEMBER. RAJKOT. ITA 1329-RJT-2010. A. Y. 2003-04. 3 DATED:30-01-2012. NVA/ COPY TO:- 1.THE A.C.I.T., CIRCLE-5, RAJKOT. 2 M/S. MORBI VEGETABLE PRODUCTS LTD.,RAJKOT. 3.THE C.I.T.(A)-IV, RAJKOT. 4.THE C.I.T.-III, RAJKOT. 5.THE D.R., ITAT, RAJKOT. 6. THE GUARD FILE TRUE COPY. BY ORDER, ASSTT. REGISTRAR, ITAT,RAJKOT.
