ACIT, C-3(1), Chandigarh V. M/s The Chandigarh State Co-operative Bank Ltd., Chandigarh

ITA 1433/CHANDI/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 8401 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 year(s) 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-03-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 11-01-2021
• Assessment Year: 2012-2013
• Appeal Filed On: 07-11-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SANDEEP DAHIYA
• Keywords: Corroborative evidences; Competent authority; Tax effect
• Section: 143(3); 142(1); 143(2); 13

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DIVISION BENCH, B CHANDIGARH BEFORE SHRI N.K. SAINI, VICE PRESIDENT & SHRIR.L NEGI, JUDICIAL MEMBER ./ ITA NO. 1433/CHD/2019 / ASSESSMENT YEAR : 2012-13 THE ACIT, CIRCLE 3(1), CHANDIGARH THE CHANDIGARH STATE CO- OPERATIVE BANK LTD., SCO NO. 1088-1089, SECTOR 22-B, CHANDIGARH ./PAN NO: AAAAT3974H / APPELLANT /RESPONDENT HEARING THROUGH VIDEO CONFERENCING / REVENUE BY : SHRI SANDEEP DAHIYA, CIT /ASSESSEE BY : SHRI AMITOZ SINGH KAMBOJ, CA /DATE OF HEARING : 11.01.2021 /DATE OF PRONOUNCEMENT : 23.03.2021 /ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE ASSESSEE HAS FILED THE CAPTIONED APPEAL AGAINST THE ORDER DATED 14.8.2019 PASSED BY THE COMMISSIONER OF INCOM E TAX (APPEALS)-1, CHANDIGARH (FOR SHORT THE CIT(A)], PE RTAINING TO THE ASSESSMENT YEAR 2012-13, WHEREBY THE LD. CIT(A) HAS DISMISSED THE 2 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH APPEAL OF THE ASSESSEE FILED AGAINST THE ASSESSMENT ORDER PASSED U/S 143(3) OF THE INCOME TAX ACT, 1961 (FOR SHORT 'THE ACT'). 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATI ON DECLARING TOTAL INCOME OF RS. 57,18,540/-. SINCE THE CASE WA S SELECTED FOR SCRUTINY, THE AO ISSUED NOTICE U/S 143(2) ON 7.8.20 13 AND NOTICE U/S 142(1) ON 30.9.2014. IN RESPONSE THEREOF, THE AUTHO RIZED REPRESENTATIVE OF THE ASSESSEE ATTENDED THE PROCEED INGS FROM TIME TO TIME AND FURNISHED THE REQUISITE DETAILS. THE AO CO MPLETED THE ASSESSMENT U/S 143(3) OF THE ACT DETERMINING THE TO TAL INCOME OF THE ASSESSEE AT RS. 3,33,29,399/- INTER ALIA MAKING ADDITION OF RS. 1,68,26,186/- ON ACCOUNT OF THE CONTRIBUTION MADE B Y THE ASSESSEE TO THE UNAPPROVED PROVIDENT FUND AND ADDITION OF RS . 91,13,601/- ON ACCOUNT OF THE LEAVE SALARY CONTRIBUTION MADE BY TH E ASSESSEE. THE ASSESSEE CHALLENGED THE ASSESSMENT ORDER BEFORE THE LD. CIT(A). THE LD. CIT(A) AFTER HEARING THE ASSESSEE PARTLY AL LOWED THE APPEAL, HOWEVER, DELETED BOTH THE ADDITIONS. AGAINST THE SA ID FINDINGS OF THE LD. CIT(A), THE REVENUE IS IN APPEAL BEFORE THIS TR IBUNAL. 2. THE REVENUE HAS CHALLENGED THE IMPUGNED ORDER B Y RAISING THE FOLLOWING GROUNDS OF APPEAL: 3 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN ALLOWING APPEAL OF THE ASSESSEE WITHOUT APPRECIATING THE FACTS OF THE CASE. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION MADE ON A CCOUNT OF DISALLOWANCE OF CONTRIBUTION MADE BY THE ASSESSEE T O THE UNAPPROVED GRATUITY FUND, AMOUNTING TO RS. 1,68,26, 186/- MERELY ON THE GROUND THAT THE ASSESSEE HAD APPLIED FOR APPROVAL OF GRATUITY FUND WITHOUT APPRECIATING THE FACT THAT NO SUPPORTING EVIDENCE FOR GRANT OF APPROVAL WAS FU RNISHED BY THE ASSESSEE AS PER THE REQUIREMENT OF SECTION 3 6(L)(V) OF THE ACT DURING THE ASSESSMENT PROCEEDINGS AND DURIN G APPELLATE PROCEEDINGS AS WELL. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION ON ACCOUN T OF DISALLOWANCE OF LEAVE SALARY CONTRIBUTION AMOUNTING TO RS. 91,13,601/- WITHOUT APPRECIATING THE FACT THAT THE DEDUCTION OF LEAVE SALARY IS ALLOWED ONLY ON ACTUAL PAYMENT T O EMPLOYEES AS PER CLAUSE (F) OF SECTION 43B. HOWEVER , THE LEAVE SALARY WAS NOT ACTUALLY PAID TO THE EMPLOYEES WHICH DOES NOT AMOUNT TO PAYMENT TO AN EMPLOYEE. 4. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION WITHOUT D ISCUSSING THE MERITS OF THE ISSUE INVOLVED AND BY RELYING ONL Y ON PREVIOUS ORDER OF CIT(A) IN CASE OF THE ASSESSEE, W HICH WERE ALSO NOT ACCEPTED BY THE DEPARTMENT BUT FURTHER APP EAL COULD NOT BE PREFERRED DUE TO THE TAX EFFECT, WHICH WAS L ESS THAN THE PRESCRIBED MONETARY LIMITS. 5. THE APPELLANT CRAVES TO LEAVE TO ADD OR AMEND ANY G ROUNDS OF APPEAL BEFORE THE APPEAL IS HEARD OR DISPOSED OF F. 4 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH 6. IT IS PRAYED THAT THE ORDER OF THE LD. CIT(A) BE CA NCELLED AND THAT OF THE ASSESSING OFFICER MAY BE RESTORED. 3. BEFORE US, THE LD. DEPARTMENTAL REPRESENTATIVE (DR) SUPPORTING THE ASSESSMENT ORDER PASSED BY THE AO SU BMITTED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE DISALLOWANCE OF RS. 1,68,26,186/- MADE BY THE A.O. ON ACCOUNT OF PAYMEN T OF PREMIUM FOR GROUP GRATUITY MADE TO LIC AS THE ASSES SEE COULD NOT ADDUCE ANY EVIDENCE TO SUPPORT ITS CLAIM OF EXP ENSES U/S 36 (1)(V) OF THE ACT. SIMILARLY, THE LD. DR CONTENDED THAT THE LD. CIT(A) HAS WRONGLY DELETED THE ADDITION OF RS. 91,1 3,601/- MADE BY THE A.O. ON ACCOUNT OF DISALLOWANCE OF LEAVE SAL ARY CONTRIBUTION AS THE CONTRIBUTION HAD NOT BEEN MADE DIRECTLY TO THE EMPLOYEES BUT TO THE LIC BY CREATING LIC BASED FUND. THE LD. DR FURTHER SUBMITTED THAT IN THE PRESENT CASE, NO ACTUAL PAYMENT WAS MADE TO ANY EMPLOYEE. ON THE OTHER HAND, LD. COUNSEL FOR THE ASSESSEE SUB MITTED THAT THERE IS NO MERIT IN THE APPEAL OF THE REVENUE AS T HE LD. CIT(A) HAS DELETED THE ADDITION MADE ON ACCOUNT OF THE CON TRIBUTION MADE BY THE ASSESSEE TO UNAPPROVED PROVIDENT FUND B Y FOLLOWING 5 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH HIS ORDER PASSED IN ASSESSEES CASE APPEAL NO. 1053 1/17-18 FOR AY 2015-16. THE LD. COUNSEL FURTHER POINTED OUT THA T THE LD. CIT(A) HAD PASSED THE SAID ORDER BY FOLLOWING THE D ECISION OF THE THEN CIT(A) LUDHIANA IN ASSESSEES OWN CASE FOR THE A.Y. 2016-17. THE LD. COUNSEL FURTHER INVITED OUR ATTEN TION TO THE COPY OF CORRIGENDUM DATED 03.07.2020 ISSUED BY THE CIT-1, WHICH SHOWS THAT THE COMPETENT AUTHORITY ACCORDED A PPROVAL EMPLOYEES GROUP GRATUITY SCHEME VIDE ORDER DATED 09 .06.2020 W.E.F. 28.02.2012. 4. SO FAR AS THE ADDITION ON ACCOUNT OF DISALLOWAN CE OF LEAVE SALARY CONTRIBUTION IS CONCERNED, THE LD. COUNSEL S UBMITTED THAT LD. CIT(A) HAS DELETED THE SAID ADDITION BY FOLLOWI NG HIS OWN ORDER DATED 22.07.2019 PASSED IN ASSESSEES APPEAL NO. 03/16-17 FOR THE ASSESSMENT YEAR 2013-14. THE LD. COUNSEL F URTHER SUBMITTED THAT BOTH THE ISSUES ARE COVERED IN FAVOU R OF THE ASSESSEE BY THE DECISION OF THE CHANDIGARH BENCH OF THE TRIB UNAL RENDERED IN THE CASE OF H.P. STATE INDUSTRIAL CORPORATION LTD.VS. THE ACIT CIRCLE SHIMLA, ITA NO 1308/CHD/2012 FOR THE ASSESSMENT YEAR 2009-10 AND SINCE THE ORDER PASSED BY THE LD. CIT(A ) IS IN ACCORDANCE WITH THE DECISION OF THE CHANDIGARH BENC H OF THE 6 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH TRIBUNAL, THERE IS NO INFIRMITY IN THE IMPUGNED ORD ER. THE LD. COUNSEL ACCORDINGLY CONTENDED THAT THE APPEAL OF TH E REVENUE IS DEVOID OF ANY MERIT AND, THEREFORE, LIABLE TO BE DI SMISSED. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PART IES AND PERUSED THE MATERIAL ON RECORD. THE FIRST ISSUE REL ATES TO PAYMENT OF PREMIUM FOR GROUP GRATUITY MADE BY THE ASSESSEE TO LIC. DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UND ER CONSIDERATION, THE ASSESSEE MADE PAYMENT OF RS. 1,6 8,26,186/- TO THE LIC TOWARDS PREMIUM FOR EMPLOYEES GRATUITY SCHE ME. AS POINTED OUT BY THE LD. COUNSEL UNDER SECTION 36(1) (V) OF THE ACT, ANY PROVISION OR CONTRIBUTION MADE TO AN APPRO VED GRATUITY FUND IS ALLOWABLE PROVIDED THAT IT SHOULD BE APPROV ED BY THE CHIEF COMMISSIONER OF THE OF THE INCOME TAX. THE CO PY OF CORRIGENDUM DATED 3.7.2020 ISSUED BY THE CIT-1, CHA NDIGARH ESTABLISHES THE FACT THAT THE ASSESSEE HAD APPLIED FOR APPROVAL OF THE SAID SCHEME, WHICH WAS GRANTED BY THE AUTHORITY CONCERNED ON 28.2.2012. THE REVENUE DID NOT DISPUTE THE CONTE NTS OF THE SAID CORRIGENDUM. HENCE, IN OUR CONSIDERED VIEW, TH E LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION MADE BY THE AO, WR ONGLY HOLDING THAT THE SCHEME WAS NOT APPROVED BY THE CON CERNED 7 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH AUTHORITY. THEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). MOREOVER, THE LD. CIT(A) HAS ALLOWED THIS GROUND OF APPEAL OF THE ASSESSEE BY FOLLOWING HIS OWN ORDER PASSED IN THE ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2015-16. HENCE, WE FIND MERIT IN THE CONTENTION OF THE LD. C OUNSEL FOR THE ASSESSEE THAT THE GROUND RAISED BY THE REVENUE IS C OVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CO-ORDIN ATE BENCH OF THE TRIBUNAL. ACCORDINGLY, WE UPHOLD THE FINDINGS OF THE LD. CIT(A) AND DISMISS THIS GROUND OF APPEAL OF THE REV ENUE. 6. THE SECOND ISSUE RELATES TO DISALLOWANCE OF PRE MIUM PAID TOWARDS LEAVE ENCASHMENT SCHEME. WE NOTICE THAT DUR ING THE YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION , THE ASSESSEE MADE PAYMENT RS. 91,13,601/- BY CREATING LIC BASED FUND. THE AO MADE ADDITION OF THE SAID AMOUNT ON THE GROUND T HAT NO ACTUAL PAYMENT WAS MADE TO ANY EMPLOYEE. HOWEVER, I N THE FIRST APPEAL, THE LD. CIT(A) HAS ALLOWED THIS GROUND OF A PPEAL BY TAKING INTO CONSIDERATION THE FACT THAT THE ASSESSE E HAS TAKEN A GROUP LEAVE ENCASHMENT PLAN FROM LIC. THE ASSESSEE MADE A CONTRIBUTION OF RS. 1 CRORE DURING THE YEAR UNDER C ONSIDERATION TOWARDS THE SAID PLAN AND OUT OF THE SAID AMOUNT, R S. 91,13,601/- 8 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH WAS DEBITED TO THE PROFIT AND LOSS ACCOUNT BY THE A SSESSEE. AS CONTENDED BY THE LD. COUNSEL, THE ASSESSEE HAS MADE THE SAID PAYMENT IN ORDER TO SECURE THE PLAN FOR PAYMENT OF LEAVE ENCASHMENT AT THE TIME OF RETIREMENT OF ITS EMPLOYE ES ON ATTAINING THE AGE OF SUPERANNUATION AS PER THE TERM S AND CONDITIONS OF THE PLAN. WE FURTHER NOTICE THAT THE LD. CIT(A) HAS ALREADY DECIDED THE IDENTICAL ISSUE IN FAVOUR O F THE ASSESSEE IN ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2013-1 4 VIDE ORDER DATED 22.7.2019 AND THE DEPARTMENT DID NOT CHALLENG E THE FINDINGS OF THE LD. CIT(A). WE FURTHER NOTICE THAT THE LD. CIT(A) HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN ASSESSEES APPEAL FOR THE ASSESSMENT YEAR 2014-1 5. WE FURTHER NOTICE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE CO-ORDINATE BENCH OF THE TRIBUNAL IN T HE CASES OF THE H.P. STATE INDUSTRIAL CORPORATION LTD.VS. THE ACIT CIRCLE SHIMLA (SUPRA). SINCE, THE FINDINGS OF THE LD. CIT(A) ARE IN ACCORDANCE WITH THE DECISION OF THE COORDINATE BENCH DISCUSSED ABOVE, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDIN GS OF THE LD. CIT(A), HENCE, WE UPHOLD THE DECISION OF THE LD. CI T(A) AND DISMISS THIS GROUND OF APPEAL OF THE REVENUE. 9 ITA NO. 1433-C-19- THE CHANDIGARH STATE COOP BANK LTD, CHANDIGARH IN THE RESULT, APPEAL FILED BY THE REVENUE FOR TH E A.Y. 2012-13 IS DISMISSED. ORDER PRONOUNCED ON 23.03.2021. SD/- SD/- ( N.K. SAINI) (R.L.NEGI) /VICE PRESIDENT / JUDICIAL MEMBER DATED :23.03.2021 . . !'# $' / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. !!% / CIT 4. !!% ( )/ THE CIT(A) 5. &' , , ()* '+ / DR, ITAT, CHANDIGARH 6. '*, / GUARD FILE / BY ORDER, / ASSISTANT REGISTRAR