M/s.Dinesh Textiles, Kannur V. The ITO, Kannur

ITA 167/COCH/2013

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 69045 (ITAT-COCHIN)
• Duration Of Justice: 7 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-11-2013
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Next Hearing Date: 01-10-2013
• Assessment Year: 2006-2007
• Appeal Filed On: 03-04-2013
• Court: TRIBUNAL
• Department Lawyers: K K JOHN
• Assessee Lawyers: U MOHANAN
• Section: 37

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND B.R.BASKAR AN, AM I.T.A. NO. 167/COCH/2013 ASSESSMENT YEAR : 2006-07 M/S. DINESH TEXTILES, CHIRAKKAL, KANNUR. [PAN:AABFD 6379E] VS. THE INCOME TAX OFFICER, WARD- 1(1), KANNUR (ASSESSEE -APPELLANT) (REVENUE-R ESPONDENT) ASSESSEE BY SHRI U. MOHANAN, REVENUE BY SHRI K.K. JOHN, SR. DR DATE OF HEARING 01/10/2013 DATE OF PRONOUNCEMENT 22/11/2013 O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER: THE APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 01-01-2013 PASSED BY LD CIT(A)-II, KOZHIKODE CONFIRMING THE DI SALLOWANCE OF RS.1,80,000/-, BEING THE CONTRIBUTION MADE TOWARDS LIC GROUP GRATUITY SC HEME, ON THE GROUND THAT THE SAID SCHEME IS NOT APPROVED UNDER THE INCOME-TAX ACT. T HE APPEAL RELATES TO THE ASSESSMENT YEAR 2006-07. 2. THE AO NOTICED THAT ASSESSEE HAS CONTRIBUTED A S UM OF RS.1,80,000/- TO THE LIC GROUP GRATUITY SCHEME AND CLAIMED THE SAME AS DEDUC TION. THE AO ALSO NOTICED THAT, AS PER THE PROVISIONS OF SEC. 36(1)(V) OF THE ACT T HE PAYMENT MADE TO APPROVED GRATUITY FUND IS ALLOWABLE AS A DEDUCTION. SINCE THE LIC G ROUP GRATUITY SCHEME OF THE ASSESSEE WAS NOT APPROVED UNDER THE INCOME TAX ACT, THE AO D ISALLOWED THE ABOVE SAID CLAIM OF RS.1,80,000/- AND THE SAME WAS ALSO UPHELD BY LD CI T(A). HENCE, THE ASSESSEE HAS FILED THIS APPEAL BEFORE US. I.T.A. NO.167/COCH/2013 2 3. BEFORE US, THE LD A.R SUBMITTED THAT THE ASS ESSEE HAD FILED APPLICATION SEEKING APPROVAL BEFORE LD CIT, BUT IT DID NOT RECEIVE ANY COMMUNICATION FROM HIM. THE LD A.R ALSO SUBMITTED THAT THE ASSESSEE MADE ENQUIRIES WIT H THE OFFICE OF THE COMMISSIONER OF INCOME TAX IN THIS REGARD, BUT IT WAS TOLD THAT THE APPLICATION FILED BY IT WAS NOT TRACEABLE. ACCORDINGLY, HE SUBMITTED THAT THE ASSE SSEE CANNOT BE COMPELLED TO DO AN ACT OF IMPOSSIBILITY AND HENCE IT SHOULD BE PRESUME D THAT THE SCHEME IS DEEMED TO HAVE BEEN APPROVED BY THE COMMISSIONER OF INCOME TA X. HE FURTHER SUBMITTED THAT THE ASSESSEE HAS SUBSCRIBED TO LIC GROUP GRATUITY SCHEM E AND HAS CONTRIBUTED RS.1,80,000/- DURING THIS YEAR AND CLAIMED THE SAM E AS DEDUCTION. HE SUBMITTED THAT THE SAID PAYMENT IS ALLOWABLE U/S 37 OF THE ACT, AS THE SAME WAS INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSES OF BUSINESS. 4. ON THE CONTRARY, THE LD D.R SUBMITTED THAT T HE LIC GROUP GRATUITY SCHEME WAS NOT APPROVED BY LD CIT AND HENCE THE CONTRIBUTION OF RS .1,80,000/- MADE BY THE ASSESSEE IS LIABLE TO BE DISALLOWED U/S 40A(9) OF THE ACT. 5. WE HAVE HEARD THE RIVAL CONTENTIONS AND CAREFULL Y PERUSED THE RECORD. IT IS AN ADMITTED FACT THAT THE LIC GROUP GRATUITY SCHEME, T O WHICH THE CONTRIBUTION OF RS.1,80,000/- WAS MADE, WAS NOT APPROVED BY THE LD CIT UNDER THE INCOME TAX ACT. THOUGH THE ASSESSEE CONTENDS THAT IT HAD FILED APPL ICATION SEEKING APPROVAL AND THE SAID APPLICATION WAS NOT TRACEABLE IN THE INCOME TA X DEPARTMENT, YET IT DID NOT FILE ANY DOCUMENT TO SUBSTANTIATE THE SAID CONTENTIONS. EVEN OTHERWISE, IN OUR VIEW, WRITTEN APPROVAL OF THE SCHEME GRANTED BY THE LD CIT IS A M ANDATORY CONDITION FOR ALLOWING THE DEDUCTION OF IMPUGNED AMOUNT AS PER THE PROVISIONS OF SEC. 36(1)(V) OF THE ACT. THE CONTENTION OF THE ASSESSEE THAT THE IMPUGNED PAYMEN T IS ALLOWABLE U/S 37 OF THE ACT IS ALSO IS ALSO LIABLE TO BE REJECTED IN VIEW OF THE S PECIFIC PROVISIONS OF SEC. 40A(9) OF THE ACT, WHICH PROHIBITS DEDUCTION OF PAYMENTS MADE TO UNAPPROVED FUNDS. HENCE, WE DO NOT FIND ANY INFIRMITY IN THE DECISION OF LD CIT(A) ON THIS ISSUE. I.T.A. NO.167/COCH/2013 3 6. IN THE RESULT, THE APPEAL FILED BY THE AS SESSEE IS DISMISSED. PRONOUNCED ACCORDINGLY ON 22-11-2 013. SD/- SD/- (N.R.S.GANESAN) (B.R.BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER PLACE: KOCHI DATED: 22ND NOVEMBER, 2013 GJ COPY TO: 1. M/S. DINESH TEXTILES, CHIRAKKAL, KANNUR. 2. THE INCOME TAX OFFICER, WARD-1(1), KANNUR. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOZH IKODE. 4. THE COMMISSIONER OF INCOME-TAX, KOZHIKODE. 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T, COCHIN I.T.A. NO.167/COCH/2013 4