ACIT, Coimbatore V. M/s. Vedanayagam Hospitals Private Ltd., Coimbatore

ITA 1933/CHNY/2013

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 73748 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-03-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 27-02-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 04-11-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: G BASKAR

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL , A B ENCH, CHENNAI . , ! ' , # $ BEFORE SHRI A.MOHAN ALANKAMONY ACCOUNTANT MEMBER AND SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER ./I.T.A.NO. 1933/MDS/2013 ( / ASSESSMENT YEAR : 2010-11) ASSISTANT COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-I(3) 63-A RACE COURSE ROAD, COIMBATORE. VS. M/S. VEDANAYAGAM HOSPITALS PVT. LTD. 133, BHASYAKARALU ROAD, R.S.PURAM, COIMBATORE-641 002. PAN:AAACV9940R ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR. SHAJI P.JACOB, ADDL. CIT /RESPONDENT BY : MR. G.BASKAR, ADVOCATE / DATE OF HEARING : 27 TH FEBRUARY, 2014 ! /DATE OF PRONOUNCEMENT : 7 TH MARCH, 2014 % / O R D E R PER CHALLA NAGENDRA PRASAD, JM: THIS APPEAL IS FILED BY THE REVENUE AGAINST THE OR DER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-I, COIMBAT ORE DATED 6.8.2013 FOR THE ASSESSMENT YEAR 2010-11. 2. THE FIRST ISSUE IN THE GROUNDS OF APPEAL OF THE REVENUE IS THAT THE COMMISSIONER OF INCOME TAX (APPEALS) ER RED IN HOLDING THAT ASSESSEE IS ENTITLED FOR DEDUCTION UND ER SECTION ITA NO.1933/MDS/2013 2 80IA OF THE ACT. THE ASSESSING OFFICER WHILE COMPL ETING THE ASSESSMENT DISALLOWED DEDUCTION UNDER SECTION 80IA OF THE ACT ON THE PROFITS DERIVED FROM WINDMILL STATING TH AT ASSESSEE CLAIMED DEDUCTION BASED ON THE DECISION OF THE HIGH COURT IN THE CASE OF M/S. VELAYUDHASAMY SPINNING MILLS[P] LT D VS. ACIT (340 ITR 477) AND SINCE THE DEPARTMENT PREFERRED SLP BEFORE THE SUPREME COURT, WHICH IS PENDING FOR DECISION, HE IS COMPELLED TO MAKE NECESSARY ADDITION ON ACCOU NT OF THIS ISSUE. HOWEVER, COMMISSIONER OF INCOME TAX (AP PEALS) ALLOWED THE CLAIM OF THE ASSESSEE UNDER SECTION 80I A OF THE ACT, AGAINST WHICH THE REVENUE IS IN APPEAL BEFORE US. 3. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F THE ASSESSING OFFICER. 4. COUNSEL FOR THE ASSESSEE RELIES ON THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) AND THE DECISI ON OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE O F VELAYUDHASAMY SPINNING MILLS P.LTD., (SUPRA). ITA NO.1933/MDS/2013 3 5. HEARD BOTH SIDES. PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE CASE LAW RELIED ON. THE COMMISS IONER OF INCOME TAX (APPEALS) ALLOWED THE CLAIM OF THE ASSES SEE UNDER SECTION 80IA ON THE PROFITS DERIVED FROM THE WINDMILL OBSERVING AS UNDER:- THIS GROUND OF APPEAL IS AGAINST THE DISALLOWANCE O F THE CLAIM FOR DEDUCTION U/S . 80IA WITH REFERENCE TO THE PROFITS DERIVED FROM THE WIND MILL . THE APPELLANT CLA I MED DEDUCTION U/S . 80IA FOR PROFITS DERIVED FROM WIND MILLS, AND THE C LAIM WAS SUPPORTED BY THE AUDIT REPORTS IN FORM 10CCB AN D OTHER SUPPORTING STA T EMENTS. THE AUTHORISED REPRESENTATIVE SUBMITTED THAT THE CLAIM OF DEDUCTION U/S . 80IA IS BASED ON THE DECISION OF THE JURISDICTION OF HIGH COURT, REN DERED IN THE CASE OF M/S . SRI VELAYUTHASWAMY SPINNING MILLS PVT.LTD, REPORTED IN 340 ITR 477(2012). AS SEEN FROM THE ASSESSMENT ORDER, THE ASSESSING OFFICER DISALLOWED THE CLAIM FOR THE REASON THAT THE DEPARTMENT HAS PREFER RED SPECIAL LEAVE PETITION (SLP) BEFORE THE HON'BLE SUP REME COURT, WHICH IS PENDING FOR DECISION. HOWEVER, RESP ECTFULLY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH C OURT IN THE CASE OF MIS.SRI VELAYUTHASWAMY SPINNING MILLS PVT. LTD, REPORTED IN 340 ITR 477{2012L THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CLAIM OF DEDUCTION U/S.. 801A . THIS GROUND OF APPEAL IS ALLOWED . 6. ON READING OF THE ABOVE ORDER, WE FIND THAT CLAI M OF THE ASSESSEE WAS ALLOWED BY THE COMMISSIONER OF INCOME TAX (APPEALS) FOLLOWING THE DECISION OF THE HONBLE JU RISDICTIONAL HIGH COURT IN THE CASE OF M/S. VELAYUDHASAMY SPINNI NG MILLS P.LTD., (SUPRA). IN THE CIRCUMSTANCES, WE DO NOT FI ND ANY VALID REASON TO INTERFERE WITH THE ORDER OF THE COMMISSIO NER OF ITA NO.1933/MDS/2013 4 INCOME TAX (APPEALS) IN ALLOWING THE CLAIM OF THE A SSESSEE. THE GROUND OF APPEAL RAISED BY THE REVENUE ON THIS ISSUE IS REJECTED. 7. THE NEXT ISSUE IN THE GROUNDS OF APPEAL OF THE R EVENUE IS THAT COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DELETING THE DISALLOWANCE MADE UNDER SECTION 36(1)( V) OF THE ACT IN RESPECT OF GRATUITY PAID BY THE ASSESSEE. ON APPEAL, THE COMMISSIONER OF INCOME TAX (APPEALS) ALLOWED TH E CLAIM OF THE ASSESSEE AGAINST WHICH REVENUE IS IN APPEAL BEFORE US. 8. DEPARTMENTAL REPRESENTATIVE SUPPORTS THE ORDER O F ASSESSING OFFICER IN REJECTING THE CLAIM OF THE ASS ESSEE AND SUBMITS THAT IN THE ABSENCE OF ANY APPROVAL BY THE COMMISSIONER, DISALLOWANCE MADE BY THE ASSESSING OF FICER IS JUSTIFIED. 9. COUNSEL FOR THE ASSESSEE SUBMITS THAT ASSESSEE F ORMED GROUP GRATUITY SCHEME AND THE CONTRIBUTIONS TO SUCH GROUP ITA NO.1933/MDS/2013 5 GRATUITY SCHEME WERE PAID TO LIC REGULARLY FROM TH E ASSESSMENT YEAR 1995-96 ONWARDS. IN THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESSEE COULD NOT PRODUCE COPY OF APPROVAL LETTER GRANTED BY THE COMMISSIONER AS I T WAS NOT TRACEABLE IN THE EARLIER YEARS. HOWEVER, APPLICATI ON FURNISHED BEFORE THE COMMISSIONER OF INCOME TAX IN JUNE, 1994 REQUESTING FOR APPROVAL OF GRATUITY SCHEME WAS FURN ISHED. THE COUNSEL SUBMITS THAT COMMISSIONER OF INCOME TAX (AP PEALS) HAS RIGHTLY ALLOWED THE CLAIM OF THE ASSESSEE. HE H AS ALSO PLACES RELIANCE ON THE DECISION OF THE HONBLE SUPR EME COURT IN THE CASE OF CIT VS. M/S.TEXTOOL CO.LTD., IN CIVI L APPEAL NO.447 OF 2003 DATED 9.9.2009 AND SUBMITS THAT THE APEX COURT ALLOWED THE CLAIM OF THE ASSESSEE WHERE CONTR IBUTION WAS DIRECTLY MADE TO LIC INSTEAD OF APPROVED GRATUI TY FUND. 10. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTHO RITIES AND DECISIONS RELIED ON. THE ASSESSING OFFICER DEN IED DEDUCTION UNDER SECTION 36(1)(V) STATING THAT ASSES SEE HAS NOT PRODUCED ANY APPROVAL FROM THE COMMISSIONER FOR GROUP GRATUITY SCHEME FORMED BY THE ASSESSEE. COMMISSIONE R OF ITA NO.1933/MDS/2013 6 INCOME TAX (APPEALS) CONSIDERING THE FACT THAT ASSE SSEE HAS ESTABLISHED EMPLOYEES GRATUITY TRUST AND MAKING CONTRIBUTIONS TO LIC UNDER GROUP GRATUITY SCHEME RI GHT FROM THE INCEPTION I.E. ASSESSMENT YEAR 1995-96 ONWARDS AND SINCE THERE WAS NO DISALLOWANCE IN ANY OF THE ASSES SMENT YEARS PRIOR TO THE ASSESSMENT YEAR UNDER APPEAL, HE ALLOWED THE CLAIM OF THE ASSESSEE AND DIRECTED THE ASSESSIN G OFFICER TO ALLOW CONTRIBUTION TO EMPLOYEES GRATUITY FUND OB SERVING AS UNDER:- THIS GROUND OF APPEAL IS AGAINST THE D I SALLOWANCE OF THE ACTUAL CONTRIBUTION MADE BY THE APPELLANT TO LL C UNDER THE GROUP GRATUITY SCHEME, ESTABLISHING EMPLOYEE GRATU I TY TRUST . THE AUTHORISED REPRESENTATIVE SUBMITTED THAT SEVERAL YEARS AGO THE APPELLANT HAD SUBMITTED NECESSARY APPLICATION TO THE COMMISS I ONER OF INCOME - TAX , COIMBATORE AND THAT THE DISALLOWANCE IS UNJUSTIFIED WHEN THE S I MILAR CONTRIBUT I ONS WERE ALLOWED FOR THE PAST MANY YEARS . AS SEEN FROM THE FACTS THE APPELLANT ESTABLISHED A GRATUITY FUND UNDER LLC GROUP GRATUITY SCHEME, INIT IATED FROM THE ASSESSMENT YEAR 1995 - 96 AND CONTRIBUTIONS WERE MADE FROM YEAR TO YEAR BY PAYMENT TO LIC . DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE APPELLANT COULD NOT PRODUCE COPY OF THE LETTER OF APPROVAL GR ANTED BY THE COMMISSIONER OF INCOME-TAX, COIMBATORE. AS THE LETTER WAS NOT TRACEAB L E IN THE EARLIER YEARS , THE ASSESSING OFFICER WAS ALLOW I NG THE DEDUCTION ON ACCOUNT OF CONTR I BUTION TO LLC GROUP GRATUITY SCHEME . THE APPELLANT FU R NISHED A COPY OF APPLICATION SUBMITTED TO THE COMMISSIONER OF INCOME-TAX , COIMBATORE ON JUNE 1994 REQUESTING FOR APPROVAL OF THE GRATUITY SCHEME . THE APPELLANT ALSO FILED THE EARLIER YEARS ORDERS TO ES TABLISH THE ITA NO.1933/MDS/2013 7 FACT THAT NO DISALLOWANCE WAS MADE DURING THE COURS E OF SCRUTINY . CONSIDERING THIS FACTS, THE ASSESSING OFFICER IS DIRECTED TO ALLOW THE CONTRIBUTION TO EMPLOYEES GRA TUITY FUND . TH I S GROUND OF APPEAL IS ALLOWED. 11. IN THE CASE OF CIT VS. TEXTOOLS CO.LTD., (SUPRA ), ASSESSEE PAID CONTRIBUTION GRATUITY FUND DIRECTLY T O LIC INSTEAD OF TO APPROVED GROUP GRATUITY FUND BY THE COMMISSIONER, THE ASSESSING OFFICER DISALLOWED THE CLAIM OF THE ASSESSEE. HOWEVER, THE COMMISSIONER OF INCOME T AX (APPEALS) ALLOWED THE CLAIM OF THE ASSESSEE HOLDING THAT OBJECT OF THE FUND WAS ACHIEVED BY THE ASSESSEE AND THEREFORE NARROW INTERPRETATION OF THE PROVISION WO ULD BE STRAINING THE LANGUAGE OF SECTION 36(1)(V) THAT SO AS TO DENY DEDUCTION CLAIMED BY THE ASSESSEE. THIS VIEW OF THE COMMISSIONER OF INCOME TAX (APPEALS) WAS UPHELD BY THE HONBLE SUPREME COURT. 12. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY GOOD R EASON TO INTERFERE WITH THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS) IN THE PRESENT APPEAL IN ALLOWING THE CLA IM OF THE ASSESSEE ON THIS ISSUE. ITA NO.1933/MDS/2013 8 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON FRIDAY, THE 7 TH DAY OF MARCH, 2014 AT CHENNAI. SD/- SD/- (A.MOHAN ALANKAMONY) (CHALLA NAGEN DRA PRASAD) ACCOUNTANT MEMBER JUDI CIAL MEMBER CHENNAI, DATED THE 7 TH MARCH, 2014. SOMU COPY TO: (1) APPELLANT (4) CIT(A) (2) RESPONDENT (5) D.R (3) CIT (6) G.F.