M/s. DLF Universal Limited, Gurgaon V. Addl.CIT, Gurgaon

ITA 2459/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5161 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-08-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 17-05-2017
• Assessment Year: 2009-2010
• Appeal Filed On: 22-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANSHUL PRAKASH
• Assessee Lawyers: SATYAJEET GOEL CAS
• Keywords: Revised return

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCHES : B : NEW DELHI BEFORE SHRI R.S. SYAL, VICE PRESIDENT AND SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER ITA NO.2459/DEL/2014 ASSESSMENT YEAR : 2009-10 DLF UNIVERSAL LIMITED, 3 RD FLOOR, SHOPPING MALL, ARJUN MARG, DLF CITY PHASE-1, GURGAON. PAN: AAACJ1655P VS. ADDL. CIT, RANGE-I, GURGAON. (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI R.S. SINGHVI & SHRI SATYAJEET GOEL, CAS DEPARTMENT BY : SHRI ANSHUL PRAKASH, SR. DR DATE OF HEARING : 17.08.2017 DATE OF PRONOUNCEMENT : 18.08.2017 ORDER PER R.S. SYAL, VP: THIS APPEAL FILED BY THE ASSESSEE ARISES OUT OF TH E ORDER PASSED BY THE CIT(A) ON 10.02.2014 IN RELATION TO THE ASSESSM ENT YEAR 2009-10. ITA NO.2459/DEL/2014 2 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS AGAINST THE CONFIRMATION OF DISALLOWANCE OF RS.61,34,922/- ON ACCOUNT OF LEAVE ENCASHMENT AND RS.64,21,793/- ON ACCOUNT OF PROVISION FOR GRATUITY FOR NON-PAYMENT. 3. SUCCINCTLY, THE FACTS OF THE CASE ARE THAT THE A SSESSEE ORIGINALLY FILED ITS RETURN AT A LOSS OF RS.107.99 CRORE. SUB SEQUENTLY, A REVISED RETURN WAS FILED AT AN INCOME OF RS.182.30 CRORE. THE REVISED RETURN WAS FILED TO GIVE EFFECT TO THE AMALGAMATION OF 11 COMP ANIES INTO THE ASSESSEE COMPANY PURSUANT TO A MERGER PETITION FILE D WITH THE HON'BLE DELHI HIGH COURT WITH EFFECTIVE DATE OF 01.04.2008. IN THE COMPUTATION OF INCOME, THE ASSESSEE REDUCED LEAVE ENCASHMENT AM OUNTING TO RS.75.83 LAC AND GRATUITY AMOUNTING TO RS.64.21 LAC . THE ASSESSING OFFICER RECORDED IN THE ASSESSMENT ORDER THAT PAYME NT OF GRATUITY AND LEAVE ENCASHMENT WAS NOT MADE TO THE EMPLOYEES AND HENCE THE LIABILITY WAS NOT DISCHARGED. THE ASSESSEES SUBMISSION THAT : `SERVICE TILL THE DATE OF TRANSFER WAS ACTUALLY TAKEN BY THE TRANSFER OR COMPANY AND DEBITED TO THE P&L ACCOUNT BY THE TRANSFEROR COMPAN Y DID NOT FIND FAVOUR WITH THE ASSESSING OFFICER. INVOKING THE PR OVISIONS OF SECTION ITA NO.2459/DEL/2014 3 43B(B) AND (F), HE MADE THE ABOVE DISALLOWANCES. T HE LD. CIT(A) GAVE DIRECTION TO THE ASSESSING OFFICER FOR VERIFYING TH E AMOUNT OF PROVISION FOR LEAVE ENCASHMENT AS PER PARA 3.3 OF HIS ORDER A ND SUSTAINED THE DISALLOWANCE ON ACCOUNT OF PROVISION FOR GRATUITY. THE ASSESSEE HAS COME UP IN APPEAL BEFORE US AGAINST SUCH SUSTENANCE OF DISALLOWANCES. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND P ERUSED THE RELEVANT MATERIAL ON RECORD. IT CAN BE SEEN FROM THE ASSESS MENT ORDER THAT THE ASSESSEE MADE A CLAIM OF DEDUCTION TOWARDS LEAVE EN CASHMENT AND GRATUITY BY CONTENDING THAT SOME OF ITS EMPLOYEES W ERE TRANSFERRED AND THE AMOUNTS STANDING TO THEIR CREDIT WERE ALSO TRAN SFERRED TO OTHER COMPANIES AND, HENCE, SUCH TRANSFER OF AMOUNTS SHOU LD BE CONSTRUED AS PAYMENT OF GRATUITY TO BE ELIGIBLE FOR DEDUCTION. SIMILAR CONTENTION WAS MADE BY THE LD. AR AS WELL BEFORE US. THE AO HAS RE PRODUCED SCHEDULE 22 OF AUDIT REPORT, WHICH READS AS UNDER:- SCHEDULE 22 - NOTE TO THE COMBINED FINANCIAL INFO RMATION 1. THE COMBINED-FINANCIAL INFORMATION IS PREPARED F OR FILING OF INCOME TAX RETURN BASED ON THE SCHEME OF AMALGAMATI ON OF M/S NECIA BUILDERS AND DEVELOPERS PRIVATE LIMITED, M/S PAT IN FRASTRUCTURES PRIVATE LIMITED, M/S ADRIENNE BUILDERS AND CONSTRUCTIONS PR IVATE LIMITED, M/S ITA NO.2459/DEL/2014 4 DLF FOOD COURTS PRIVATE LIMITED, M/S DLF RETAIL SER VICES LIMITED, M/S DLF COMMERCIAL COMPLEXES LTD, M/S CALLISLA BUILDERS AND CONSTRUCTIONS PVT. LTD. M/S GAVIN BUILDERS AND DEVE LOPERS PRIVATE LIMITED, M/S ALASTAIR BUILDERS AND DEVELOPERS PRIVA TE LIMITED, M/S AMODA BUILDERS AND DEVELOPERS PVT. LTD. AND M/S LEA NDRA BUILDERS & DEVELOPERS PVT. LTD. ('AMALGAMATING COMPANIES') WIT H DLF RETAIL DEVELOPERS LIMITED ('TRANSFEREE COMPANY') WITH THE APPOINTED DATE AS APRIL 10, 2008. 2. THE COMBINED FINANCIAL INFORMATION AS AT MARCH 3 1, 2009 HAVE BEEN PREPARED TO PRESENT THE COMBINED CAPITAL, ASSE TS AND LIABILITIES AND FINANCIAL PERFORMANCE OF THE AMALGAMATING COMPANIES ON A LINE BY LINE BASIS AND AFTER ADJUSTMENT OF ELIMINATION OF COMMON TRANSACTIONS AS OF AND FOR THE YEAR ENDED MARCH 31, 2009. 5. THE ABOVE NOTE INDICATES THAT 11 COMPANIES AMALG AMATED WITH THE ASSESSEE COMPANY. THIS FACT HAS ALSO BEEN RECORDED BY THE LD. CIT(A) IN PARA 3.3 OF HIS ORDER WHILE DEALING WITH THE DISALL OWANCE U/S 43B(B) AND (F). WE ARE UNABLE TO APPRECIATE AS TO HOW THE EMP LOYEES OF THE ASSESSEE WERE TRANSFERRED TO OTHER COMPANIES WHEN THE FACT I S THAT CERTAIN OTHER COMPANIES GOT AMALGAMATED WITH THE ASSESSEE. IN SU CH A SCENARIO, THE EMPLOYEES OF OTHER COMPANIES SHOULD HAVE JOINED THE ASSESSEE COMPANY. THE ENTIRE CASE OF THE ASSESSEE IS BASED ON THE PRE MISE THAT ITS EMPLOYEES WERE TRANSFERRED TO OTHER GROUP COMPANIES AND TRANS FER OF THE AMOUNT PAYABLE AS LEAVE ENCASHMENT AND GRATUITY SHOULD BE CONSIDERED AS ITA NO.2459/DEL/2014 5 PAYMENT TO BE ELIGIBLE FOR DEDUCTION. WHEN WE VIEW THE POSITION IN ENTIRETY, IT CLEARLY EMERGES THAT THERE IS SOME CO NFUSION IN THE FACTUAL SCENARIO AS RECORDED BY THE AUTHORITIES BELOW. IT I S NOT CLEAR AS TO WHETHER THE DISALLOWANCE PERTAINS TO THE EMPLOYEES OF THE ASSESSEE COMPANY TRANSFERRED TO OTHER COMPANIES OR THE EMPLO YEES OF SOME OTHER COMPANIES GETTING TRANSFERRED TO THE ASSESSEE COMPA NY ON AMALGAMATION. SINCE THE NECESSARY FACTUAL POSITION IS NOT CLEAR, WE ARE CONSTRAINED TO GIVE ANY FINDING ON THE DEDUCTIBILIT Y OR OTHERWISE OF THE AMOUNTS IN QUESTION. WE, THEREFORE, SET ASIDE THE IMPUGNED ORDER AND REMIT THE MATTER TO THE FILE OF AO FOR FIRSTLY ASCE RTAINING THE CORRECT FACTS AND THEN DECIDING THE ISSUE AS PER LAW AFTER ALLOWI NG A REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. 6. IN THE RESULT, THE APPEAL IS ALLOWED FOR STATIST ICAL PURPOSES. THE ORDER PRONOUNCED IN THE OPEN COURT ON 18.08.201 7. SD/- SD/- [K. NARASIMHA CHARY] [R.S. SYAL] JUDICIAL MEMBER VICE PRESIDENT DATED, 18 TH AUGUST, 2017. ITA NO.2459/DEL/2014 6 DK COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT (A) 5. DR, ITAT AR, ITAT, NEW DELHI.