Ahmednagar Jilha Prathamik Shikshak Sahakari Bank Ltd., Ahmednagar V. Deputy Commissioner of Income-tax,

ITA 2615/PUN/2016

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 4915 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-02-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 06-02-2019
• Assessment Year: 2012-2013
• Appeal Filed On: 17-11-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: HEMANT LEUVA
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI VIKAS AWASTHY, JM / ITA NO. 2615/PUN/2016 / ASSESSMENT YEAR : 2012-13 AHMEDNAGAR JILHA PRATHAMIK SHIKSHAK SAHAKARI BANK LTD. AIKYA MANDIR, ANANDI BAZAAR, AHMEDNAGAR-414 001. PAN : AAAJA0961E ....... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, AHMEDNAGAR CIRCLE, AHMEDNAGAR. / RESPONDENT ASSESSEE BY : SHRI NIKHIL S. PATHAK REVENUE BY : SHRI HEMANT LEUVA / DATE OF HEARING : 11.02.2019 / DATE OF PRONOUNCEMENT : 14.02.2019 / ORDER PER VIKAS AWASTHY, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORD ER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, PUNE DATED 22.07.20 16 FOR THE ASSESSMENT YEAR 2012-13. 2 ITA NO. 2615/PUN/2016 A.Y. 2012-13 THE ASSESSEE IN APPEAL HAS RAISED FOUR GROUNDS INCLUDING S UB-GROUNDS FOR GROUND NO.1 AND 2. 2. SHRI NIKHIL S. PATHAK APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED AT THE OUTSET THAT THE GROUND NO.2 ALONG WITH ITS SUB-GROU NDS AND GROUND NO.3 ARE NOT PRESSED. HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. 3. THE LD. AR OF THE ASSESSEE SUBMITTED THAT IN GROUND NO. 1.1 TO 1.6, THE SOLITARY ISSUE IS DISALLOWANCE OF PROVISIONS FOR EMPLOYEES BONUS & EX-GRATIA RS.55,43,239/-. THE LD. AR SUBMITTED THAT THE ASSESSEE IS A CO-OPERATIVE SOCIETY ENGAGED IN THE BANKING BUSINESS. THE ASSESSEE HA D CREATED PROVISION FOR EMPLOYEES EX-GRATIA AND BONUS AND EMPLOYEES GRATU ITY PAYMENTS IN THE PERIOD RELEVANT TO ASSESSMENT YEAR UNDER APPEAL. THE LD. AR FAIRLY ADMITTED THAT THE ACTUAL PAYMENT WAS MADE IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2013-14. THE ASSESSING OFFICER INVOKED THE PROVISIONS OF SECTION 43B OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS T HE ACT) AND HELD THAT THE PROVISION FOR EMPLOYEES BONUS AND EX-GRATIA ARE NOT ALLOW ABLE AS THE SAME HAVE NOT BEEN PAID IN THE PERIOD RELEVANT TO THE ASSESSMENT YEAR 2012-13. AGGRIEVED WITH THE ASSESSMENT ORDER DATED 26.03.2015, THE ASSE SSEE FILED APPEAL BEFORE THE COMMISSIONER OF INCOME TAX (APPEALS). THE COMMISSIONER OF INCOME TAX (APPEALS) UPHELD THE FINDINGS OF THE ASSESSING O FFICER AND DISMISSED THE APPEAL OF THE ASSESSEE. NOW THE ASSESSEE IS IN SECOND APPEAL BEFORE THE TRIBUNAL. 4. THE LD. AR FOR THE ASSESSEE SUBMITTED THAT THE ASSES SEE HAS IN FACT PAID THE AMOUNT DURING THE PERIOD RELEVANT TO THE ASSESSMEN T YEAR 2013-14 BUT HAS 3 ITA NO. 2615/PUN/2016 A.Y. 2012-13 CREATED THE PROVISION IN THE ASSESSMENT YEAR UNDER APP EAL. THE PROVISION OF SECTION 43B OF THE ACT DOES NOT APPLY TO EX-GRATIA PAY MENTS, THEREFORE, IT SHOULD BE ALLOWED IN THE YEAR OF CREATING PROVISION. IN SUPP ORT OF HIS SUBMISSIONS, THE LD. AR PLACED RELIANCE ON THE DECISION OF H YDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF NOVOPAN INDUSTRIES LIMITED VS. DCIT, IN ITA NO.1661/HYD/2008 FOR THE ASSESSMENT YEAR 2004-05 DECIDED ON 0 4.09.2013. 5. ON THE OTHER HAND, SHRI HEMANT LEUVA REPRESENTING TH E DEPARTMENT VEHEMENTLY DEFENDED THE ORDER OF THE COMMISSIONER OF INC OME TAX (APPEALS). THE LD. DR SUBMITTED THAT THE ASSESSEE HAS NOT MADE AC TUAL PAYMENT DURING THE PERIOD RELEVANT TO THE ASSESSMENT YEAR UNDER APPE AL. MERELY CREATING PROVISION WOULD NOT ENTITLE THE ASSESSEE TO CLAIM EXPENDITURE. 6. BOTH SIDES HEARD. ORDERS OF THE AUTHORITIES BELOW PERU SED. THE SOLITARY ISSUE RAISED BEFORE US FOR ADJUDICATION IN THE APPEAL IS WITH RESPECT TO ALLOWABILITY OF PROVISIONS FOR EMPLOYEES BONUS AND EX-GRATIA. IT IS AN UNDISPUTED FACT THAT THE ASSESSEE HAS MERELY CREATED PROVISION OF RS.55,43,239/- IN THE PERIOD RELEVANT TO THE ASSESSMENT Y EAR UNDER APPEAL. ACTUAL PAYMENT OF BONUS AND EX-GRATIA HAS BEEN MADE IN THE SUBSEQUENT ASSESSMENT YEAR. THE CREATING OF PROVISION INDICATES CONTIN GENT LIABILITY WHICH CANNOT BE ALLOWED AS EXPENDITURE ON MERE CREATION OF PRO VISION. IT IS ONLY ALLOWABLE IN THE YEAR OF PAYMENT. THE LD. AR STATED AT THE BAR THAT THE PAYMENTS WERE MADE IN THE PERIOD RELEVANT TO THE ASSES SMENT YEAR 2013-14. WE DO NOT FIND ANY INFIRMITY IN THE IMPUGNED ORDER REJECTING ASSESSEES CLAIM IN THE ASSESSMENT YEAR 2012-13. CONSEQUENTLY, THE GROUN D NO.1 OF THE APPEAL IS DISMISSED. 4 ITA NO. 2615/PUN/2016 A.Y. 2012-13 HOWEVER, THE CLAIM OF ASSESSEE IS ALLOWABLE IN THE YEAR OF AC TUAL PAYMENT. TAKING INTO CONSIDERATION THE FACTS OF THE CASE, WE DEEM IT APPROPRIATE TO DIRECT THE ASSESSING OFFICER TO VERIFY THE GENUINENESS OF THE PAYMENTS SO MADE AND ALLOW THE SAME IN THE YEAR OF ACTU AL PAYMENT, IN ACCORDANCE WITH LAW. 7. THE LD. AR HAS STATED AT THE BAR THAT HE IS NOT PRESS ING GROUND NO. 2 AND 3. THE SAID GROUNDS ARE DISMISSED AS NOT PRESSED. 8. THE GROUND NO.4 IS GENERAL IN NATURE AND HENCE, REQUIR ES NO ADJUDICATION. 9. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PRONOUNCED ON THURSDAY, THE 14TH DAY OF FEBRUARY, 2019 . SD/- SD/- R. S. SYAL VIKAS AW ASTHY VICE-PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 14 TH FEBRUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT(APPEALS)-2, PUNE. 4. THE PR. CIT-1, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, A BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 5 ITA NO. 2615/PUN/2016 A.Y. 2012-13 DATE 1 DRAFT DICTATED ON 11.02.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 12.02.2019 SR.PS/PS 3 DRAFT PROPOSED AND PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER AM/JM 5 APPROVED DRAFT COMES TO THE SR. PS/PS SR.PS/PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS/PS 7 DATE OF UPLOADING OF ORDER SR.PS/PS 8 FILE SENT TO BENCH CLERK SR.PS/PS 9 DATE ON WHICH THE FILE GOES TO THE HEAD CLERK 10 DATE ON WHICH FILE GOES TO THE A.R 11 DATE OF DISPATCH OF ORDER