ACIT, Nainital V. M/s. The Nainital Bank Ltd., Nainital

ITA 3147/DEL/2013

• Counselvise Citation: 314720114 RSA 2013
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-04-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 02-04-2014
• Assessment Year: 2010-2011
• Appeal Filed On: 20-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: K R RASTOGI
• Assessee Lawyers: D SRINIVAS
• Keywords: Revenue expenditure
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH: H NEW DELHI BEFORE SMT DIVA SINGH, JUDICIAL MEMBER AND SHRI B.C.MEENA, ACCOUNTANT MEMBER I.T.A .NO.-3147/DEL/2013 (ASSESSMENT YEAR-2010-11) ACIT, GOLGHAR, BARA BAZAR, NAINITAL (APPELLANT) VS M/S THE NAINITAL BANK LTD. SEVEN OAKS, MALLITAL, NAINITAL PAN-AAACT5714D (RESPONDENT) APPELLANT BY: SH.K.R.RASTOGI, ADV. RESPONDENT BY: SH. D.SRINIVAS, SR. DR ORDER PER DIVA SINGH, JM THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER DATED 07.03.2013 OF CIT(A)-II, DEHRADUN PERTAINING TO 2006-07 ASSES SMENT YEAR ON THE FOLLOWING GROUNDS:- 1. WHETHER THE LD. CIT(A) WAS CORRECT, ON FACTS AND I N THE CIRCUMSTANCES OF THE CASE, IN NOT APPRECIATING THE FACT THAT THE DIS ALLOWANCE U/S 43B OF THE I.T. ACT IN RESPECT OF THE PAYMENT OF LEAVE ENCASHM ENT BENEFIT WHICH WAS NOT DUE TO THE ELIGIBLE EMPLOYEES DURING THE YEAR U NDER CONSIDERATION WAS JUSTIFIED AS THE LIABILITY TO PAY HAS NOT INCURRED WHICH IS ESSENTIAL FOR ALLOWABILITY OF EXPENDITURE UNDER MERCANTILE SYSTEM OF ACCOUNTING. 2. RIGHT AT THE OUTSET IT WAS SUBMITTED BY THE LD. AR THAT THE POINT AT ISSUE IS FULLY COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDE R OF THE CO-ORDINATE BENCH IN ASSESSEES OWN CASE ON THE VERY SAME POINT. ATTENT ION WAS INVITED TO THE ORDER DATED 14.09.2012 IN ITA NO-3492/DEL/2012 (COPY PLAC ED AT PAGES 3-7 OF THE PAPER BOOK FILED) WHEREIN ON IDENTICAL FACTS & CIRC UMSTANCES IDENTICAL GROUND OF THE REVENUE WAS DISMISSED. SIMILAR VIEW IT WAS SU BMITTED HAS BEEN HELD BY THE TRIBUNAL BY ITS ORDER DATED 11.01.2012 AGAIN IN THE CASE OF THE ASSESSEE FOR 2008- I.T.A .NO.-3147/DEL/2013 2 09 ASSESSMENT YEAR IN ITA NO-3606/DEL/2011 (COPY PL ACED AT PAGES 8-12 OF THE PAPER BOOK). THE SAID VIEW HAS BEEN AFFIRMED BY TH E JURISDICTIONAL HIGH COURT IN THE CASE OF THE ASSESSEE BANK IN 2003-04 A.Y; 20 04-05 A.Y; AND 2005-06 A.YEAR. COPIES OF THE SAME IT WAS SUBMITTED ARE PL ACED AT PAGES 14 TO 17; 18 & 19 OF THE PAPER BOOK. IN THE AFORE-MENTIONED PECUL IAR FACTS AND CIRCUMSTANCES, IT WAS HIS SUBMISSION THAT THE DEPARTMENTAL APPEAL DES ERVES TO BE DISMISSED. 3. LD. SR. DR CONFRONTED WITH THE ORDERS OF THE TRI BUNAL AND THE JUDGEMENT OF THE JURISDICTIONAL HIGH COURT IN ASSESSEES OWN CAS E PERUSING PAGES 3 & 4 OF THE ASSESSMENT ORDER STATED THAT THE FACTS AND CIRCUMST ANCES ARE IDENTICAL AS REFERENCE TO THE VIEW TAKEN IN 2009-10 A.YEAR HAS BEEN MADE B Y THE AO HIMSELF. HOWEVER, RELIANCE WAS PLACED ON THE AO AND NO DISTI NGUISHING ORDER OF ANY SUPERIOR COURT WAS PLACED BEFORE THE BENCH SO AS TO CANVASS A CONTRARY VIEW. 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IT IS SEEN THAT ADDITION BY WAY OF A DISALLOWANCE WAS MADE BY THE AO IN THE FOLLOWING MANNER:- 5. ISSUE OF PAYMENT TO LIC FOR LEAVE ENCASHMENT:- 5.1. THE ASSESSEE HAD CLAIMED AN AMOUNT OF RS.20,00 ,000/- ON ACCOUNT OF PREMIUM PAID TO LIC TOWARDS LEAVE ENCASHMENT FUND A S REVENUE EXPENDITURE. THE ASSESSEE WAS REQUESTED TO SHOW CAUSE AS TO WHY THE PREMIUM PAID TO LIC SHOULD NOT BE DISALLOWED BY INVOKING THE PROVISIONS OF SECTION 43B(F). THE ASSESSEE VIDE ITS REPLY SUBMITTED THAT: 1-IT IS SUBMITTED THAT WE HAVE MADE PAYMENT AS PRE MIUM PAID TO LIC OF INDIA TOWARDS LEAVE ENCASHMENT MADE DURING THE YEAR RS.20,00,000/-, THE SAME HAS BEEN CLAIMED AS DEDUCTION U/S 43B OF I.T. ACT. THE FACTS AND CIRCUMSTANCES ARE THE SAME AS IN EARLIER YEAR. IN EARLIER YEAR THE HONBLE ITAT HAS ALLOWED DEDUCTION ON THIS ISSUE. THE SIMI LAR ADDITION HAS BEEN MADE IN A.Y. 2009-10 IN THE ASSESSMENT ORDER. 2-REGARDING INTEREST RECEIVED ON THE FUNDS CREATED WITH LIC FOR LEAVE ENCASHMENT, IT IS SUBMITTED THAT WE HAVE MADE PAYME NT TO LIC FOR BEING PREMIUM AS DETERMINED BY LIC ON THE POLICIES OF THE EMPLOYEES TOWARDS LEAVE ENCASHMENT. THE AMOUNT PAID HAS BEEN TREATED AS EXPENDITURE. WE HAVE NOT CREATED ANY FUND IN OUR BOOKS OF ACCOUNTS. THE PAYMENT IS MADE TO LIC WE ARE NOT CONCERNED WITH THE INTEREST IF ANY O N THESE FUNDS. 3-WE ARE SUBMITTING THE DETAILS OF MISCELLANEOUS IN COME, WHICH IS AN UNDER:- 1. OTHER RECEIPTS AT BRANCHES 7,78,61,283.81 2. RECEIPTS AT HEAD OFFICE 12,62,803.85 3. PROFIT ON SALE OF FURNITURE 72,606.00 6.0. ADDITION ON ACCOUNT OF PAYMENT TO LIC FOR LEAVE ENC ASHMENT I.T.A .NO.-3147/DEL/2013 3 6.1. THE ASSESSEE SUBMITTED THAT THIS HAS ALREADY B EEN SETTLED BY HONBLE ITAT IN A.Y. 2009-10 IN THE ASSESSEES OWN CASE VID E ITA NO.3492/DEL/2012. COPY OF THE ORDER PLACED ON FILE. ACCORDINGLY ARGU ED THAT THE FACTS AND CIRCUMSTANCES ARE SAME AS IN A.Y.2009-10. HENCE NO ADDITION SHOULD BE MADE IN THIS REGARD DURING A.Y.2010-11. 6.2. SINCE THE DEPARTMENT HAVE FILED APPEAL BEFORE HONBLE HIGH COURT FOR A.Y.2009-10 WHICH IS PENDING FOR ADJUDICATION. IN VIEW OF THE DISCUSSION ABOVE THE DEDUCTION CLAIMED ON ACCOUNT OF PREMIUM P AID TO LIC FOR LEAVE ENCASHMENT IS DISALLOWED AND AN ADDITION OF RS.20,0 0,000/- IS MADE TO THE INCOME OF THE ASSESSEE. PENAL ACTION U/S 271(1)(C) FOR FURNISHING IN ACCURATE PARTICULARS OF INCOME IS BEING INITIATED SEPARATELY . (ADDITION RS.20,00,000/-) 5. THE CIT(A) IT IS SEEN HAS GRANTED RELIEF FOLLOWI NG THE ORDER OF THE TRIBUNAL REFERRED TO ABOVE BY THE AO HIMSELF. THE SAID VIEW IT IS SEEN IS IN CONSISTENCY WITH THE VIEW TAKEN BY THE JURISDICTIONAL HIGH COUR T WHO HAS HAD AN OCCASION TO CONSIDER THE ISSUE IN 2003-04, 2004-05 & 2005-06 AS SESSMENT YEARS. IN VIEW OF THE ABOVE LEGAL POSITION IN THE ABSENCE OF ANY DEC ISION TO THE CONTRARY OF ANY HIGHER FORUM, WE FIND THAT THERE IS NO MERIT IN THE DEPARTMENTS APPEAL AND ARE OF THE VIEW THAT IT DESERVES TO BE DISMISSED. THE SAI D ORDER WAS PRONOUNCED IN THE PRESENCE OF THE PARTIES. 6. IN THE RESULT THE APPEAL OF THE REVENUE IS DISMI SSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 04 TH OF APRIL 2014. SD/- SD/- (B.C.MEENA) (DIVA SINGH) ACCOUNTANT MEMBER JUDICIAL MEM BER DATED: 04/04/2014 *AMIT KUMAR* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT RE GISTRAR ITAT NEW DELHI