Nainital Almora Kshetriya Gramin Bank, Haldwani V. DCIT, Haldwani

ITA 3501/DEL/2010

• Counselvise Citation: [2011] 135 COUNSELVISE.COM (IT) 0650 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-01-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Next Hearing Date: 19-01-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: H K LAL
• Keywords: Opportunity of being heard
• Section: 43B; 143(3); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH F BENCH F BENCH F BENCH F : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND BEFORE SHRI G.E.VEERABHADRAPPA, VICE PRESIDENT AND SHRI C.L.SETHI, JUDICIAL MEMBER SHRI C.L.SETHI, JUDICIAL MEMBER SHRI C.L.SETHI, JUDICIAL MEMBER SHRI C.L.SETHI, JUDICIAL MEMBER ITA NO. ITA NO. ITA NO. ITA NO. 3501/DEL/2010 3501/DEL/2010 3501/DEL/2010 3501/DEL/2010 ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : ASSESSMENT YEAR : 2007 2007 2007 2007 - -- - 08 0808 08 M/S NAINITAL ALMORA KSHETRIYA M/S NAINITAL ALMORA KSHETRIYA M/S NAINITAL ALMORA KSHETRIYA M/S NAINITAL ALMORA KSHETRIYA GRAMIN BANK, GRAMIN BANK, GRAMIN BANK, GRAMIN BANK, UTTARAYAN PR UTTARAYAN PR UTTARAYAN PR UTTARAYAN PRAKASHAN PARISAR, AKASHAN PARISAR, AKASHAN PARISAR, AKASHAN PARISAR, NAINITAL ROAD, NAINITAL ROAD, NAINITAL ROAD, NAINITAL ROAD, HALDWANI. HALDWANI. HALDWANI. HALDWANI. PAN NO. PAN NO. PAN NO. PAN NO.AABCN5364J. AABCN5364J. AABCN5364J. AABCN5364J. VS. VS. VS. VS. DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, DY.COMMISSIONER OF INCOME TAX, HALDWANI. HALDWANI. HALDWANI. HALDWANI. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI K.SAMPATH, ADVOCATE. RESPONDENT BY : SHRI H.K.LAL, SR.DR. ORDER ORDER ORDER ORDER PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI PER C.L.SETHI, J , J, J , JM : M : M : M : THE ASSESSEE IS IN APPEAL AGAINST THE ORDER DATED 16.3.2010 PASSED BY LEARNED CIT(A) IN THE MATTER OF AN ASSESS MENT MADE U/S 143(3) OF THE INCOME-TAX ACT, 1961 (THE ACT) FOR TH E AY 2007-08. 2. THE ONLY ISSUE RAISED IN THIS APPEAL IS DIRECTED AGAINST CIT(A)S ORDER IN CONFIRMING DISALLOWANCE FOR PROVISION FOR GRATUITY PAYABLE OF `1,51,08,408/-. 3. WE HAVE HEARD BOTH THE PARTIES AND HAVE CAREFULL Y PERUSED THE ORDERS OF AUTHORITIES BELOW. 4. THE AO HAS COMPLETED THE ASSESSMENT U/S 143(3) O F THE ACT ON 22.12.2009. IN THE ASSESSMENT, THE AO DISALLOWED T HE ASSESSEES CLAIM OF GRATUITY PAYABLE AMOUNTING TO `1,51,08,408 /- BY OBSERVING THAT THE GRATUITY FUND OF THE ASSESSEE IS NOT AN AP PROVED FUND AND THEREFORE, THE AMOUNT OF THE PROVISION MADE FOR GRA TUITY TO MEET LIABILITY OF GRATUITY OF THE PERIOD OTHER THAN THE CURRENT YEAR CANNOT BE ITA-3501/DEL/2010 2 DEDUCTIBLE AS PER THE PROVISIONS OF SECTION 40A(7) OF THE ACT. IT WAS FURTHER OBSERVED THAT AS THE GRATUITY FUND OF THE A SSESSEE IS NOT AN APPROVED FUND, THE AMOUNT OF CONTRIBUTION MADE BY T HE ASSESSEE AS EMPLOYER TO THE ABOVE FUND IS NOT ALSO DEDUCTIBLE U /S 40A(9) OF THE ACT. HE FURTHER OBSERVED THAT AS PER SECTION 43B OF THE ACT, A SUM PAYABLE IN RESPECT OF UNAPPROVED GRATUITY FUND IS NOT DEDUC TIBLE, IF IT IS NOT ACTUALLY PAID BY THE ASSESSEE WITHIN THE ACCOUNTING YEAR OR ON OR BEFORE THE DUE DATE OF FURNISHING OF INCOME U/S 139 (1) OF THE ACT. 5. THE AOS ACTION HAS BEEN CONFIRMED BY THE LEARNE D CIT(A). WHILE CONFIRMING THE AOS ORDER, CIT(A) OBSERVED THAT IN THE COURSE OF HEARING OF THE APPEAL BEFORE HIM, A COPY OF THE ORD ER DATED 10.3.2010 PASSED BY THE CIT GRANTING RECOGNITION OF THE FUND TO THE ASSESSEE WAS FURNISHED BUT CIT(A) HAS TAKEN A VIEW THAT THE SAID ORDER GRANTING RECOGNITION TO THE ASSESSEES FUND WOULD BE APPLICA BLE ONLY TO FUTURE YEARS AND NOT TO THE YEARS FOR WHICH ASSESSMENT ORD ER HAS ALREADY BEEN PASSED. 6. HENCE, THE ASSESSEE IS IN FURTHER APPEAL BEFORE US. 7. IN THE COURSE OF HEARING OF THIS APPEAL, THE ASS ESSEE HAS PRODUCED BEFORE US THE COPY OF APPLICATION FOR APPR OVAL OF GRATUITY FUND DATED 24.12.1990 FILED BEFORE CIT, LUCKNOW. T HE ASSESSEE HAS ALSO FILED COPY OF RECEIPT OF GRATUITY FUND DATED 1 0.8.2007 FROM LIC OF INDIA. THE ASSESSEE HAS ALSO FURNISHED THE COPY OF THE ORDER DATED 10.3.2010 OF THE CIT RECOGNIZING THE ASSESSEES GRA TUITY SCHEME. THE ORDER RECOGNIZING THE ASSESSEES GRATUITY SCHEME DA TED 10.3.2010 READS AS UNDER:- ORDER 10.03.2010 UNDER RULE 2(1) OF PART C OF THE FOURTH SCHEDULE T O THE INCOME TAX ACT, 1961, I, THE COMMISSIONER OF IN COME ITA-3501/DEL/2010 3 TAX, HALDWANI, HEREBY ACCORD RECOGNITION W.E.F. 24/12/1990 TO THE NAINITAL ALMORA KSHETRIYA GRAMIN BANK EMPLOYEES GROUP GRATUITY-CUM-LIFE ASSURANCE SCHEME, NAINITAL ROAD, HALDWANI. 8. ON READING THIS ORDER PASSED BY THE CIT, HALDWAN I ON 10.3.2010, IT IS CLEAR THAT THE COMMISSIONER HAS ACCORDED RECO GNITION TO THE ASSESSEES GRATUITY CUM LIFE ASSURANCE SCHEME W.E.F . 24.12.1990. WE, THEREFORE FIND THAT THE ASSESSEES SCHEME HAS BEEN APPROVED BY THE CIT W.E.F. 24.12.1990. WE, THEREFORE, RESTORE THIS MATTER BACK TO THE FILE OF THE AO FOR HIS FRESH ADJUDICATION IN THE LI GHT OF THE ORDER DATED 10.3.2010 OF CIT, HALDWANI ACCORDING RECOGNITION W. E.F. 24.12.1990 TO THE ASSESSEES GRATUITY LIFE ASSURANCE SCHEME, AND AS PER THE PROVISIONS OF THE ACT. THE AO SHALL PROVIDE REASON ABLE OPPORTUNITY OF BEING HEARD TO THE ASSESSEE. WE ORDER ACCORDINGLY. 9. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS TREATED TO BE ALLOWED IN THE MANNER AS INDICATED ABOVE. DECISION PRONOUNCED IN THE OPEN COURT ON CONCLUSION OF HEARING ON 19 TH JANUARY, 2011. SD/- SD/- (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA (G.E.VEERABHADRAPPA ) )) ) (C.L.SETHI (C.L.SETHI (C.L.SETHI (C.L.SETHI ) )) ) VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER DATED : 19.01.2011. VK. COPY FORWARDED TO: - 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR ITA-3501/DEL/2010 4