D.C.I.T.-1(3)(2), MUMBAI V. M/S. NEW INDIA CO-OP BANK LTD., MUMBAI

ITA 4927/MUM/2017

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5817 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 14-07-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MARRAPU NAVEEN
• Assessee Lawyers: NITESH JOSHI SHRI S I MOGUL
• Keywords: Question of law; Commercial expediency
• Section: 143(3); 201; 63

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH B , MUMBAI BEFORE HONBLE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND HONBLE SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO.4927 /MUM/201 7 ASSESSMENT YEAR: 2014 - 15 DCIT 1(3)(2), ROOM NO. 540, 5 TH FLOOR, AAYAKAR BHAVAN, MUMBAI. VS. M/S. NEW INDIA CO - OP BANK LTD., 1260, TPS NEW INDIA BHAVAN, A.V. NAGVEKAR MARG, BABASAHEBWORLIKARCHOWK, PRABHADEVI, MUMBAI 400025. PAN: AAAAN0012G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI MARRAPU NAVEEN (DR) ASSESSEE BY : SHRI NITESH JOSHI SHRI S.I. MOGUL DATE OF HEARING : 14.11.2018 DATE OF PRONOUNCEMENT : 05 .12 .201 8 O R D E R PER SANDEEP GOSAIN , JM: 1. THIS APPEAL BY ASSESSEE IS DIRECTED AG AINST THE ORDER OF THE CIT(A) - 3, MUMBAI DATED 28 .04 .201 7 FOR THE A.Y 2014 - 15 , WHICH IN ITSELF DIRECTED AGAINST THE ORDER PASSED BY THE ASSESSING OFFICER (FOR SHORT A.O ) UNDER SEC. 143(3) OF THE IT ACT , 1961 . 2. AT THE VERY OUTSET, WE NOTICED THAT THE LD. CIT(A) HAD DECIDED THE GROUNDS RAIS ED BY THE ASSESSEE BY FOLLOWING THE ORDER OF COORDINATE BENCH OF ITAT IN ITA NO. 901/MUM/2011 IN THE ASSESSEES OWN CASE FOR THE A.Y 2007 - 08. AS PER THE FACTS OF THE PRESENT CASE, THE A.O HAD NOT ALLOWED DEDUCTION OF EX - GRATIA PAYMENT MADE BY ASSESSEE TO ITS EMPLOYEES, WHILE COMPUTING THE TOTAL INCOME OF THE 2 ITA NO. 4927/MUM/2017. M/S NEW INDIA CO - OP BANK LTD., MUMBAI ASSESSEE. IN THE ORDER PASSED BY THE COORDINATE BENCH OF ITAT IN ITA NO. 901/MUM/2011 FOR THE A.Y 2007 - 08 IN THE ASSESSEES OWN CASE , THE IDENTICAL GROUND WAS DECIDED IN FAVOUR OF ASSESSEE. THE SAID ORDER OF THE COORDINATE BENCH WAS ALSO UPHELD BY THE HONBLE JURISDICTIONAL HIGH COURT IN ITA NO. 371/2015 WHICH WAS DECIDED ON 25.07.2017 , WHEREIN IT WAS HELD AS UNDER: 4. WE HAVE CONSIDERED THE SUBMISSIONS. 5. SECTION 63 OF THE ACT EMPOWERS THE BOARD OF DIRECTORS TO APPROVE PAYMENT OF EX - GRATIA AMOUNT TO ITS EMPLOYEES. IT IS ALSO OBSERVED BY THE TRIBUNAL THAT THE ASSESSEE HAS BEEN EXTENDING INCENTIVES TO EMPLOYEES FOR THE PROCEEDING YEARS AND THE SUBSEQUENT YEA RS ALSO AND THE SAME IS ACCEPTED BY THE REVENUE . THE TRIBUNAL HAS ALSO RELIED ON THE JUDGMENT OF THIS COURT IN THE CASE OF CIT VS. MAINA ORE TRANSPORT P. LTD, REPORTED IN 324 ITR 100 AND SHAHZADA NAND AND SONS VS. CIT, REPORTED IN 108 ITR 358, WHERE IT HA S BEEN HELD THAT EX - GRATIA PAYMENT MADE BY THE EMPLOYER TO ITS EMPLOYEES IS ON ACCOUNT OF COMMERCIAL EXPEDIENCY AND HENCE ALLOWABLE. 6. IN THE CASE OF MAFATLAL FINE SPG. & MFG. CO. LTD. RELIED BY THE REVENUE, THERE WAS NO EVIDENCE TO SHOW THAT AGREEMENT BETWEEN THE ASSESSEE AND THE EMPLOYEES AND THE EARNING OF THE ASSESSEE OR TO SHOW THAT EX - GRATIA PAYMENT IS REASONABLE OR IN ACCORDANCE WITH THE PROVISIONS AT THE RELEVANT TIME. IN THE PRESENT CASE, THE PRACTICE OF EX - GRATIA PAYMENT IS EVIDENT FROM THE OBSERVATIONS OF THE TRIBUNAL. FOR THE PROCEEDING YEAR AND THE SUBSEQUENT YEARS THE DEPARTMENT HAS ALLOWED DEDUCTION IN RESPECT OF EX - GRATIA PAYMENT. 7. CONSIDERING THE AFORESAID CONS PECTUS OF THE MATTER, NO SUBSTANTIAL QUESTION OF LAW IS ARISES INTEREST HE PRESENT APPEAL. THE APPEAL IS DISMISSED 3. SINCE THE MATTER IS SQUARELY COVERED BY THE DECISION OF THE COORDINATE BENCH OF ITAT IN ASSESSEES OWN CASE, WHICH WAS ALSO UPHELD BY THE HO N'BLE BO MBAY HIGH COURT IN THE CASE OF CIT VS. NEW INDIA CO - OP. BANK LTD., IN INCOME TAX APPEAL NO. 371 OF 2015 (SUPRA) , THEREFORE RESPECTFULLY FOLLOWING THE SAME, WE DECIDE THE ISSUE IN FAVOUR OF ASSESSEE. 3 ITA NO. 4927/MUM/2017. M/S NEW INDIA CO - OP BANK LTD., MUMBAI 4. IN THE NET RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED . ORDER PRONOUNCED IN THE OP EN COURT ON THIS 5 T H DEC , 201 8 . S D / - S D / - ( B.R. BASKARAN ) ( SANDEEP GOSAIN ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI; DATED 0 5 /12 /201 8 KRK / PS / COPY OF THE ORDER FORWARDED TO : / BY ORDER, / (ASSTT.REGISTRAR) , / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A), MUMBAI. 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE. //TRUE COPY/