M/s. Cranedge India Pvt.Ltd, Pune V. Deputy Commissioner of Income tax, Pune

ITA 555/PUN/2017

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 5848 (ITAT-PUNE)
• Duration Of Justice: 1 year(s) 10 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-01-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 08-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, PUN E BEFORE SHRI R.S. SYAL, VP AND SHRI PARTHA SARATHI CHAUDHURY, JM / ITA NO. 555/PUN/2017 / ASSESSMENT YEAR : 2013-14 M/S. CRANEDGE INDIA PVT. LTD., 16/3, F-2 BLOCK, MIDC, PIMPRI, PUNE-411 018. PAN : AADCC7490A .... / APPELLANT / V/S. THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-8, PUNE. / RESPONDENT ASSESSEE BY : SHRI C.H. NANIWADEKAR REVENUE BY : SHRI SUDHENDU DAS / DATE OF HEARING : 29.01.2019 / DATE OF PRONOUNCEMENT : 30.01.2019 / ORDER PER PARTHA SARATHI CHAUDHURY, JM : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM TH E ORDER OF LD. CIT(APPEALS)-9, PUNE DATED 23.12.2016 FOR THE ASSESSMENT YEAR 2013-14 AS PER FOLLOWING GROUNDS OF APPEAL: 1. THE LD. CIT (APPEALS) -IX ERRED ON FACTS AND IN LAW IN HOLDING THAT THE ASSESSEE HAS MADE A PAYMENT TO AN UNAPPROVED GRATUI TY FUND, WHEREAS THE FACT IS THAT THE ASSESSEE HAD ALREADY APPLIED T O THE HON'BLE PRINCIPAL CIT FOR THE APPROVAL OF GRATUITY SCHEME ON 20TH MAY 2011. THE ASSESSEE HAS NOT RECEIVED THE APPROVAL FROM HON'BLE CIT TILL THE DATE OF ASSESSMENT IN SPITE OF DUE FOLLOW-UPS. DURING THE COURSE OF AS SESSMENT THE LEARNED DCIT HAS DISALLOWED THE ENTIRE CONTRIBUTION MADE TO EMPLOYEES GROUP GRATUITY CUM LIFE ASSURANCE SCHEME U/S.36(1)(V). HE HAS DONE SO JUST BECAUSE ACTUAL APPROVAL TO THE GROUP GRATUITY TRUST IS NOT RECEIVED FROM HON'BLE CIT. THE SAME WAS AFFIRMED BY ID. CIT (APPE ALS) - IX, PUNE. 2 ITA NO.555 /PUN/2017 A.Y.2013-14 2. THE LD. CIT (APPEALS) -IX ERRED ON FACTS AND IN LAW IN NOT APPRECIATING AND CONSIDERING THE RECENT DECISION OF HON'BLE RAJA STHAN HIGH COURT (JAIPUR BENCH) IN THE CASE OF JAIPUR THARGRAMIN BAN K WHEREIN A SIMILAR ISSUE WAS DECIDED IN THE FAVOUR OF THE ASSESSEE BEI NG THE APPELLANT. THE ID. CIT (APPEALS) -IX IN HIS ORDER HAS MENTIONED TH AT THE FACT OF THE CASE OF JAIPUR THARGRAMIN BANK ARE CLEARLY DISTINGUISHABLE, HOWEVER HE FAILED TO SPELL OUT THE DISTINCTION IN HIS ORDER. HE HAS MERE LY RELIED ON THE DECISION OF HIS PREDECESSOR WHILE DISMISSING THE APPEAL WITH OUT CONSIDERING THE RECENT LEGAL PRECEDENTS IN THE MATTER. 3. THE ASSESSEE CRAVES LEAVE TO ADD, ALTER, OR DELE TE ANY OF OR ALL THE GROUNDS OF APPEAL. 2. THE BRIEF FACTS IN THIS CASE ARE THAT THE ASSESSEE IS ENGAGED IN PROVIDING AFTER SALE SUPPORT FOR INDUSTRIAL CRANES SOLD BY ITS SISTER CONCERN M/S. ELECTROMECH MATERIAL HANDLING SYSTEMS (I) PVT. LTD. DURING TH E YEAR ASSESSEE HAS PROVIDED AN AMOUNT OF RS.7,69,781/- FOR CONTRIBUTION TO WARDS GRATUITY TRUST, CREATED FOR THE BENEFIT OF THE EMPLOYEE OF THE ASSE SSEE COMPANY. HOWEVER, IT WAS OBSERVED THAT THE SAID GRATUITY FUND HAS NOT BEEN APPROVED BY THE PRINCIPAL COMMISSIONER/COMMISSIONER OF INCOME TAX. AS P ER THE PROVISION OF SECTION 36(1)(V) OF THE INCOME TAX ACT, 1961 ( HEREINAFTER REFERRED TO AS THE ACT) AND SUCH DEDUCTION IS ALLOWABLE ON THE GRATUITY FUN D WHICH IS APPROVED BY THE PRINCIPAL COMMISSIONER OF INCOME TAX. THEREFORE, THE CLAIM OF THE ASSESSEE WAS REJECTED BY THE ASSESSING OFFICER AND ADDIT ION OF RS.7,69,781/- ON ACCOUNT OF PAYMENT TOWARDS GRATUITY SCHEME WAS ADD ED TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE LD. AR OF THE ASSESSEE FILED DETAILED WRITTEN SUBMISS IONS BEFORE THE LD. CIT(APPEALS). THE LD. CIT(APPEALS) AFTER CONSIDERING THE FAC TS OF THE CASE, SUBMISSIONS OF THE ASSESSEE OBSERVED THAT THE FACTS FOR THE YEAR UNDER CONSIDERATION ARE IDENTICAL TO THE FACTS OF A.Y. 2011-12 AND THEREAFTER, THE LD. CIT(APPEALS) GOES ON TO UPHOLD THE DECISION OF THE ASSESS ING OFFICER DISMISSING THE APPEAL OF THE ASSESSEE AS PER REASONS RECORDED IN HIS ORDER. 3 ITA NO.555 /PUN/2017 A.Y.2013-14 4. AT THE TIME OF HEARING, THE LD. AR OF THE ASSESSEE S UBMITTED THAT FACTS AND CIRCUMSTANCES OF THE ASSESSMENT YEAR UNDER CONSIDE RATION ARE IDENTICAL TO THE FACTS AND CIRCUMSTANCES IN ASSESSMENT YEAR 2011-12 . THE CO-ORDINATE BENCH OF THE TRIBUNAL, PUNE IN ASSESSEES OWN CASE FOR AS SESSMENT YEAR 2011- 12 IN ITA NO. 2275/PUN/2014 HAS PROVIDED RELIEF TO THE ASSESSEE ON T HIS ISSUE. 5. THE LD. DR ON THE OTHER HAND HAS PLACED RELIANCE ON THE ORDERS OF THE SUB-ORDINATE AUTHORITIES. 6. WE HAVE PERUSED THE CASE RECORDS AND CONSIDERED T HE JUDICIAL PRONOUNCEMENT PLACED BEFORE US. THAT ON PERUSAL OF THE A SSESSEES ORDER FOR ASSESSMENT YEAR 2011-12 BY THE CO-ORDINATE BENCH OF T HE TRIBUNAL, PUNE IN ITA NO.2275/PUN/2014, THE ISSUE THEREIN WAS: 3. THE ISSUE RAISED VIDE GROUND OF APPEAL NO.1 IS A GAINST DISALLOWANCE MADE IN RESPECT OF PAYMENT TO UNAPPROVED GRATUITY F UND. 6.1 THE LD. AR OF THE ASSESSEE THEREIN HAD POINTED OUT T HAT EVEN IF THE SAID AMOUNT WAS DISALLOWABLE UNDER SECTION 36(1)(V) OF THE ACT, THE N THE SAME IS TO BE ALLOWED AS DEDUCTION UNDER SECTION 37(1) OF THE ACT. IN THIS REGARD, RELIANCE WAS PLACED ON THE RATIO LAID DOWN BY THE HYDERABAD BENC H OF THE TRIBUNAL IN CAPITAL IQ INFORMATION SYSTEM (INDIA) P. LTD. VS. ADDL. CIT IN ITA NO.84/HYD/2013 RELATING TO ASSESSMENT YEAR 2008-09, ORD ER DATED 31.05.2013. THEREAFTER, THE CO-ORDINATE BENCH OF THE TRIBU NAL, PUNE IN ITA NO.2275/PUN/2014 (SUPRA.) HAS HELD AS FOLLOWS: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. THE ISSUE WHICH ARISES BY WAY OF GROUND OF APPEAL NO.1 IS THE PAYMENT OF GRATUITY TO A FUND FORMULATED BY THE ASSESSEE FOR THE BENEFIT OF ITS EMPLOYEES. THE ASSESSEE CLAIMS THAT IT HAD PAID SUM OF RS.18,79,51 6/- TO LIC ON ACCOUNT OF GRATUITY FUND. THE ASSESSEE HAD APPLIED FOR RECOGNI TION OF THE SAID GRATUITY FUND BEFORE THE COMMISSIONER OF INCOME TAX, WHICH H AS NOT BEEN APPROVED TILL DATE. THE ASSESSING OFFICER AND THE CIT(A) THUS, IN VOKED THE PROVISIONS OF SECTION 36(1)(V) OF THE ACT TO DISALLOW THE SAID CLAIM OF ASSESSEE AS THE AMOUNT WAS NOT PAID TO AN APPROVED GRATUITY FUND. T HE CASE OF ASSESSEE BEFORE US ON THE OTHER HAND, IS THAT EVEN OTHERWISE , THE SAID AMOUNT IS TO BE ALLOWED IN THE HANDS OF ASSESSEE UNDER SECTION 37(1 ) OF THE ACT. THE LEARNED 4 ITA NO.555 /PUN/2017 A.Y.2013-14 AUTHORIZED REPRESENTATIVE FOR THE ASSESSEE IN THIS REGARD, HAS PLACED RELIANCE ON THE RATIO LAID DOWN BY THE HYDERABAD BENCH OF TR IBUNAL IN CAPITAL IQ INFORMATION SYSTEM (INDIA) P. LTD. VS. ADDL. CIT (S UPRA). FROM THE PERUSAL OF SAID DECISION, WE FIND THAT REFERENCE IS MADE TO TH E DECISION OF HON'BLE BOMBAY HIGH COURT IN TATA IRON & STEEL CO. LTD. VS. D.V. BAPAT, ITO (1975) 101 ITR 292 (BOM) AND THE JUDGMENT OF HON'BLE SUPRE ME COURT IN METAL BOX COMPANY OF INDIA LTD. VS. THE WORKMEN (1969) 73 ITR 53 (SC), WHEREIN IT HAS BEEN HELD THAT THE AMOUNT PAID TOWARDS UNAPPROVED G RATUITY FUND CAN BE DEDUCTED UNDER SECTION 37(1) OF THE ACT, THOUGH NOT UNDER SECTION 36(1)(V) OF THE ACT. FOLLOWING THE RATIO LAID DOWN BY THE JURIS DICTIONAL HIGH COURT, WE HOLD THAT THE AMOUNT WHICH HAS BEEN PAID BY THE ASSESSEE TOWARDS AN UNAPPROVED GRATUITY FUND IS DULY ALLOWABLE AS DEDUC TION UNDER SECTION 37(1) OF THE ACT THOUGH THE ASSESSEE IS NOT ENTITLE D TO CLAIM THE DEDUCTION UNDER SECTION 36(1)(V) OF THE ACT. ACCORDINGLY, THE GROUND OF APPEAL NO.1 RAISED BY THE ASSESSEE IS ALLOWED. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF THE CO-ORDINAT E BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2011-12, WE SET ASIDE THE ORDER OF LD. CIT(APPEALS) FOR PRESENT YEAR I.E. ASSESSMENT YEAR 2013- 14 AND ALLOW THE APPEAL OF THE ASSESSEE. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON 30 TH DAY OF JANUARY, 2019. SD/- SD/- R.S.SYAL P ARTHA SARATHI CHAUDHURY VICE PRESIDENT JUDICIAL MEMBER / PUNE; / DATED : 30 TH JANUARY, 2019. SB !'#$%&%# / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT. 2. / THE RESPONDENT. 3. THE CIT (APPEALS)-9, PUNE. 4. THE PR. CIT-5, PUNE. 5. '#$ %%&' , ( &' , )*+ , / DR, ITAT, B BENCH, PUNE. 6. $,- ./ / GUARD FILE. // TRUE COPY // (0 / BY ORDER, %1 &+ / PRIVATE SECRETARY ( &' , / ITAT, PUNE. 5 ITA NO.555 /PUN/2017 A.Y.2013-14 DATE 1 DRAFT DICTATED ON 29 .01.2019 SR.PS/PS 2 DRAFT PLACED BEFORE AUTHOR 29 .01 .201 9 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