ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-2, Alwar V. THE ALWAR CENTRAL CO-OPERATIVE BANK LTD., Alwar

ITA 686/JPR/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2005 (ITAT-JAIPUR)
• Duration Of Justice: 1 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 10-10-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2014-2015
• Appeal Filed On: 05-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R A VERMA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Capital expenditure
• Section: 143(3); 37(1); 37

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH HKKXPUN] YS[KK LNL; ,OA JH DQY HKKJR] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM AND SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 686/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15. THE ACIT, CIRCLE-2, ALWAR. CUKE VS. THE ALWAR CENTRAL CO - OPERATIVE BANK LTD., HOPE CIRCUS, ALWAR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN NO. AABAT 4891 Q VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI R.A. VERMA (ADDL. CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (CA) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 06.10.2017. ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 10/10/2017. VKNS'K@ ORDER PER SHRI KUL BHARAT, JM. THIS APPEAL BY THE BY THE REVENUE IS FILED AGAINST THE ORDER OF LD. CIT (A), ALWAR DATED 24.07.2017 PERTAINING TO ASSESSMENT YEA R 2014-15. THE SOLITARY GROUND RAISED IN THIS APPEAL READS IS AS UNDER : ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE , LD. CIT (A) ERRED IN DELETING THE DISALLOWANCE OF RS. 30,00,000/- MADE B Y THE AO ON ACCOUNT OF CAPITAL CONTRIBUTION TO LIC FOR FUTURE L IABILITY OF LEAVE ENCASHMENT AT THE RETIREMENT OF EMPLOYEES. 2. BRIEFLY STATED FACTS ARE THAT THE CASE OF THE AS SESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT AND THE ASSESSMENT UNDER SECTIO N 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) WAS FRAMED VIDE ORDER DATED 20.10.2016. WHILE FRAMING THE ASSESSMENT, THE AO M ADE ADDITION ON ACCOUNT OF 2 ITA NO. 686/JP/2017 THE ALWAR CENTRAL COOPERATIVE BANK LTD., ALWAR. DISALLOWANCE OF INVESTMENT IN LIC FOR LEAVE ENCASHM ENT OF RS. 30,00,000/-. AGAINST THIS, THE ASSESSEE PREFERRED AN APPEAL BEFORE LD. C IT (A), WHO AFTER FOLLOWING THE DECISION OF COORDINATE BENCH OF THE TRIBUNAL DELETE D THE DISALLOWANCE. NOW THE REVENUE IS IN APPEAL BEFORE THIS TRIBUNAL. 3. THE LD. D/R SUPPORTED THE ORDER OF THE ASSESSING OFFICER. 4. ON THE CONTRARY, LD. COUNSEL FOR THE ASSESSEE SU BMITTED THAT THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE COORDINATE BENCH RENDERED IN THE CASE OF M/S. BHILWARA URBAN COOPERA TIVE BANK LTD. VS. DCIT, ITA NO. 268/JODH/2016 DATED 24.04.2017. 5. WE HAVE HEARD RIVAL CONTENTIONS, PERUSED THE MAT ERIAL ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE LD . CIT (A) HAS DECIDED THE ISSUE BY OBSERVING IN PARA 4.3 TO 4.7 AS UNDER :- 4.3. ON THE SIMILAR ISSUE, FOR PRECEDING YEARS, MY PREDECESSOR LD. CIT (A) HAD ADJUDICATED ON THE ISSUE AND HAS DISCUS SED IN DETAILS VARIOUS JUDICIAL PRONOUNCEMENTS ON THE ISSUE OF ALL OWABILITY OF PAYMENT OF INSURANCE PREMIUM FOR GROUP INSURANCE SCHEME OF THE EMPLOYEES AND HAS HELD THAT IT IS AN ALLOWABLE DEDUCTION UNDE R SECTION 37(1) OF THE ACT. I HAVE ALSO PERUSED THE ASSESSMENT ORDER A S WELL AS SUBMISSIONS MADE BY THE APPELLANT AND FIND THAT A D ISALLOWANCE OF RS. 30 LACS WAS MADE BY THE A.O. ON ACCOUNT OF GROUP LE AVE ENCASHMENT FOR EMPLOYEES PREMIUM PAID BY THE BANK TO LIC. THE DISALLOWANCE WAS MADE BY THE A.O. WHO HAS HELD IT AS CAPITAL EXPENDI TURE. 4.4. THE APPELLANT HAS STATED THAT BANK HAS MADE PA YMENT FOR GROUP LEAVE ENCASHMENT SCHEME FOR THE BENEFIT OF THE EMPL OYEES. THE BANK HAS TAKEN THIS POLICY FROM LIC FOR PAYMENT OF LEAVE ENCASHMENT TO THE EMPLOYEES OF THE BANK AT THE TIME OF THEIR RETIREME NT. UNDER THE PROVISIONS OF INCOME TAX ACT ANY SUM PAID BY THE AS SESSEE AS AN 3 ITA NO. 686/JP/2017 THE ALWAR CENTRAL COOPERATIVE BANK LTD., ALWAR. EMPLOYER BY WAY OF CONTRIBUTION FOR LEAVE ENCASHMEN T FOR THE BENEFIT OF EMPLOYEES IS AN ALLOWABLE EXPENDITURE. ACCORDING LY, DURING THE YEAR THIS PAYMENT OF RS. 30 LACS WAS MADE TO LIC. 4.5. THE APPELLANT HAS PLACED RELIANCE ON THE DECIS ION OF HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN LATEX LTD. IN IT APPEAL NO. 64 OF 2012 DATED 07.06.2012 ON THE ISSUE OF PAYMENT OF PREMIUM MADE BY THE COMPANY TO LIC FOR POLICY UNDER GROUP LEAVE ENCASHMENT SCHEME, WHEREIN, IT HAS BEEN HELD THAT A MOUNT OF CONTRIBUTION TOWARDS GROUP LEAVE ENCASHMENT SCHEME DIRECTLY TO THE LIC FOR THE BENEFIT OF THE EMPLOYEE OF THE ASSESSEE , IS ALLOWABLE AS DEDUCTION U/S 37(1) OF THE IT ACT. THIS HAS BEEN AL LOWED AFTER CONSIDERING THIS EXPENDITURE AS HAVING BEEN INCURRE D FOR THE PURPOSES OF BUSINESS. THE APPELLANT HAS ALSO PLACED RELIANCE ON THE LATEST JUDGMENT OF HONBLE ITAT JODHPUR BENCH IN THE CASE OF THE BARMER CO-OPERATIVE SOCIETY V/S ACIT AS REPORTED IN ITA NO . 378/JODH/2012 DATED 15.07.2013, WHEREIN IT HAS BEEN HELD THAT PRE MIUM PAID ON INSURANCE POLICY FOR LEAVE ENCASHMENT IN AN ALLOWAB LE DEDUCTION U/S 37 OF THE IT ACT. 4.6. HAVING CONSIDERED THE SUBMISSIONS MADE AND JUD ICIAL CITATIONS QUOTED THEREIN, I FIND THAT A.O. HAS DISALLOWED THE CLAIM ONLY ON THE GROUND THAT THE PAYMENT MADE IS CAPITAL EXPENDITURE AND THE BENEFIT WOULD ACCRUE ONLY IN FUTURE. AFTER CONSIDERING THE DECISION OF THE HONBLE KERALA HIGH COURT (AS STATED ABOVE), AND OF THE HONBLE ITAT, JODHPUR BENCH WHICH ARE DIRECTLY ON THIS ISSUE, THE RE IS NO JUSTIFICATION IN THE ACTION OF THE A.O. FOR MAKING THE DISALLOWAN CE. 4.7. IN VIEW OF THE ABOVE DISCUSSION AND THE DECISI ONS TAKEN IN EARLIER YEARS BY MY PREDECESSORS ON SIMILAR FACTS O F THE CASE AS ALSO ON THE BASIS OF JUDICIAL RULINGS AS STATED ABOVE, THE ADDITION OF RS. 30 LAKHS MADE BY THEA.O. IS DELETED AND THE APPELLANT S GROUND OF APPEAL ON THE ISSUE IS ALLOWED. 4 ITA NO. 686/JP/2017 THE ALWAR CENTRAL COOPERATIVE BANK LTD., ALWAR. FROM THE ABOVE, IT IS CLEAR THAT THE LD. CIT (A) HA S FOLLOWED THE DECISION OF THE TRIBUNAL AND THE JUDGMENT OF THE HONBLE KERALA HIG H COURT IN THE CASE OF CIT VS. HINDUSTAN LATEX LTD. (SUPRA). THE FACTUM THAT THE ISSUE HAS BEEN DECIDED BY THE COORDINATE BENCH IN FAVOUR OF THE ASSESSEE AND EVEN IN ASSESSEES OWN CASE COORDINATE BENCH HAS DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE IN ITA NO. 143/JP/2016 PERTAINING THE ASSESSMENT YEAR 2011-12. THE REVENUE HAS NOT BROUGHT TO OUR NOTICE ANY CONTRARY BINDING PRECEDENT, THERE FORE, TAKING A CONSISTENT VIEW, WE DO NOT SEE ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT (A), THE SAME IS HEREBY AFFIRMED. 6. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 10.10.2 017. SD/- SD/- ( HKKXPUN ( DQY HKKJR ) ( BHAGCHAND) ( KUL BHARAT ) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER JAIPUR DATED:- 10/10/2017. DAS/ VKNS'K DH IZFRFYFI VXZSF'KR@ COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT- THE ACIT, CIRCLE-2, ALWAR. 2. THE RESPONDENT THE ALWAR CENTRAL COOPERATIVE B ANK LTD., ALWAR. 3. THE CIT(A). 4. THE CIT, 5. THE DR, ITAT, JAIPUR 6. GUARD FILE (ITA NO. 686/JP/2017) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR 5 ITA NO. 686/JP/2017 THE ALWAR CENTRAL COOPERATIVE BANK LTD., ALWAR.