M/s N N Combined Engineering Agencies P Ltd., Secunderabad V. DCIT, Hyderabad

ITA 978/HYD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 6214 (ITAT-HYDERABAD)
• Duration Of Justice: 4 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-11-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2006-2007
• Appeal Filed On: 05-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V MADHUVANI
• Assessee Lawyers: K C DEVADAS
• Keywords: Set aside

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A', HYDERABAD BEFORE SHRI G.C.GUPTA, VICE PRESIDENT AND SHRI AKBER BASHA, ACCOUNTANT MEMBER ITA NO.978/HYD/2010 (ASSESSMENT YEAR 2006-07) M/S. NEO PETCON INDIA PRIVATE LIMITED, HYDERABAD ( PAN AAACN 4660 N ) V/S. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) AND ITA NO.994/HYD/2010 (ASSESSMENT YEAR 2006-07) M/S. N.N. COMBINED ENGINEERING AGENCIES P. LTD., SECUNDERABAD. ( PAN AABCN 1042 K ) V/S. DY. COMMISSIONER OF INCOME- TAX, CIRCLE 16(1), HYDERABAD. (APPELLANT) (RESPONDENT) APPELLANTS BY : SHRI K.C.DEVADAS RESPONDENT BY : SHRI V.MADHUVANI O R D E R PER G.C.GUPTA, VICE PRESIDENT: THESE TWO APPEALS OF THE ASSESSEES FOR THE ASSESSMENT YEAR 2006-07 ARE DIRECTED AGAINST THE ORDERS OF THE COMMISSI ONER OF INCOME- TAX (APPEALS). SINCE A COMMON ISSUE IS INVOLVED, BOTH THESE APPEALS WERE HERD TOGETHER AND THEY ARE BEING DISPOSED OFF BY THIS COMMON ORDER FOR THE SAKE OF CONVENIENCE. ITA NO.978 & 994/HYD/10 M/S. NEO PETCON INDIA PRIVATE LIMITED, HYD & ANR. 2 2. THE ONLY GROUND OF THE ASSESSEE IN APPEAL ITA NO.978/HYD/2010 READS AS FOLLOWS- 'THE ORDER OF THE CIT(A) V, HYDERABAD IN HOLDING TH AT THE CONTRIBUTION OF RS.41,015/- TOWARDS GROUP GRATUITY SCHEME OF LIC OF INDIA WAS NOT DEDUCTIBLE U/S. 36(1)(V)/37 OF THE INCOM E TAX ACT, 1961 IS WHOLLY UNSUSTAINABLE BOTH IN LAW AND FACTS.' SIMILARLY, GROUNDS RAISED BY THE ASSESSEE IN ITA NO.994/ HYD/2010 READ AS FOLLOWS- 1. ' 'THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN UPHOLDING THE DISALLOWANCE OF AMOUNT PAID TO LIFE I NSURANCE CORPORATION OF INDIA ON THE GROUND THAT THE APPROVA L OF THE COMMISSIONER OF INCOME TAX WAS NOT AVAILABLE TO THE EMPLOYEES' GROUP GRATUITY FUND, IGNORING THE FACT T HAT THE APPELLANT'S APPLICATION WAS PENDING FOR MORE THAN N INE YEARS BEFORE THE COMMISSIONER OF INCOME-TAX. 2. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN IG NORING THE SUBMISSION OF THE APPELLANT THAT THE APPLICATIO N FOR APPROVAL OF GROUP GRATUITY FUND FILED IN MARCH, 200 1 WAS NOT REJECTED BY THE COMMISSIONER OF INCOME-TAX TILL DAT E AND THE ONLY INFERENCE THAT COULD BE DRAWN IS THAT THE GROU P GRATUITY FUND HAS BEEN APPROVED. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS) ERRED IN IG NORING THE DECISION OF THE HON'BLE ITAT, JAIPUR BENCH IN R AJASTHAN FINANCIAL CORPN. VS. DEPUTY COMMISSIONER OF INCOME- TAX (66 ITD 193) ON SIMILAR FACTS, POUT FORWARD BY THE APP ELLANT. 4. THE LEARNED COMMISSIONER OF INCOME-TAX(APPEALS) OU GHT TO HAVE ALLOWED THE APPELLANT'S CLAIM FOR DEDUCTION OF CONTRIBUTION TO GROUP GRATUITY FUND ON THE PRINCIPLES OF NATURA L JUSTICE TAKING INTO ACCOUNT THE PASSAGE OF VAST PERIOD OF T IME FROM THE DATE THE APPLICATION WAS FILED. ' 3. LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEES HAVE FILED APPLICATIONS FOR APPROVAL OF THE EMP LOYEES GROUP GRATUITY FUND WITH THE COMMISSIONER OF INCOME-TAX IN T HE YEAR 2001, BUT TILL DATE, THE SAME ARE PENDING WITH THE COMMISSIONER OF INCOME-TAX AND THE APPROVAL HAS NOT BEEN GRANTED TO THE ASSESSEES. HE SUB MITTED THAT THE APPLICATIONS FILED BY THE ASSESSEES IN MARCH, 2001 WE RE NOT REJECTED ITA NO.978 & 994/HYD/10 M/S. NEO PETCON INDIA PRIVATE LIMITED, HYD & ANR. 3 BY THE COMMISSIONER OF INCOME-TAX TILL DATE, AND THER EFORE, THE ONLY INFERENCE THAT COULD BE DRAWN IS THAT THE EMPLOYEES GRO UP GRATUITY FUND HAS BEEN APPROVED BY HIM. HE SUBMITTED THAT ALL OTHER CONDITIONS FOR THE GRANT OF APPROVAL AS WELL AS DEDUCTION UNDER S.367(1)( V)/37 OF THE ACT, ARE FULLY SATISFIED IN THESE CASES. HE SUBMITTED THAT THE I SSUE IS COVERED IN FAVOUR OF THE ASSESSEES WITH THE DECISION OF THE HYDERAB AD BENCH OF THE TRIBUNAL IN THE CASE OF ACIT V/S. SRI KRISHNA DRUGS LTD. (ITA NO.349/HYD/2006 DATED 15.2.2008); AND WITH THE DECISIO N OF THE JAIPUR BENCH OF THE TRIBUNAL IN RAJASTHAN FINANCIAL CORPORA TION V./S. DCIT(66 ITD 193(JAIPUR). 4. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTE D THAT THE ISSUE MAY BE SET ASIDE TO THE FILE OF THE CIT(A)/ASSESSING OFFICER TO FIND OUT AS TO WHAT HAPPENED TO THE APPLICATIONS OF THE ASSE SSEES FOR APPROVAL OF THE EMPLOYEES GROUP GRATUITY FUND. SHE R ELIED ON THE ORDERS OF THE ASSESSING OFFICER AND THE CIT(A) AND SUBMITTED THA T THE DEDUCTION CLAIMED TOWARDS EMPLOYEES GROUP GRATUITY FUND WAS NOT A LLOWABLE TO THE ASSESSEES FOR WANT OF APPROVAL BY THE COMMISSIONER OF INCOM E-TAX. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND T HAT THE FACT THAT THE ASSESSEES HAVE APPLIED FOR APPROVAL OF THE EMPLOYEES GROUP GRATUITY FUND WITH THE COMMISSIONER OF INCOME-TAX IN M ARCH, 2001, COULD NOT BE CONTROVERTED ON BEHALF OF THE REVENUE. IT IS AN ADMITTED FACT THAT THE COMMISSIONER OF INCOME-TAX HAS NOT PASSED AN Y ORDER EITHER APPROVING THE EMPLOYEES GROUP GRATUITY FUND O R REJECTING THE APPLICATIONS OF THE ASSESSEES FOR APPROVAL THEREOF. THE ASSESSEES HAVE COMPLIED WITH ALL OTHER CONDITIONS FOR DEDUCTION OF TH E AMOUNTS CONTRIBUTED TOWARDS EMPLOYEES GROUP GRATUITY FUND AND THE REVENUE COULD NOT POINT OUT ANY SINGLE NON-COMPLIANCE WITH THE CONDITIONS FOR ITA NO.978 & 994/HYD/10 M/S. NEO PETCON INDIA PRIVATE LIMITED, HYD & ANR. 4 APPROVAL OF THE EMPLOYEES GROUP GRATUITY FUND BY THE ASSESSEES. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE WITH THE DECISIONS OF THE HYDERABAD BENCH AND THE JAIPUR BENCH OF THE TRIBUNAL, CITED SUPRA, RELIED UPON ON BEHALF OF THE ASSESSEE. IN THE CASES BEFOR E THE COORDINATE BENCHES OF THE TRIBUNAL, IT WAS HELD IN SIMILAR FACTS TH AT THE ONLY INFERENCE, WHICH COULD BE DRAWN WAS THAT THE COMMISSIONER OF INCOME- TAX HAS APPROVED THE EMPLOYEES GROUP GRATUITY FUND AS HE HAD NOT REJECTED THE APPLICATION TILL DATE. WE ARE IN AGREEM ENT WITH THE DECISION OF THE COORDINATE BENCHES OF THE TRIBUNAL REFERRED TO HEREINABOVE. ACCORDINGLY THE ISSUE BEFORE US RELATING TO DISALLOWANCE OF CONTRIBUTIONS MADE TO EMPLOYEES GROUP GRATUITY FUND IS DECIDED IN FA VOUR OF THE ASSESSEES AND THE GROUNDS OF APPEAL OF THE ASSESSEES IN THESE A PPEALS ARE ALLOWED. 6. IN THE RESULT, BOTH THE APPEALS OF THE ASSESSEES ARE ALLOWED. ORDER PRONOUNCED IN THE COURT ON 12.11.2010 SD/- SD/- (AKBER BASHA) (G.C.GUPTA) ACCOUNTANT MEMBER VICE PRESIDENT DT/- OCTOBER, 2010 COPY FORWARDED TO: 1. M/S. NEO PETCON INDIA PVT LTD, C/O. SHRI V.S.RAO, CHARTERED ACCOUNTANTS, 6-3-6-9/136, ANANDNAGAR, HYDERABAD 500 004. 2. M/S. NN COMBINED ENGINEERING AGENCIES PVT. LTD., D R. RANJI BLOCK, 1ST FLOOR, 125 MG ROAD, SECUNDERABAD. 3. DY. COMMISSIONER OF INCOME-TAX , CIRCLE 16(1), HYDE RABAD 4. COMMISSIONER OF INCOME-TAX (APPEALS)-V, HYDERABAD. 5. COMMISSIONER OF INCOME-TAX-IV HYDERABAD. . 6. THE DEPARTMENTAL REPRESENTATIVE, ITAT, HYDERABAD B.V.S .