M/S. ENGINEERING MAZDOOR SABHA,MUMBAI V. ASST. CIT CENTRAL CIRCLE-43, MUMBAI

ITA 4720/MUM/2025

AI Insights

The case involves the Engineering Mazdoor Sabha, a registered trade union, appealing against the order of the CIT(A)/NFAC which confirmed the disallowance of compensation aid/expenses amounting to Rs. 2,30,000 paid to its members during strike, closure, or lay-off periods. The union argued that these payments were made to assist members in urgent financial need, supported by resolutions and affidavits. The assessing officer had doubted the genuineness of these payments, noting that they were all made on the same day without individual voucher numbers, which the Tribunal found unsubstantiated. The Tribunal emphasized the union's right to assist its members under the Trade Union Act and criticized the assessing officer for not verifying the facts independently.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 775926 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-09-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 25-07-2025
• Laws Referred To: Income Tax Act, Trade Union Act, 1926, Bombay Trade Union Regulation
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SWAPNIL SAVANT
• Assessee Lawyers: N.R. AGRAWAL

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER ITA No. 4720/MUM/2025 (AY: 2011-12) (Physical hearing) Engineering Mazdoor Sabha Kennedy House, 4th Floor, Goregaonkar Road, Mumbai – 400007. [PAN: AAABE0116B] Vs ACIT, Central Circle-43, Mumbai ACIT Central 43, 6th Floor, Aayakar Bhavan, Mumbai – 400020. Appellant / Assessee Respondent / Revenue Assessee by Shri N.R. Agrawal, CA Revenue by Shri Swapnil Savant, Sr. DR Date of Institution 25.07.2025 Date of hearing 09.09.2025 Date of pronouncement 09.09.2025 Order under section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER; 1. This appeal by assessee is directed against the order of Ld. CIT(A)/NFAC dated 22.07.2025 for assessment year (AY) 2011-12. The assessee has raised solitary grounds of appeal for disallowance of compensation aid/expenses paid by assessee to its members (workers) of Rs. 2,30,000/-. 2. Rival submissions of both the parties have been heard and record perused. The learned Authorised Representative (ld. AR) of the assessee submits that assessee is a registered trade union, registered under the provisions of Trade Union Act, 1926. One of the objects of assessee union is to assist legally financially or otherwise its members (workers) in the event of their bona fide needs. The assess-union is working in accordance with the provisions of Trade Union Act. The assessee during the year under consideration paid subsistence to its members for their welfare during the strike period or strike, Printed from counselvise.com ITA No. 4720/Mum/2025 Engineering Mazdoor Sabha 2 closure or lay off period. The assessee trade union before making such payment based resolution in its general body meeting. Copy of such resolution is placed on record at page no. 79 of paper book. The assessee also furnished the names and other details of 19 such workers to whom Rs. 10,000/- or Rs. 15,000/- were paid during the relevant financial year. The assessee also furnished copy of vouchers bearing the signature of all such workers (member of assessee-union). The assessee also furnished the affidavit of general secretary of assessee union and treasurer/accountant of assessee to substantiate such fact that such amount/subsistence was paid to 19 workers as per memorandum of association/constitution of assessee trade union. Being a registered trade union and its books of accounts are duly audited. The function of assessee is governed by Bombay Trade Union Regulation. Though, similar additions were made against the assessee-union on A.Y. 2005-06 to 2010-11, however, such addition was deleted as the same were not based on incriminating material found during the search action carried out on assessee unit. However, during the assessment as well as first appellate stage, the assessee furnished complete details of the persons/workers to whom such assistance was extended. The assessing officer doubted such payment on the ground that voucher number was not mentioned and all the payments were made on the same day. The evidence furnished by assessee was held to be afterthought. No verification of fact was carried out by assessing officer. The ld. CIT(A) confirmed the action of assessing officer without any independent finding. Printed from counselvise.com ITA No. 4720/Mum/2025 Engineering Mazdoor Sabha 3 3. On the other hand, learned senior departmental representative (ld. Sr. DR) for the revenue supported the order of lower authorities. The ld. Sr. DR for the revenue submits that all the payments were made on a single day. The lower authorities have passed a detailed order. 4. I have considered the rival submissions of both the parties and have gone through the orders of lower authorities carefully. There is no dispute that assessee is a registered trade union. The assessee claimed that they have made payment to its members (workers) during strike period for urgent need when their wages were not paid their employer. I find that assessee furnished the name of all the workers along with their name of employer. The assessee has paid Rs. 15,000/- each to eight persons and Rs. 10,000/- each to eleven persons/workers. The assessee also furnished copy of payment voucher of all the workers. The assessing officer has not verified the fact from all such workers either by calling such person through assessee union or by issuing any notice or summon to them. I find that assessee being a registered trade union is legitimately empowered to assist their members in accordance with the provisions of Indian Trade Union Act. Thus, doubting such payment by assessing officer without bringing any adverse material on record is not justified. I also find that assessee has passed a resolution (espousal) before making such payment. To substantiate such fact, the assessee has also furnished affidavit of General Secretary and Accountant/treasurer assessee unit. Thus, in absence of adverse material that payments were not genuine, the assessing officer was not justified in Printed from counselvise.com ITA No. 4720/Mum/2025 Engineering Mazdoor Sabha 4 making addition. Hence, entire addition made by assessing officer is deleted. In the result, ground of assessee is allowed. 5. In the result, the appeal of assessee is allowed. Order was pronounced in the open Court on 09/09/2025. Sd/- PAWAN SINGH JUDICIAL MEMBER MUMBAI, Dated:09/09/2025 Biswajit Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The PCIT / CIT (Judicial); (4) The DR, ITAT, Mumbai; and (5) Guard file. By Order Assistant Registrar ITAT, Mumbai Printed from counselvise.com "