ITO, Ward - 1(2), Kolkata, Kolkata V. M/s. Mohan Jute Mills Ltd., Kolkata

MA 149/KOL/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 6057 (ITAT-KOLKATA)
• Duration Of Justice: 5 month(s) 12 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 23-01-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2005-2006
• Appeal Filed On: 10-08-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B, BENC H KOLKATA BEFORE SHRI ABY.T. VARKEY, JM &DR. A.L.SAINI, AM M.A. NO.149 /KOL/2018 ./ITA NO.261 /KOL/2014 ( / ASSESSMENT YEARS: 2005-06) ITO, WARD-1(2), KOLKATA VS. M/S MOHAN JUTE MILLS LTD. 16A, PALACE COURT, 1, KYD STREET, KOLKATA-700016 ./ ./PAN/GIR NO.: AACCM 4482 B (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI RADHEY SHYAM, CIT DR RESPONDENT BY : SHRI ANKIT JALAN, AR / DATE OF HEARING : 04/01/2019 /DATE OF PRONOUNCEMENT : 23/01/2019 / O R D E R PER DR. A. L. SAINI: BY WAY OF CAPTIONED APPLICATION, THE REVENUE HAS S OUGHT TO POINT OUT THAT A MISTAKE APPARENT FROM RECORD WITHIN THE MEANING O F SECTION 254(2) OF THE INCOME TAX ACT, 1961(IN SHORT THE ACT) HAS CREPT IN THE ORDER OF THE TRIBUNAL DATED 01.09.2017. 2. THE CASE OF THE REVENUE IN THIS M.A. IS THAT WHE THER ADVANCE AMOUNT PAID TO EMPLOYEES IN EARLIER YEARS CAN BE ADJUSTED IN THE A SSESSMENT YEAR UNDER CONSIDERATION. IF IT CAN BE ADJUSTED, THEN NEXT QUE STION IS WHETHER ASSESSEE CAN CLAIM DEDUCTION U/S 43B OF THE ACT IN RESPECT OF AD VANCE PAID EARLIER YEAR BUT M/S MOHAN JUTE MILLS LTD. MA NO. 149/KOL/2018 (ARISING OUT OF I.T.A. NO. 261/KOL/2014) ASSESSMENT YEAR:2005-06 P PP PA AA AG GG GE EE E | || | 2 22 2 ADJUSTED IN THE ASSESSMENT YEAR UNDER CONSIDERATION . WITH THIS BACKGROUND, THE MAIN GRIEVANCE OF THE REVENUE IN THIS M.A. IS REPRO DUCED BELOW: THE BRIEF FACTS OF THE CASE IS THAT THE ASSESSEE M ADE PAYMENT OF GRATUITY ON DIFFERENT DATES BEGINNING FROM THE YEAR 2002 TILL F .Y. 2004-05 AGGREGATING RS. 67,37,002/-. ACTUAL PAYMENT IN THE YEAR 2004-05 WAS RS. 2,33,888/- ONLY. THE ASSESSEE CLAIMED DEDUCTION OF THE ENTIRE AMOUNT OF RS. 67,37,002/- U/S 43B OF THE INCOME TAX ACT, 1961, IN THE A.Y. 2005-06. NOW THE BRIEF QUESTION OF LAW WAS WHETHER THE ASSESSEE WAS ENTITLED TO DEDUCTION U/S 43B OF THE ACT IN THE A.Y. 2005- 06 OF THE ENTIRE AGGREGATE AMOUNT OF RS. 67,37,002/ - OR TO THE EXTENT OF RS. 2,33,888/- WHICH IS THE ACTUAL PAYMENT MADE DURING THE F.Y. 2004-05. WHILE ADJUDICATING THE APPEAL OF THE ASSESSEE, HONBLE IT AT WAS OF THE VIEW THAT GRATUITY EXPENSES IS ALLOWABLE ON THE BASIS OF ACTU AL PAYMENT ONLY [PARAGRAPH 12 OF THE ORDER]. THE HONBLE ITAT HAS RESTORED THE MA TTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO ALLOW DEDUC TION OF GRATUITY EXPENSES AFTER VERIFYING WHETHER ANY DEDUCTION OF GRATUITY EXPENSE S HAS BEEN CLAIMED BY THE ASSESSEE IN THE EARLIER YEARS [LINES 6 TO 9 OF PARA GRAPH 13 OF THE ORDER]. COMPLYING WITH THE ORDER OF THE HONBLE ITAT MAY RE SULT IN A SITUATION THAT IN THE CASE OF ASSESSEE NOT CLAIMING ANY DEDUCTION U/S 43B OF THE ACT IN EARLIER YEARS, THE ENTIRE AMOUNT OF RS. 67,37,002/- SHALL BE ALLOW ED AS DEDUCTION IN THE A.Y. 2005-06 THOUGH ACTUAL PAYMENT IN THE SAID A.Y. IS O NLY RS. 2,33,888/-. THIS WILL BE IN VIOLATION OF THE VIEW OF HONBLE ITAT AS EXPRESS ED IN PARAGRAPH 12 OF THE ORDER. WE NOTE THAT ASSESSEE CLAIMED THE DEDUCTION OF THE ENTIRE AMOUNT OF RS. 67,37,002/- U/S 43B OF THE ACT. WE NOTE THAT ACTUAL PAYMENT IN THE A.Y. 2005-06 WAS TO THE TUNE OF RS. 2,33,888/- ONLY, THEREFORE, THE AMOUNT BELONGS TO EARLIER YEARS COMES AT RS. 65,03,114/- (RS. 67,37,002 RS. 2,33,888). THEREFORE, MAIN GRIEVANCE OF THE REVENUE IS THAT RS. 65,03,114/- WH ICH BELONGS TO EARLIER YEARS, AND PAID AS ADVANCE TO THE EMPLOYEES IN EARLIER YEA RS SHOULD NOT BE ALLOWED U/S 43B OF THE ACT, AND ONLY RS. 2,33,888/- ACTUAL AMOU NT PAID BY THE ASSESSEE SHOULD BE ALLOWED U/S 43B OF THE ACT. NOW, TO UNDERSTAND T HE FACTUAL POSITION. WE EXPLAIN THE ACCOUNTING TREATMENT OF THE FIGURES EXP LAINED ABOVE. I) AT THE TIME OF GIVING ADVANCE, THE ASSESSEE COMPANY DOES THE FOLLOWING ACCOUNTING ENTRY: ADVANCE TO EMPLOYEES A/C FOR RS. 65,03,114/- TO BANK RS. 65,03,114/- II) AT THE TIME OF PAYMENT OF GRATUITY TO EMPLOYEES THE COMPANY DOES FOLLOWING ACCOUNTING ENTRIES: M/S MOHAN JUTE MILLS LTD. MA NO. 149/KOL/2018 (ARISING OUT OF I.T.A. NO. 261/KOL/2014) ASSESSMENT YEAR:2005-06 P PP PA AA AG GG GE EE E | || | 3 33 3 GRATUITY EXPENDITURE A/C RS. 67,37,002/- TO ADVANCE TO EMPLOYEES RS. 65,03,114/- TO BANK RS. 2,33,888/- (BEING ADVANCE PAID EARLIER TO EMPLOYEES ADJUSTED I N GRATUITY PAYABLE) THEREFORE, THE ASSESSEE COMPANY MAY CLAIM THE DEDUC TION U/S 43B OF THE ACT TO THE TUNE OF RS. 67,37,002/-IN THE YEAR OF GRATUITY PAYMENT AFTER ADJUSTING THE ADVANCE PAID EARLIER TO EMPLOYEES. 3. WE NOTE THAT TRIBUNAL IN ITS ORDER DIRECTED THE ASSESSING OFFICER TO EXAMINE THE DEDUCTION OF GRATUITY EXPENSES CLAIMED BY THE A SSESSEE IN EARLIER YEAR, OUT OF THE ADVANCE PAYMENT MADE TO EMPLOYEES. IF NOT PAID THEN ENTIRE ADVANCE AMOUNT PAID TO EMPLOYEES WILL BE DEDUCTIBLE IN THE A.Y. UN DER CONSIDERATION. THEREFORE, WE DO NOT FIND ANY APPARENT MISTAKE IN PARA NO. 13 OF THE ORDER OF THE TRIBUNAL; WHICH IS REPRODUCED BELOW FOR READY REFERENCE: 13. AS IN THE CASE BEFORE US, THE ASSESSEE HAS MAD E THE PAYMENT WHICH WAS SHOWN AS ADVANCE IN THE BOOKS IN THE EARLIER YEARS, THEREFORE, IT NEEDS TO BE VERIFIED WHETHER THE DEDUCTION WAS CLAIMED BY THE A SSESSEE IN THE EARLIER YEARS. THUS EVEN THE GRATUITY EXPENSES REPRESENTS THE PRIO R PERIOD EXPENSES WOULD BE ALLOWED ON ACTUAL PAYMENT BASIS. IN THE LIGHT OF AB OVE DISCUSSION WE ARE INCLINED TO RESTORE BACK THE ISSUE TO THE FILE OF ASSESSING OFFICER WITH THE DIRECTION TO ALLOW THE DEDUCTION OF THE GRATUITY EXPENSES AFTER VERIFY ING THE FOLLOWING DETAILS: I) WHETHER ANY DEDUCTION OF GRATUITY EXPENSE HAS BEEN CLAIMED BY THE ASSESSEE IN THE EARLIER YEARS, II) THE ASSESSEE WILL PRODUCE ALL THE EVIDENCES SHOWING THE PAYMENT OF GRATUITY FOR RS. 62,15,970/- ONLY. IN VIEW OF THE ABOVE, THE ISSUE RAISED BY THE ASSES SEE IS ALLOWED FOR STATISTICAL PURPOSES. THE ASSESSEE PAID ADVANCE AMOUNT AGAINST GRATUITY P AYABLE TO EMPLOYEES AND THE SAME GET ADJUSTED AT THE TIME OF ACTUAL PAYMENT OF GRATUITY, HENCE FINDINGS GIVEN BY THE TRIBUNAL IN SENDING ISSUE FOR VERIFICATION O F ASSESSING OFFICER IS CORRECT. 4. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT AFTER GOING THROUGH THE ENTIRE ORDER OF THE CO-ORDINATE BENCH M/S MOHAN JUTE MILLS LTD. MA NO. 149/KOL/2018 (ARISING OUT OF I.T.A. NO. 261/KOL/2014) ASSESSMENT YEAR:2005-06 P PP PA AA AG GG GE EE E | || | 4 44 4 IN I.T.A. NO. 261/KOL/2014 WE DO NOT FIND ANY MISTA KE APPARENT ON RECORD, THEREFORE WE REJECT THE MISCELLANEOUS APPLICATION FILED BY THE REVENUE . 5. IN THE RESULT, THE MISCELLANEOUS APPLICATION OF THE REVENUE IS DISMISSED. ORDER IS PRONOUNCED IN THE OPEN COURT ON 23.01.201 9. SD/- ( A.T. VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 23/01/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. ITO, WARD-1(2), KOLKATA 2. M/S MOHAN JUTE MILLS LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES