MAHINDRA RURAL HOUSING FINANCE LIMITED,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 7(1)(1), MUMBAI

Date of Hearing – 07/02/2023 Date of Order – 23/02/2023

O R D E R PER BENCH

The captioned appeal has been filed by the assessee challenging the impugned order dated 17/10/2022, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, Delhi, [“learned CIT(A)”], for the assessment year 2012–13.

“1. On the facts and the circumstances of the case and in law, the CIT(A) erred in passing an order in reference to issues which were not the point of consideration in the case of the Appellant.

Mahindra Rural Housing Finance Ltd. ITA no.3165/Mum./2022

2. On the facts and the circumstances of the case and in law, the CIT(A) erred in not adjudicating the grounds of appeal taken by the Appellant towards unwarranted disallowance of provision for contingencies of Rs. 25,00,000

3. We have considered the submissions of both sides and perused the material available on record. The brief facts of the case are that the assessee filed its return of income on 27/09/2012 declaring total income at Rs.15,03,46,460. The return of income filed by the assessee was selected for scrutiny and statutory notices under section 143(2) and section 142(1) along with a questionnaire were issued and served on the assessee. During the assessment proceedings, it was observed that the assessee in the computation of income claimed a deduction of provision for contingency of Rs.25 lakhs, which was disallowed in the assessment year 2011-12. In its justification for the aforesaid claim, the assessee submitted that the provision for contingency was towards staff welfare, conveyance, and travelling of employees. The assessee further submitted that this provision has been added in the computation of income in the assessment year 2011-12 and therefore same was claimed in the year under consideration. The Assessing Officer vide order dated 17/03/2015 passed under section 143(3) of the Act did not agree with the submissions of the assessee and held that only ascertained expenses are allowable as deduction and not the provision. The AO further held that the assessee did not furnish the details of corresponding expenses and accordingly disallowed the provision for contingency expenses of Rs.25 lakhs claim by the assessee.

Mahindra Rural Housing Finance Ltd. ITA no.3165/Mum./2022

“1. The learned DCIT enved in making disallowance of Rs. 25,00,000 under the head Provision for Contingency expenses on adhoc basis. The appellant has to submit that the said provision was not made during the year under consideration but pertained to earlier Assessment Year. Accordingly no disallowance ought to be made during the year under consideration.”

6. Thus, from the above, it is evident that the learned CIT(A) instead of deciding the issue raised in the ground of appeal filed by the assessee proceeded to adjudicate the assessee’s appeal on some other issue, which does not arise from the facts of the present case. Accordingly, in view of the above, we deem it appropriate to restore the appeal to the file of the learned CIT(A) for de novo adjudication of ground raised by the assessee after hearing both parties. As a result, grounds raised by the assessee are allowed for statistical purposes.