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Income Tax Appellate Tribunal, AMRITSAR BENCH, AMRITSAR.
Before: SH. LALIET KUMAR & DR. M. L. MEENA
ORDER Per Laliet Kumar, J.M. The appeal of the Assessee is directed against the order dated 22.09.2020 passed by the Commissioner of Income Tax (Appeals)-1, Amritsar in respect of A.Y. 2017-18.
Grounds of appeal:
I. That the order of the Assessing Officer as well as the order of Learned CIT(A) are both against the facts of the case and are untenable in law.
II. That the worthy CIT(A) has not appreciated the facts of the case and merely relied on order of the AO and without any rhyme & reason, the Ld. CIT(A) has confirmed the addition of Rs.19,52,659/- against the disallowance made by the CPC at Rs.22,59,445/- u/s 40A(7) of the IT Act, 1961. As such order of the CIT(A) is also liable to be cancelled and the addition confirmed may be deleted.
III. That the Ld. CIT(A) did not appreciate that during the year under consideration the position of the gratuity account is as under:-
Particulars Amount Opening (A) Rs.2,41,69,772/- Expenses during the year (B) Rs.22,59,445/- Paid during the year (C) (-) Closing Liability (D) Rs.2,44,33,648/- a. Thus the Ld. CIT(A) did not appreciate that during the year under consideration the appellant has claimed an amount of Rs.22,59,445/- as expenditure in the audited profit & loss a/c out of which an amount of Rs.19,95,569/- was paid/spent and out of these the balance amount of Rs.2,63,876/- was duly added in the computation of income filed along- with the return of income.
IV. Thus the Ld. CIT(A) did not appreciate that this amount of Rs.263876/- has already suffered tax viewed from all the angles including the difference between the opening and closing balance i.e. Rs.2,63,876/-
(Rs.2,44,33,648/- (-) Rs.2,41,69,772/-) was duly added back in the return of income filed by the assessee.
V. The Ld. CIT(A) did not appreciate that there was no justification and reason for further addition of Rs.19,52,569/- and the same is not at all called for and the same may be deleted. The Ld. CIT(A) further did not appreciate that no further addition of Rs.19,52,569/- is called for either u/s 143(1) or 143(3). It is correct that appeal against order u/s 143(3) is pending before the CIT(A) but the fact remains that no addition of Rs.19,52,569/- is called for either u/s 143(1) or u/s 143(3). The addition made u/s 143(1) should have been deleted and this addition has been confirmed without any rhyme & reason.
VI. That any other ground of appeal which may be argued at the time of hearing of the appeal.”
1. At the outset the Ld AR had drawn our attention to page 6 of the order passed by CIT(A) wherein the CIT(A) had disallowed the claim of the assessee by observing as under.
“ii. Further, disallowance of Rs.22,59,445/- has been made by CPC of the Provision for payment of gratuity not allowable u/s 40A(7). The disallowance has been rightly made by CPC on the basis of 3CD, col 21(e), i.e., on the basis of the Auditors certificate.”
2. The Ld AR had also drawn our attention to page 50 of the paper book wherein the certificate of the Chartered Accountant was placed certifying that the amount was made towards the Gratuity contribution were made during the year under consideration. It was submitted that the lower authority had wrongly disallowed the payment made by the assessee on the pretext that the same was not made during the year consideration. The Ld AR had submitted that the matter be kindly remitted back to the follow of the Assessing Officer concerned for the purpose of verification of the above said fact.
Per contra, the LD DR the order relied upon Lower Authorities and has submitted that he has no objection if the matter setback for AO verification.
We have heard the rival contention of the party and perused the material available on record. In the present case, it is the case of the assessee that the assessee had made contribution towards the gratuity funds during the assessment year under consideration and therefore the assessee is entitled to the dedication liable under section 40A(7 ) of the Act.
In our view, once the assessee had made the payment during the year under consideration then the same is required to be allowed. However, the above said fact have not been considered by the lower authorities and therefore we deem it appropriate to remand back the matter to the file of the concerned AO to verify whether the contribution towards the gratuity funds were paid by the assessee during the year under consideration or not. If on verification the AO comes to the conclusion that the contribution were made in the year under consideration then the AO is directed to allow the benefit of 40A(7) to the assessee. Needless to say, that while verifying above set back of contribution the AO shall afford the opportunity to the assessee and also permit him to support the contention on the basis of the documents/ evidence may be advised. Accordingly, the appeal of assessee is allowed for statistically purposes.
In the result, the assessee’s appeal is allowed for statistical purposes.