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Income Tax Appellate Tribunal, PUNE “A” BENCH, PUNE
Before: SHRI PARTHA SARATHI CHAUDHURY & SHRI G. D. PADMAHSHALI
ORDER PER G. D. PADMAHSHALI, AM; This appeal of the Revenue is assailed against the order of Commissioner of Income Tax (Appeals)-4, [for short ‘CIT-(A)’] dt. 22/06/2017 passed u/s 250 of the Income-tax Act, 1961 [for short ‘the Act’] for the assessment year [for short ‘AY’] 2011-12.
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Briefly stated facts borne out of case records are; 2.1 The appellant assessee is engaged in the business of printing and publishing of Newspapers and magazine etc. The return of income [for short ‘ITR’] declaring total income at ₹5,28,32,313/- filed on 28/09/2011 was subjected to scrutiny, wherein the Ld. AO determined the total income at ₹6,37,67,780/- u/s 143(3) vide his order dt. 28/01/2014.
2.2 The assessment was further rectified u/s 154 of the Act on 25/02/2014 thereby correcting the total income to ₹5,57,88,260/- as against foregoing assessed income on account of disallowance u/s 14A and claim of chapter VI-A made u/s 80IA of the Act.
2.3 Subsequently by service of notice u/s 148 on 04/03/2016 the was reopened and the income of the assessee re-assessed at ₹7,12,34,270/- u/s 143(3) r.w.s. 147 of the Act vide order dt. 08/12/2016 by the Income Tax, Officer, Ward 6(1), Pune [for short ‘AO’].
ITAT-Pune Page 2 of 6 2.4 The assessee successfully contested the aforesaid additions before the first appellate authority [for short ‘FAA’] and the Revenue aggrieved by the action of Ld. CIT(A) set-up this case before us on the following grounds ; “1. On the facts and in the circumstance of the case and in law, the Ld CIT(A) erred in deleting the addition of ₹ 51,56,488/- made by the Assessing officer on account of amount paid towards Leave Encashment by invoking provisions u/s 43B of the IT Act 1961.
2. On the facts and in the circumstance of the case and in law, the Ld CIT(A) erred in deleting additions of ₹ 47,61,097/- made by the Assessing officer on account of amount of VRS allowable u/s 35DDA of the Act.
3. For this and such other reasons as may be urged at the time of hearing, the order of the CIT(A) be vacated and that of the Assessing Officer be restored.
4. The appellant craves, leave to add, amend, alter or delete any of the above grounds of appeal during the course of appellate proceedings before the Hon’ble Tribunal.”
3. After hearing to rival contentions of both the parties; and subject to the provisions of rule 18 of ITAT, Rules perused the material placed on record, case laws relied upon by the appellant as well the ITAT-Pune Page 3 of 6 respondent and duly considered the facts of the case in the light of settled legal position forewarned to parties present.
4. We note that, the CIT(A)’s after considering the submission of the appellant in the light of judicial precedents and the settled legal position has rightly summarized discussion on both these impugned addition and rejected the Ld. AO’s action, which reads as under; “1.During the appellate proceedings, the Ld. AR for the appellant reiterated the same facts as placed before the Assessing Officer during the assessment proceedings. A detailed list of payment made has been produced which is placed on record. On verification, it is seen that the appellant has made payment of Rs.51,56,488/- towards leave encashment in the previous year. The Assessing Officer is therefore directed to allow the claim of the appellant to the extent of amount paid i.e. Rs.51,56,488/- and the addition of balance amount of Rs.7,88,080/- is confirmed. Ground no. 2(b) raised by the appellant is accordingly partly allowed.
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2. I have perused the assessment order and the submission made by the appellant as above carefully. In order to decide the issue, it is necessary to refer to the Section 35DDA which reads as follows: ‘35DDA. Amortisation of expenditure incurred under voluntary retirement scheme— (1) Where an assessee incurs any expenditure in any previous year by way of payment of any sum to an employee at the time of his voluntary retirement, in accordance with any scheme or schemes of voluntary retirement, one-fifth of the amount so paid shall be deducted in computing the profits and gains of the business for that previous year, and the balance, shall be deducted in equal instalments for each of the four immediately succeeding previous years. (2) No deduction shall be allowed in respect of the expenditure mentioned in sub-section (1) under any other provision of this Act.
I find from the details and evidences filed by the appellant that in computation of total income for A.Y. 2010-11, VRS compensation Rs.2,38,05,484/- was considered by the appellant in adding the same to total income and thereafter deduction was claimed u/s. 35DDA Rs.47,61,097/- in the said year, which appears to have been rightly claim and allowed by the AO. Therefore, further addition in this regard as made by the AO was uncalled for. The additions so made of Rs.47,61,097/- therefore deleted. Ground no. 2(c) raised by the appellant is according allowed.”
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The Revenue hardly controvert the settled legal position and place any deprecative material against the action of Ld. CIT(A) in restricting the disallowance with respect to leave encashment in the light of section 43B of the Act and deleting the entire disallowance made towards the claim of instalment of VRS expenditure written off during the year under consideration.
In result, the appeal of the Revenue is DISMISSED. In terms of rule 34 of ITAT Rules, the order pronounced in the open court on this Tuesday 13th day of June, 2023.
-S/d- -S/d- PARTHA SARATHI CHAUDHURY G. D. PADMAHSHALI JUDICIAL MEMBER ACCOUNTANT MEMBER पुणे/ PUNE ; ददनाांक / Dated : 19th day of June, 2023. आदेशकीप्रधिधलधपअग्रेधर्ि / Copy of the Order forwarded to : 1.अपीलाथी / The Appellant. 2. प्रत्यथी / The Respondent. 3. The Pr. CCIT, Pune (Mh-India) 4. The CIT(A)-4, Pune 5. DR, ITAT, Pune“A”Bench, 6. गार्डफ़ाइल / Guard File. Ashwini आदेशानुसार / By Order, वररष्ठ दनजी सदिव / Sr. Private Secretary आयकर अपीलीय न्यायादधकरण, पुणे / ITAT, Pune.
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