DELPHI T vs. TECHNOLOGY,CHENNAIVS.DCIT, CHENNAI

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ITA 1914/CHNY/2026Status: DisposedITAT Chennai16 July 2026AY 2021-224 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the claim regarding gratuity additions requires factual examination. Therefore, it found no reason to interfere with the CIT(A)'s decision to restore the matter back to the Assessing Officer for a detailed examination.

What were the facts?

The assessee company filed its return of income, which was processed under section 143(1) by the CPC. The CPC made additions for gratuity claimed as deduction and for book profits computation. The assessee contended that these adjustments were not prima facie errors and that their responses were not considered.

What were the issues?

Whether adjustments made under section 143(1) regarding gratuity and book profits involved debatable issues beyond prima facie adjustments and if the assessee's responses were adequately considered.

Which sections of the Income-tax Act were involved?

Section 143(1),Section 115JB,Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘C’ BENCH: CHENNAI

Before: SHRI GEORGE GEORGE KAND MS. PADMAVATHY.S

For Respondent: Mr. Shivalingam, Sr. A.R

आदेश / O R D E R

PER PADMAVATHY.S, A.M: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Addl./JCIT(A)-1, Bengaluru (in short "FAA") passed u/s. 250 of the Income Tax Act, 1961 (in short "the Act") dated 09.02.2026 for Assessment Year (AY) 2021-22. The grounds of appeal raised by the assessee are as under: “1. On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) erred in not granting opportunity to the Appellant to present the case through video conferencing. 2. On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) failed to consider that the appellant had furnished detailed responses which were not examined by CPC in violation of second proviso to section 143(1)(a).

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3.

On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) erred in upholding adjustments made under section 143(1) dated 14-12-2022 which involved debatable issues relating to Ind-AS accounting treatment and computation under section 115JB, beyond the scope of prima facie adjustments. 4. On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) failed to appreciate that claim of gratuity debited to OCI and allowed under section 43B required factual verification and could not be treated as an incorrect claim apparent from return. 5. On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) erred in confirming addition of gratuity debited to OCI to book profits, despite explicit exclusion under section 115JB(2A)(b), thereby permitting CPC to adjudicate MAT issues impermissible under section 143(1). 6. On the facts and in the circumstances of the case and in law, the Ld. ADDL/JCIT (A) erred in holding that reversal of deferred tax provision cannot reduce book profit without examining statutory conditions under Explanation 1 to section 115JB(2).”

2.

The assessee is a company engaged in manufacture of automobile components. The assessee filed a return of income for AY 2021-22 on 26.02.2022 declaring total income of Rs.57,59,88,100/-. The return was processed u/s. 143(1) by making an addition of Rs. 1.54 Crores towards gratuity claimed as a deduction on payment basis in the computation of income. The CPC also added the same amount while computing the book profits u/s. 115JB of the Act. Aggrieved, the assessee filed further appeal before the CIT(A). Before the CIT(A), the assessee raised a contention that the impugned adjustments made by the CPC does not fall within the purview of prima facie adjustments u/s.143(1) of the Act. The assessee also contended that the assessee has submitted its objections in response to the notice issued by CPC with respect to the proposed adjustments and that the CPC without taking into consideration the submissions of the assessee has proceeded to make the adjustments. The CIT(A) after considering the submissions of the

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assessee held that the discrepancies identified by CPC are apparent errors and therefore is well within purview of Section 143(1) of the Act. On merits, the CIT(A) set aside the matter back to the A.O to examine the issue on merits based on the submissions and evidences after giving reasonable opportunity of being heard to the assessee. The assessee is in appeal before the Tribunal against the order of the CIT(A).

3.

We have heard the parties, and perused the material available on record. From the perusal of the order u/s. 143(1) of the Act, we notice that the assessee has debited a sum of Rs. 4,22,08,004/- towards provision for gratuity and in the return of income has claimed a sum of Rs. 5,76,83,294/- as deduction based on the actual payment of gratuity [Page 2 of paper book & Page 31 of intimation u/s. 143(1)]. Accordingly the CPC proposed a variance to the income of the assessee comparing the amount debited to the Profit and Loss account and the actual amount claimed in the return of income. We further notice that the assessee has responded to the variance proposed stating that the difference is due to the amount debited to Other Comprehensive Income (OCI) which is included in the actual gratuity payments made by the assessee. We also notice that with regard to the variance to MAT computation u/s. 115JB of the Act, the assessee has responded explaining the reason for difference. The CPC however has proceeded to make the adjustment stating that no response is received from the assessee. Considering that the claim of the assessee with regard to the impugned additions needs factual examination, we see no reason to interfere with the decision of CIT(A) in restoring the matter back to the A.O.

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4.

In the result, the appeal of the assessee is allowed for statistical purposes.

Order pronounced on 16th day of July, 2026 at Chennai.

Sd/- Sd/- (जॉज� जॉज� के) (पदमावती यस) (Padmavathy.S) (George George K) उपा�� / Vice President लेखा लेखा सद�य लेखा लेखा सद�य सद�य /Accountant Member सद�य चे�नई/Chennai, �दनांक/Dated: 16th July, 2026. EDN, Sr. P.S EJTADA Digitally signed by आदेश क� �ितिल�प अ�े�षत/Copy to: EJTADA DURGA DURGA 1. अपीलाथ�/Appellant NARESH Date: 2026.08.10 NARESH 17:44:55 +05'30' 2. ��थ�/Respondent 3. आयकर आयु�/CIT, Chennai/Madurai/Coimbatore/Salem 4. िवभागीय �ितिनिध/DR 5. गाड� फाईल/GF

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