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Facts
The assessee's appeal was dismissed ex-parte by the CIT(A) for non-response to notices. The disallowance was related to a provision made for Long-Term Incentive Plan (LTIP) under Section 43B of the Act, which the AO disallowed as it was not paid before the due date of filing the return.
Held
The Tribunal noted that the assessee claimed not to have received all notices and had requested adjournment. Considering the need for a fair hearing and factual examination of the payment of the provision, the Tribunal remitted the appeal back to the CIT(A).
Key Issues
Whether the CIT(A) erred in dismissing the appeal ex-parte without considering the assessee's submissions regarding the disallowance of LTIP expenses under Section 43B and short grant of interest under Section 244A?
Sections Cited
250, 43B, 244A, 143(1)
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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
Before: SHRI SAKTIJIT DEY, VP &
(Assessment Year: 2023-24) M/s Birla Management Centre DCIT, Circle-6(1)(2), Services Pvt. Ltd., Aayakar Bhavan, M.K. Road, Aditya Birla Centre, S.K. Ahire Marg, Vs. Mumbai-400020. Worli, Mumbai-400030. PAN: AABCB7830M Appellant) : Respondent) Appellant /Assessee by : Shri Ronak Doshi, AR Revenue / Respondent by : Shri Leyaqat Ali Aafaqui- Sr. DR : 24.04.2025 Date of Hearing : 06.05.2025 Date of Pronouncement O R D E R Per Padmavathy S, AM:
This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals), Panchkula [In short 'CIT(A)'] dated 19.12.2024 for AY 2023-24. The assessee raised the following grounds of appeal:
“1. GROUND NO. 1: VIOLATION OF PRINCILPLES OF NATURAL JUSTICE: 1.1. On the facts and in circumstances of the case and in law, the Ld. CIT(A) erred in passing the order u/s 250 of the Act without considering the submission filed by the Appellant during the course of proceedings.
1.2. The Appellant prays that the order passed by the Ld. CIT(A) u/s 250 of the Act be held as bad in law and same be quashed/set aside. WITHOUT PREJUDICE TO GROUND NO 1: 2. GROUND NO. 2: DISALLOWANCE OF EXPENSE U/S 43B OF THE ACT AMOUNTING TO RS. 38,08,607/- IN RESPCT OF LONG-TERM INCENTIVE PLAN (LTIP): 2.1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the action of the Id. AO of disallowing expense u/s 43B of Rs. 38,08,607/-in respect of Long-Term Incentive Plan (LTIP) which was incurred by the Appellant for the benefit of employees. 2.2. The Id. CIT(A) failed to appreciate that according to sec 43B of the Act, the expenses are allowed to be claimed as deduction only in case of actual payment. 2.3. The Appellant prays that the disallowance u/s. 43B be deleted.
3. GROUND NO. 3: SHORT GRANT OF INTEREST U/S 244A OF THE ACT: 3.1. On the facts and in the circumstances of the case and in law, the ld. CIT(A) erred in confirming the short grant of interest u/s. 244A of the Act. 3.2. The Appellant prays that the correct interest to be granted u/s. 244A of the Act.”
The assessee is a private limited company and filed the return of income for AY 2023-24 on 27.10.2023. The return was processed under section 143(1) of the Income Tax Act, 1962 (the Act) on 27.03.2024. In the said intimation the Assessing Officer (AO) has made a disallowance of provision made towards Long Term Incentive Plan to the employees under section 43B of the Act. Aggrieved the assessee filed further appeal before the CIT(A). The CIT(A) had issued three notices on 08.07.2024, 09.08.2024 and 04.12.2024. Since the assessee has not responded to the notices, the CIT(A) dismissed the appeal ex-parte. On merits the CIT(A) held that the assessee failed to produce valid evidence to demonstrate that the actual M/s Birla Management Centre Services Pvt. Ltd. payment against the provision has been made before the due date for filing return of income as per section 43B of the Act. The assessee is in appeal before the Tribunal against the order of the CIT(A).
We heard the parties and perused the material on record. The ld. AR submitted that the assessee has not received two of the notices and that the assessee has filed an adjournment letter (page 203 to 206 of Paper Book) in response to the last of the notices seeking time for furnishing the details. The ld. AR also drew our attention to the details of payment made against the provision made to submit that the amount disallowed under section 43B of the Act is not tenable (page 202 of the Paper Book). We notice that the disallowance is made in the intimation under section 143(1) and that the CIT(A) has dismissed the appeal exparte due to non- appearance of the assessee. Further, the claim made by the assessee that the payments against the provision towards bonus are made as per section 43B needs factual examination. Considering these facts peculiar to the assessee's case in the interest of natural justice and fair play, we are remitting the appeal back to the CIT(A) to consider the issue on merits by calling for the required details and decide in accordance with law. The assessee is directed to file the relevant documents in support of the claim without seeking unnecessary adjournments and co-operate with the appellate proceedings. It is ordered accordingly.
In result, appeal of the assessee is allowed for statistical purpose.
Order pronounced in the open court on 06-05-2025. Sd/- Sd/- (SAKTIJIT DEY) (PADMAVATHY S) Vice-President Accountant Member *SK, Sr. PS M/s Birla Management Centre Services Pvt. Ltd. Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT