TOYOTA MATERIAL HANDLING INDIA PVT. LTD.,GURGAON vs. ACIT, CIRCLE- 25(2), NEW DELHI

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ITA 1638/DEL/2018Status: DisposedITAT Delhi29 September 2021AY 2012-134 pages
AI SummaryRemanded

What did the Tribunal hold?

The Tribunal restored the issue to the Assessing Officer to verify if the provision for the gratuity fund was deposited before the due date of filing the return. If verified, no disallowance would be made.

What were the facts?

The assessee claimed a provision for gratuity as an expense. The Assessing Officer disallowed a portion of this provision, stating it was not paid to the approved gratuity fund within the financial year as required by Section 43B.

What were the issues?

Whether a provision for gratuity is allowable as a deduction if paid to an approved fund before the due date of filing the return, even if paid after the financial year-end.

Which sections of the Income-tax Act were involved?

Section 43B,Section 40A(7)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCH ‘B’ : NEW DELHI

Before: SHRI ANIL CHATURVEDI & SHRI SANJAY GARG

Hearing: 21.09.2021

Per Sanjay Garg, Judicial Member Appellant, Toyota Material Handling India Pvt. Ltd., Gurgaon (hereinafter referred to as ‘the assessee’), by filing the present appeal has sought to set aside the impugned order dated 26.12.2017 passed by the Commissioner of Income-tax (Appeals)- 1, Gurgaon, qua the assessment year 2012-13 on the grounds inter alia that :-

1.

“1.That on the facts and circumstances of the case and in law, the order passed by the Learned Commissioner of Income-tax (Appeal)-1, Gurgaon [Ld. CIT(A)] under section 250(6) of the Act is bad in law, to the extent of disallowance sustained as per ground no.

2.

That Ld. CIT(A), on the facts and circumstances of the case and in law, has erred in confirming the disallowance of provision made towards contribution to approved gratuity fund, amounting to INR 12,34,312. The appellant reserves its right to add, alter, amend or withdraw all or any grounds of Appeal

herein and to submit such statements, documents and papers as may be considered either before or at the time of hearintg of this appeal.”

2. The short issue involved in this appeal is relating to the disallowance made by the Assessing Officer on account of provision made towards contribution to approved gratuity fund amounting to Rs. 12,34,312/-.

3. The assessee during the year claimed an expense of Rs. 17,37,312/- being provision towards gratuity. However, the Assessing Officer referring to the provisions of Section 43B of the Income Tax Act observed that the assessee, during the financial year, had paid to the fund an amount of Rs. 5,03,000/- only, he, therefore, disallowed remaining amount of Rs. 12,34,312/- as the same was not paid to the approved gratuity fund during the year, but in the subsequent year. The Assessing Officer held that as per the provisions of Section 43B only the amount of actual payment was to be allowed.

4.

The Ld. CIT(A) confirmed the disallowances made by the AO.

5.

Before us, the Ld. Counsel for the assessee has submitted that as per the provisions of section 40A(7)(b) of the Income Tax Act, the provision made by the assessee for the purpose of a payment of sum by way of any contribution to approve gratuity fund is an allowable deduction. The Ld. Counsel has further referred to provisions of section 43B of the Act to state that as per the proviso to section 43B, the amount paid towards gratuity fund before the due date of filing of the return is to be allowed as deduction. Ld. Counsel has further submitted that the assessee has deposited a sum of Rs.56,14,466/- on 19th April, 2012 in the approved gratuity fund i.e. before the due date of filing of the Income Tax Return for the financial year 2011-12. The ld. Counsel, in this respect, has submitted that the matter may be restored to the file of the Assessing Officer for verification of this fact.

The Ld. Departmental Representative (for short as “DR”) has also not objected to the same.

In view of this the matter is restored to the file of the Assessing officer with the direction to verify the contention of the assessee that the amount of provision created for approved gratuity fund was deposited before due date of filing of the return. If the contention of the assessee is proved to be correct then no disallowance on this account would be made.

5. In view of above, appeal of the assessee is treated as allowed for statistical purposes.

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