ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE-1, ELURU vs. THE DISTRICT COOPERATIVE BANK LIMITED, ELURU

आदेश /O R D E R

PER D.S. SUNDER SINGH, Accountant Member: These appeals are filed by the revenue against the order of the Commissioner of Income Tax(Appeals) [CIT(A)]-11,Hyderabad vide Appeal No.237 & 238/2017-18/DCIT C-1 ELR/CIT(A)-11Hyd/17-18dated 31.01.2018 and Cross Objections are filed by the assessee supporting the order of the Ld.CIT(A) for the assessment year 2012-13 and 2013-14. Since the grounds raised in the appeals are common, these appeals are heard together and a common order is being disposed of for the sake of convenience as under.

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the Act. For ready reference, we extract relevant part of the order of the AO which reads as under : “4. It has been found that the assesses has made payment of Rs50 Lakhs towards gratuity fund for the welfare of employees. As per the provisions of sec.40A(7) of the I.T.Act1961, payment of premium towards group gratuity scheme in respect of a gratuity fund which has not been approved by the Commissioner of Income Tax is not allowable. This issue has been discussed at length in course of hearing with reference to the provisions of Sec.40A(7) and 36(1) (v) of the I.T.Act, 1961. The AR. Sri J.Radhakrishan,C.A., of the assessee-bank has been specially interacted regarding non-allowability of the amount paid towards the Gratuity Fund set up with LIC of India. Their special attention was drawn to the detailed discussion made in the assessment order for the A.Y.2010-11 & 2011-12. The clear-cut provisions of the aforesaid two sections state that no deduction is allowable for contribution made to an unapproved fund. All this proves that the amount paid to LIC of India towards the Gratuity Fund is not to be allowed. The claim is not found to be acceptable.” 4. Aggrieved by the order of the AO, the assessee went on appeal before the CIT(A) and the Ld.CIT(A) deleted the addition following the order of this Tribunal in assessee’s own case in ITA Nos.49, 50, 78, 476/Viz/2012, 515,524/Viz/2014, 269/Viz/2014 & CO 33/Viz/2013 & CO 29/Viz/2015 and allowed the appeal of the assessee holding that the assessee is entitled for deduction for payment of gratuity to LIC on actual payment basis. For the sake of clarity and convenience, we extract relevant part of the order of Ld.CIT(A) which reads as under :

4.4. Upon search of the official website of the ITAT, namely,www.itat.gov.in. the order of ITAT, Visakhapatnam dated 25/01/2018 in ITA Nos. 49,50,78,476/VizagJ2012, 515,524/Vizag/2014, 269/Vizag/2015 &CO 33/Vizag/2013 &CO 29/Vizag/2015 has been found, which is downloaded. In paragraphs 8 to 11 of the order, the ITAT, Visakhapatnam discussed the decision

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part on this issue. For the sake of ready reference, relevant part of para 10 is reproduced below:- "10. In the case of Verizon Data Services India Pvt Ltd (supra) the coordinate bench of Madras held that payment made to gratuity fund maintained with LIC has no control over the irrevocable trust created exclusively for the benefit of employees and deduction shall be allowed. The coordinate bench of Madras while deciding the appeal relied on the decision of Hon tie Madras High court in the case of Textool lndia Pvt. Limited (supra) (civil appeal No. 447 of 2003). In the instant case the assessee has made the payments to the LIC towards group gratuity scheme directly in approved schemes. The assessee has also obtained the policy in favour of the bank. The assessee has no control over the funds contributed to LIC towards the gratuity. The assessee is receiving the gratuity payment directly from the LIC of India as per the scheme which is paid to the employee on happening of the event i.e. retirement or death or resignation. Therefore, the facts of the assessee's case are squarely covered by the decisions cited supra. The coordinate bench of Hyderabad while delivering the ruling relied on the decision of jurisdictional High Court in the case of Warner Hindustan Ltd. Since the facts are identical, respectfully following the view taken by the coordinate benches, we hold that the assessee is entitled for the deduction for payment of gratuity to LIC and accordingly, we set aside the order of the lower authorities and allow the appeal of the assessee.

4.5 Respectfully following the latest decision of ITAT, Visakhapatnam, in assessee's own case, referred to supra, the Assessing Officer is directed to delete the disallowance of Rs.50,00,000/- each for AYs 2012-13 & 2013-14 respectively.”

4.1. Since the facts are identical, and Ld.CIT(A) allowed the appeal of the assessee following the order of this tribunal respectfully following the view taken by this Tribunal in the assessee’s own case cited supra, we direct the AO to allow the payment made to LIC gratuity fund towards the group

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gratuity on actual payment basis. Accordingly, we uphold the order of the Ld.CIT(A) and dismiss the appeal of the revenue .

In the result, appeals of the revenue as well as the cross objections filed by the assessee are dismissed.

Pronounced in the open court on 20th September 2018.

Sd/- Sd/- (िी.दुगाा राि) (धड.एस. सुन्दर ससह) (V. DURGA RAO) (D.S. SUNDER SINGH) न्याधयक सदस्य/JUDICIAL MEMBER लेखा सदस्य/ACCOUNTANT MEMBER धिशाखापटणम /Visakhapatnam ददिांक /Dated : 20.09.2018 L.Rama, SPS

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आदेश की प्रधिधलधप अग्रेधर्ि/Copy of the order forwarded to:- 1. निर्ााररती/ The Assessee- The District Cooperative Central Bank Ltd., Ramachandra Rao Pet, Eluru, West Godavari Dist. 2. राजस्व/ The Revenue – The ACIT, Circle-1, Eluru 3. The Pr.Commissioner of Income Tax, Rajahmundry 4. The Commissioner of Income-Tax (Appeals)-11, Hyderabad 5. धिभागीय प्रधिधिधि, आयकर अपीलीय अधिकरण, धिशाखापटणम /DR, ITAT, Visakhapatnam 6.गाडाफ़ाईल / Guard file आदेशािुसार / BY ORDER // True Copy //

Sr. Private Secretary ITAT, VISAKHAPATNAM