THE KANAKA MAHALAKSHMI CO - OPERATIVE BANK LIMITED,VISAKHAPATNAM vs. THE ACIT, VISAKHAPATNAM

Ground No. 3 relates to sustenance of addition of Rs. 3.00 lakhs towards staff gratuity. 4. Facts of this issue in brief are that in the assessment order, the Assessing Officer has observed on going through the profit & loss account that the assessee has debited a sum of Rs. 3.00 lakhs towards staff gratuity. The gratuity fund has been approved by the Commissioner of Income Tax. The AR of the assessee stated that the assessee made an agreement with LIC of India for deposit of this staff gratuity and this agreement deed was executed on 30/10/2010 which is relevant to the Assessment Year 2011-12. However, there was no approval from the Commissioner. Therefore, the Assessing Officer has disallowed the same and added back to the total income of the assessee. 5. On appeal, ld. CIT(A) by passing exparte order, confirmed the order of the Assessing Officer. 6. Before us, assessee has submitted that the issue is squarely covered in favour of the assessee in the case of The District Co-operative Central Bank vs. ITO in ITA No. 49 & 50/VIZ/2012 by order dated 25/01/2018. 7. On the other hand, ld. Departmental Representative strongly supported the orders passed by the authorities below.

We have heard both the parties, perused the material available on record and the orders of the authorities below. 9. The assessee has debited a sum of Rs. 3.00 lakhs towards staff gratuity. The Assessing Officer asked the assessee to produce the approval of the Commissioner. The assessee submitted before the Assessing Officer that the assessee made an agreement with LIC of India for deposit of staff gratuity and this agreement deed was executed on 30/10/2010 which is relevant to the Assessment Year 2011-12. However the Assessing Officer has disallowed the claim of the assessee on the ground that there is no approval from the Commissioner. Admittedly, the assessment year under consideration before us is 2010-11 and the agreement was executed on 30/10/2010 which is relevant to the Assessment Year 2011-12. In view of the above facts, we find that the Assessing Officer has not examined the full facts of the case and the ld. CIT(A) has passed exparte order. Therefore, we are of the opinion that the issue has to the remitted back to the Assessing Officer for fresh consideration and accordingly direct the Assessing Officer, if the assessee has already paid this amount towards staff gratuity for the Assessment Year 2010-11, to follow the decision of ITAT, Vizag Bench in ITA No. 299/VIZ/2017. Thus, this ground of appeal raised by the assessee is allowed for statistical purposes.

Ground No. 4 relates to sustenance of addition of Rs.27,680/- towards taxation expenses. 11. The Assessing Officer has observed that on verification of profit & loss account, it is seen that the assessee has claimed taxation expenses of Rs. 27,680/-, which is not allowable expenditure. Therefore, same is disallowed and added back to the total income of the assessee. 12. On appeal, ld. CIT(A) by passing exparte order, confirmed the order of the Assessing Officer. 13. Before us, ld. counsel for the assessee has submitted that the above expenditure incurred by the assessee is relating to defend the cases of the assessee before the taxing authorities. Therefore, expenses incurred by the assessee towards professional charges, which has to be allowed. The assessee has not filed any supportive evidence to substantiate his case. We find that, it is appropriate to remit the issue back to the file of the Assessing Officer to consider it afresh after taking into account all the details filed by the assessee. In view of the above, we set aside the order passed by the ld. CIT(A) and direct the Assessing Officer to consider the issue afresh by considering all the details filed by the assessee.

In the result, appeal filed by the assessee is partly allowed for statistical purposes. Order Pronounced in open Court on this 05th day of Sept., 2018.