ADANI TRACKS MANAGEMENT SERVICE LIMITED (FORMERLY KNOWN AS ADANI TRACKS MANAGEMENT SERVICE PRIVATE LIMITED) (ALSO FORMERLY KNOWN AS SURGUJA RAIL CORRIDOR PRIVATE LIMITED),GURGAON vs. DCIT CIRCLE 3(1), GURGAON

ITA 1128/DEL/2023Status: DisposedITAT Delhi21 January 2026AY 2020-21Bench: SHRIS.RIFAUR RAHMAN (Accountant Member), SHRI ANUBHAV SHARMA (Judicial Member)1 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that when an employee is transferred, the gratuity liability can be transferred to the other concern, and this transfer of liability constitutes a discharge of the assessee's obligation. Therefore, such transferred gratuity liability can be claimed as an expenditure.

What were the facts?

The assessee claimed gratuity expenses, but the Assessing Officer disallowed a portion of it under section 43B. The CIT(A) allowed the claim to the extent of actual payment made to one employee but disallowed the claim related to a transferred employee, viewing it as a journal entry without actual payment.

What were the issues?

Whether the transfer of gratuity liability to another concern upon employee transfer is considered actual payment and allowable as expenditure under the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 40A(7),Section 43B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, DELHI BENCHES ‘A’: NEW DELHI.

For Respondent: Shri Ajay Arora, Sr. DR
Hearing: 04.11.2025

PER S. RIFAUR RAHMAN, ACCOUNTANT MEMBER :

The assessee has filed appeal against the order of the Learned Commissioner of Income Tax (Appeals)/National Faceless Appeal Centre (NFAC), Delhi [“Ld. CIT(A)”, for short] dated 20.02.2023 for the Assessment Year 2020-21, wherein the assesse has raised following grounds:-

2 “1.In law and in the facts and circumstances of the case, the learned CIT(A) has erred in rejecting the claim of appellant for Rs. 6,51,894/-towards gratuity expense when such claim is duly allowable in view of provisions of section 40A(7)

The order continues below.

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