DCIT, CHENNAI vs. SUNDARAM ASSET MANAGEMENT CO. LTD., CHENNAI

Ms. Bharathi Krishnaprasad, Chartered Accountant represented on behalf of the Assessee and Mr. A. Sundararajan, Additional CIT represented on behalf of the Revenue.

At the time of hearing, it was fairly agreed that the appeal of the Revenue in was below the tax effect. Consequently, the appeal filed by the Revenue is dismissed on account of low tax effect.

In respect of the assessee’s appeal in it was submitted by the learned Authorized Representative that she did not want to press Ground Nos. 1, 2 and 3 in respect of the issue of reopening and Ground No.5 which was the alternative prayer in respect of the claim of deduction representing the incentives paid to the & 3 -: employees. Consequently, Ground Nos. 1, 2 3 and 5 of the assessee’s appeal stands dismissed as withdrawn. The learned Authorized Representative has made endorsement to this effect. In respect of Ground No.4, it was submitted by the learned Authorized Representative that the issue was against the action of the learned CIT(A) in confirming the disallowance of the expenditure of Rs.30,80,000/- representing the incentives paid to the employees by considering the same as prior period expenditure. It was a submission that the said expenditure was the actual incentive paid to the employees during the relevant assessment year. It was a submission that this was performance incentives which had been paid during the relevant assessment year. It was a prayer that the said expenditure may be directed to be allowed as the same are not prior period expenditure.

In reply, the learned Departmental Representative submitted that he had no objection if the issue was restored to the file of the Assessing Officer for examination as to whether the said amounts have been paid during the year. It was a submission that if the amounts have been paid during the year, he had no objection if the same was allowed to the assessee subject to verification. & 4 -: 6. We have considered the rival submissions and perused the materials available on record.

It has been claimed by the assessee that the said expenditure representing the performance incentives to the employees are not prior period expenditure. It has also been claimed by the assessee that the said expenditure has been paid during the year. This being so, in the interest of justice, the issue is restored to the file of the Assessing Officer for verification as to whether the said amounts in the form of performance incentives have been paid to the employees during the relevant assessment year. If the amounts have been paid during the relevant assessment year, then the same is liable to be allowed.

In the result, the appeal of the assessee in is partly allowed for statistical purposes and the appeal of the Revenue in is dismissed. Order pronounced in the open Court on 2nd January, 2020 in Chennai.