DCIT, CIRCLE-3(1), NEW DELHI vs. APL APOLLO TUBES LTD., NEW DELHI

Learned Departmental Representative referring to page 6 para 3 of the assessment order submits that the assessee while computing the book profit under Section 115JB deducted prior period expenses amounting to Rs.12,44,377/- being the provision for gratuity expenses.

Learned Departmental Representative further submits that the assessee furnished actuarial valuation report only before the learned CIT (Appeals) based on which the learned CIT (Appeals) deleted the addition. Referring to ground no.2 of grounds appeal, learned Departmental Representative submits that learned CIT (Appeals) erred in admitting additional evidence without allowing proper opportunity to the Assessing Officer.

On the other hand, learned counsel for the assessee submits that assessee followed accounting standard 5 and made the provision for gratuity which is an ascertained liability. Learned counsel placing reliance on the decision of the Hon'ble Delhi High Court in the case of CIT vs. Khaitan Chemicals & Fertilizers Ltd. – 307 ITR 150 submits that the provision for gratuity calculated on the basis of an actuarial

On hearing both the sides and perusing the orders of the authorities below, we are of the view that this matter should go back to the file of the Assessing Officer to examine whether the valuation report furnished by the assessee in respect of provisions for gratuity whether such valuation was made is as per actuarial valuation prepared by valuer and if so it is an ascertained liability. Thus, this issue is restored to the file of the Assessing Officer to decide the issue after providing adequate opportunity of being heard.

In the result, the appeal is allowed for statistical purposes.