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Facts
The assessee's appeal arose from a CIT(A) order confirming a disallowance of Rs.7,76,499 under section 40A(7) for gratuity provision. The assessee contended that this amount was not claimed as a deduction and was already disallowed in the computation, arguing it was a clerical error.
Held
The Tribunal noted that the assessee's sole substantive issue was that the disallowance amount was already included in their computation and had gone un-rebutted by the Revenue. In the interest of justice, the Tribunal restored the ground to the Assessing Officer to ensure no double disallowance.
Key Issues
Whether the CIT(A) erred in confirming a disallowance when the amount was already accounted for and disallowed in the computation, and if it constitutes a clerical error.
Sections Cited
40A(7), 36(1)(v), 36(1)(va), 154, 143(3)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’, NEW DELHI
Before: Sh. Satbeer Singh Godara
ORDER This assessee’s appeal for Assessment Year 2018-19, arises against the CIT(A)/NFAC, Delhi’s DIN & order No. ITBA/NFAC/S/250/2025-26/1077779461(1) dated 25.06.2025, in proceedings u/s 143(3) of the Income Tax Act, 1961 (in short “the Act”).
Heard both the parties at length. Case file perused.
3. The assessee hereby pleads the following substantive grounds in the instant appeal: “1. That the Ld. CIT(A) erred in confirming the disallowance of Rs.7,76,499 under section 40A(7) in respect of provision for gratuity, despite the fact that the said amount was not claimed as deduction and was already disallowed in the computation. 2. That the CIT(A) failed to appreciate that the error in classification between section 36(1)(v) and 40A(7) was purely clerical and had no bearing on the actual taxable income reported.
That the appellant had filed a valid rectification application along with revised computation, which could not be processed due to Jurisdictional transfer.
That the appellant, without prejudice, does not contest the disallowance under section 36(1)(va) in respect of employees' PF/ESI contributions.
That In view of decisions including Rajasthan Fasteners (Raj HC), Iskander Altaf Lalljee (Del HC), and Integrace Pvt. Ltd. (ITAT Bangalore), clerical errors that do not result in tax evasion should be rectified in favour of the Assessee.
That the Hon'ble Tribunal may be pleased to Direct the Assessing Officer to rectify the computation under section 154.”
4. Suffice to say, it is come on record at the assessee’s sole substantive issue raised herein is that it had already included the above disallowance amount in it’s computation which has gone un-rebutted from the Revenue side. That being the case, it is deemed appropriate in the larger interest of justice to restore the assessee’s instant sole substantive ground back to the learned Assessing Officer to ensure that there is no double disallowance made in it’s hands. Necessary computation shall follow as per law.