Appel v. M/S Bright Enterprises Private Limited, Jalandhar, Mbd House,Railway Road, Jalandhar

ITA No. 197 of 2017(O&M) 1 Gurbax SinghIN THE HIGH COURT OF PUNJAB AND HAR Y AWA A Ges c-oc2017.05.15 16:36CHANDIGARH. ITA No. 197 of 2017 (O&M)Date of decision: 5.5.2017 The Principal Commissioner of Income Tax (Central), Ludhiana ..-.-- Appel Vs. M/s Bright Enterprises Private Limited, Jalandhar, MBD House,Railway Road, Jalandhar ..-- Respondent CORAM: HON’BLE MR. JUSTICE AJAY KUMAR MITTALHON’ BLE MR. JUSTICEK RAMENDRA JAIN Present: Mr. Rajesh Katoch, Senior Standing counsel for the appellant. Ajay Kumar Mittal,J. 1,The appellant-revenue has filed the instant appeal under|Section 260A of the Income Tax Act, 1961 (in short, “the Act”) againstthe order dated 28.10.2016, Annexure A.III, passed by the Income TaxAppellate Tribunal, Amritsar Bench, Amritsar (in short, “the Tribunal’’)in I.T.A. No.518(Asr)/2014 for the assessment year 2010-11, claimingfollowing substantial question of law:- “Whether on the facts and in the circumstances of the case,the Hon’ble ITAT has erred in deleting the addition ofy14,94,648/- made by the Assessing Officer on account ofGratuity payable without appreciating the fact that the gratuity fund of the assessee was unapproved and as perSection 40A(7) of the Income Tax Act, 1961, no provisioncan be made is allowable when such amount is kept in anunapproved fund?” ? A few facts relevant for the decision of the controversy|involved, as narrated in the appeal, may be noticed. The respondent-assessee 1S running a Hotel known as Radisson MBD at Noida (UP).During the course of assessment year 2010-11 it was noticed by theAssessing Officer that the assessee company had shown employees creditofy28,/4,558/- under the head ‘sundry payable account’ which included94 sum of<14,94,648/- on account of ‘gratuity payable’. It was found that|the gratuity fund of the assessee was not approved fund within themeaning of Section 40A(7) and Schedule-IV of the Act. In view of theunapproved status of the assessee is Gratuity fund the amount ofz14,94,648/- of ‘Gratuity payable’ was added to the income of theassessee vide order dated 28.03.2017, Annexure A.1. Aggrieved by theorder, the assessee filed an appeal before the Commissioner of IncomeTax (Appeals) [CIT(A)]. Vide order dated 08.05.2014, Annexure A.2, theCIT(A) deleted the addition ofy14,94,648/-. Not satisfied with the order,the revenue filed an appeal before the Tribunal. Vide order dated28.03.2013, Annexure A.3, the Tribunal confirmed the order passed bythe CIT(A) deleting the addition of<14,94.648/- and dismissed the|appeal filed by the revenue. Hence, the instant appeal by the appellant-revenue. onWe have heard learned counsel for the appellant-revenue.4It has been noticed by the Tribunal in its order dated28.10.2016, Annexure A.3, that the CIT(A) observed that the impugned balance of gratuity payable amounting to|y14,94,648/- had been created|in the assessment year 2008-09 and the same had been added back in thecomputation for the said assessment year. It was further observed that thecurrent balance was only a brought forward balance and no suchprovision had been created during the year under consideration whichmeant that no such debit had been effected in the profit and loss accountfor the year under consideration. Thus, the addition made by theAssessing Officer was directed to be deleted. After examining, the matterand perusing the findings recorded by the authorities below. The Tribunalconcurred that the gratuity payable related to the assessment year 2008-09 which was added in the computation for the said assessment year.While concurring with the findings recorded by the CIT(A). The Tribunaldismissed the appeal filed by the revenue. The relevant findings recordedby the Tribunal read thus:- “We find that the learned CIT(A) has made categoricalfindings that the gratuity payable related to the assessmentyear 2008-09 and the same was added in the computation forthe said assessment year. The learned CIT(A) has furthergiven finding of fact that the current balance is only abrought forward balance and no such provision had beencreated during the year under consideration which meantthat no such debit had been affected in the profit and lossaccount. The learned DR was not able to controvert any ofthe findings of the learned CIT(A). In view of the abovediscussion, we do not find any infirmity in the order of thelearned CIT(A) and therefore, the appeal of the revenue isdismissed.”findings that the gratuity payable related to the assessmentyear 2008-09 and the same was added in the computation forthe said assessment year. The learned CIT(A) has furthergiven finding of fact that the current balance is only abrought forward balance and no such provision had beencreated during the year under consideration which meantthat no such debit had been affected in the profit and lossaccount. The learned DR was not able to controvert any ofthe findings of the learned CIT(A). In view of the abovediscussion, we do not find any infirmity in the order of thelearned CIT(A) and therefore, the appeal of the revenue isdismissed.” 5 Learned counsel for the appellant-revenue has not been ableto point out any error in the findings recorded by the Tribunal upholding ITA No. 197 of 2017(O&M) 4 the view taken by the CIT(A), thus, no substantial question of law arises and the appeal stands dismissed. (Ajay Kumar Mittal)Judge May 05, 2017Whether speaking/reasoned Whether reportable (Ramendra Jain)JudgeYesYes