2012 (5) TMI 144 - HC - Income Tax

Deduction of additional dearness allowance - effect of non provision in the books of accounts - held that - The submission is that there is no provision made in the books of the assessee for the aforesaid amount. - The assessee having contested the claim of workers of Additional Dearness Allowance, the fact that no provision was made or no actual payment was made are inconsequential. - Decided in favor of assessee.

Summary

Issues:
1. Appeal under Section 260-A of Income Tax Act, 1961 against the judgment and order dated 10.1.2001 passed by the Income Tax Appellate Tribunal in I.T.A No. 113 (Alld) of 1984 for the Assessment Year 1976-77.
2. Disallowance of claim for Additional Dearness Allowance by the Assessing Officer.
3. Appeal by the assessee and the Revenue against the judgment and order of the Commissioner (Appeals).
4. Tribunal's consideration of Appeal No. 16/Alld/1984 by the assessee for a revised claim amount.
5. Tribunal's observations on the claim of Additional Dearness Allowance by the worker.
6. Tribunal's decision on the deduction claimed by the assessee.
7. Questions admitted for appeal regarding the relief of Rs. 34,63,135/- in respect of disallowance of the assessee's claim of variable Additional Dearness Allowance.

Analysis:
The High Court of Allahabad heard an appeal under Section 260-A of the Income Tax Act, 1961, filed by the department against the judgment of the Income Tax Appellate Tribunal regarding the Assessment Year 1976-77. The appeal involved the disallowance of a claim for Additional Dearness Allowance by the Assessing Officer. Both the assessee and the Revenue had filed appeals against the judgment of the Commissioner (Appeals). The assessee had claimed a deduction for Additional Dearness Allowance, which was initially disallowed by the Assessing Officer but later allowed by the CIT. The Tribunal considered the appeal of the assessee for a revised claim amount and observed the history of the worker's demand for Additional Dearness Allowance, which was adjudicated by the Industrial Tribunal and subsequently upheld by higher courts. The Tribunal noted that the assessee had contested the claim but ultimately the deduction was allowed. The Tribunal rejected the appeal of the Revenue, stating that the lack of provision in the books of the assessee for the claimed amount was inconsequential.

The appeal was admitted based on two questions related to the relief of Rs. 34,63,135/- in respect of the disallowance of the assessee's claim of variable Additional Dearness Allowance. The High Court, after considering the submissions and observations, answered both questions against the Revenue and in favor of the assessee. Consequently, the appeal was dismissed. The judgment affirmed the Tribunal's decision to uphold the deduction claimed by the assessee for Additional Dearness Allowance, despite the lack of provision in the assessee's books for the claimed amount.