2016 (1) TMI 362 - AT - Income Tax

Prior period expenses - CIT(A)allowed the claim - Held that - AO has filed the complete details of the prior period expenses of ₹ 1,96,917/-. Vide letter dated 26.4.2008, vouchers in respect of the same were filed. From the details we note that the approval for payment of these expenditure were given during the year and therefore the liability crystalised during the year in view of these facts and the consistent view of this Bench that the liability crystalised on approval of payment, we find no infirmity in the order of ld.CIT (A) deleting the disallowance - Decided in favour of assessee Disallowance of an unapproved gratuity fund - CIT(A)allowed the claim - Held that - This issue in assessee s own case for the assessment year 2006-07 in favour of the assessee wherein held there is no dispute as to the fact that assessee has applied for approval of the scheme on 31.03.1981. The A O has not brought any material on record that the approval to the scheme is not allowed. Therefore the scheme cannot be taken as not approved. The assessee can t be made to suffer for inaction of the department. Considering these facts, this Bench in assessee s own case of A.Y. 1996-97 & 1997-98 itat allowed the claim of the assessee - Decided in favour of assessee Contribution to State Renewal Fund - CIT(A) treated as allowable expenditure - Held that - This issue is covered in favour of the assessee as the amount was set apart not for shareholder but it was provided for the benefits of the employees, by following our earlier decisions, we uphold the order of CIT(A) on this issue.- Decided in favour of assessee

Summary

Issues Involved:
1. Allowability of prior period expenses as allowable expenses.
2. Deduction for the contribution made to an unapproved gratuity fund.
3. Allowability of contribution to State Renewal Fund as an allowable expenditure.

Issue 1: Allowability of Prior Period Expenses
The Revenue challenged the allowance of prior period expenses by the ld. CIT(A) for the assessment year 2007-08. The ITAT Jaipur Bench had previously ruled in favor of the assessee in a similar case for the assessment year 2006-07. The Bench noted that the liability crystallized during the year upon approval of payment, and thus, upheld the decision of the ld. CIT(A) to delete the disallowance of prior period expenses. Consequently, the ground raised by the Revenue was dismissed.

Issue 2: Deduction for Contribution to Unapproved Gratuity Fund
The Revenue contested the deduction claimed by the assessee for the contribution made to an unapproved gratuity fund. The AO disallowed the contribution on the grounds that the gratuity scheme was not approved. However, the ld. CIT(A) deleted the disallowance based on previous ITAT decisions in favor of the assessee for different assessment years. The ITAT upheld the decision of the ld. CIT(A), emphasizing that the approval status of the scheme was not proven by the AO, and the assessee could not be penalized for the department's inaction. Therefore, the ITAT dismissed the Revenue's appeal on this ground.

Issue 3: Allowability of Contribution to State Renewal Fund
The Revenue raised an issue regarding the addition of payment as a contribution to the State Renewal Fund. The ITAT Jaipur Bench had previously ruled in favor of the assessee for the assessment year 2006-07, stating that the contribution was for the benefit of employees, similar to previous decisions based on High Court judgments. The ITAT upheld the order of the ld. CIT(A) based on previous decisions and dismissed the Revenue's ground, as the issue had already been decided in favor of the assessee for the previous assessment year. Consequently, the ITAT dismissed the appeal of the Revenue based on the precedents and rulings in favor of the assessee.

In conclusion, the ITAT Jaipur Bench dismissed the Revenue's appeal, upholding the decisions of the ld. CIT(A) based on previous rulings and precedents in favor of the assessee for the assessment year 2007-08.