2017 (8) TMI 566 - AT - Income Tax

Disallowance of contribution made to LIC Group Gratuity Scheme - addition u/s 36(1)(va) & 40A(7) - Held that - The assessee had filed an application seeking approval for Employees Group Gratuity Scheme in the year 1992 and when no action was taken, assessee again filed an application on 4/8/2015 on this application the approval was granted. The Revenue has not placed any material on record demonstrating the reasons for non-granting of approval. It is also not in dispute that, this is the first time when the claim has been disallowed. Under these facts, in view of the judgment of the Hon ble Jurisdictional High Court in the case of Pr. CIT vs. Rajasthan State Seeds Corporation Ltd. (2016 (9) TMI 59 - RAJASTHAN HIGH COURT). We are of the considered view, that the authorities below were not justified in disallowing the claim of the assessee. Therefore, we direct the Assessing Officer to delete the disallowance made on account of contribution to LIC Group Gratuity Scheme - Decided in favour of assessee.

Summary

Issues Involved:
1. Disallowance of contribution made to LIC Group Gratuity Scheme under sections 36(1)(va) and 40A(7).
2. General grounds of appeal.
3. Request for awarding costs.

Issue-wise Detailed Analysis:

1. Disallowance of Contribution to LIC Group Gratuity Scheme:
The primary issue in this appeal is the disallowance of ?1,66,96,379/- contributed to the LIC Group Gratuity Scheme. The assessee argued that the disallowance was unjustified as the application for approval of the gratuity scheme was filed on 14.08.1992 and was pending due to inaction by the department. The assessee refiled the application on 04.08.2015, which was approved on 27.05.2016. The assessee contended that the delay in approval was not attributable to them and cited similar cases where contributions were allowed despite pending approvals, such as M/s Man Structural Pvt. Ltd. vs. ACIT and ACIT vs. Rajasthan State Seeds Corporation Ltd. The tribunal noted that the facts were undisputed and that this was the first time the claim was disallowed. The tribunal referenced the Rajasthan High Court's decision, which held that the assessee should not suffer due to the department's inaction. The tribunal concluded that the authorities were not justified in disallowing the claim and directed the Assessing Officer to delete the disallowance.

2. General Grounds of Appeal:
The second ground raised by the assessee was general in nature, seeking the right to add, alter, or amend any grounds of appeal. The tribunal found this ground to be general and not requiring separate adjudication.

3. Request for Awarding Costs:
The third ground was a request for awarding costs to the assessee. The tribunal noted that no specific submissions were made regarding the awarding of costs and decided that each party should bear its own costs. Consequently, this ground of appeal was dismissed.

Conclusion:
In summary, the tribunal allowed the appeal concerning the disallowance of the contribution to the LIC Group Gratuity Scheme, directing the Assessing Officer to delete the disallowance. The general grounds of appeal did not require separate adjudication, and the request for costs was dismissed with each party bearing its own costs. The appeal was partly allowed.