2019 (11) TMI 1103 - AT - Income Tax

Addition made on account of excess provision of gratuity and leave encashment - HELD THAT - As perused the materials available on record and gone through the orders of the authorities below. We find that CIT(A) has given a finding on fact that all the payments have been actually made. This fact is not controverted by the revenue, therefore, we do not see any reason to interfere with the finding of the Ld. CIT(A). Ground raised by the revenue is rejected. Addition u/s 40(a)(ia) - CIT(A) justification in reducing the addition - HELD THAT - We find that Ld. CIT(A) has followed the judicial pronouncements applicable on the facts of the present case, therefore, the view of the Ld. CIT(A) is affirmed as the revenue failed to bring any judgement of the Hon'ble jurisdictional High Court on this issue. Addition on account of provision of gratuity and leave encashment - HELD THAT - CIT(A) has given a finding on fact that the payments were actually made in the year under appeal, therefore, in view of the aforesaid provision, we do not see any infirmity in to the finding of CIT(A) and the same is hereby affirmed. This ground of the revenue s appeal is rejected.

Issues involved:
1. Justification of admitting and adjudicating the ground regarding addition under section 369(1)(viia) when no such addition was made in the original order.
2. Deletion of addition on account of excess provision of gratuity and leave encashment.
3. Sustaining only a part of the addition under section 40(a)(ia).
4. Deleting the addition on account of provision of gratuity and leave encashment without verifying actual payments.

Issue 1: Justification of admitting and adjudicating the ground regarding addition under section 369(1)(viia) when no such addition was made in the original order:
The assessee's appeal was dismissed by the Ld. CIT(A) concerning a disallowed deduction under section 36(1)(vii)(a). The revenue's appeal on this ground was dismissed as well, as the disallowance of the claim was confirmed based on previous decisions. Therefore, the revenue's appeal on this ground was dismissed.

Issue 2: Deletion of addition on account of excess provision of gratuity and leave encashment:
The Ld. CIT(A) deleted the addition made by the A.O. on account of excess provision for leave encashment and gratuity after finding that all payments were actually made during the relevant year. The Tribunal did not see any reason to interfere with this finding, as it was a fact not contested by the revenue. Hence, the ground raised by the revenue was rejected.

Issue 3: Sustaining only a part of the addition under section 40(a)(ia):
The Ld. CIT(A) reduced the addition made under section 40(a)(ia) based on applicable judicial pronouncements, as the revenue failed to provide any contrary judgment from the jurisdictional High Court. The Tribunal affirmed the Ld. CIT(A)'s view on this issue.

Issue 4: Deleting the addition on account of provision of gratuity and leave encashment without verifying actual payments:
The revenue challenged the deletion of the addition on the basis of provision for gratuity and leave encashment, arguing that the Ld. CIT(A) allowed the claim without verifying actual payments. However, the assessee's counsel reiterated that all payments were made during the relevant year and provided evidence to support this claim. The Ld. CIT(A) allowed the deduction under section 43B(b) of the Act as the payments were actually made, and the Tribunal affirmed this decision, rejecting the revenue's appeal on this ground.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the decisions of the Ld. CIT(A) on all grounds raised by the revenue. The Tribunal found that the Ld. CIT(A) had correctly applied the law and facts in each instance, leading to the dismissal of the revenue's appeal.

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