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2022 (7) TMI 157 - AT - Income TaxBonus ex-gratia payment - bonus/ex-gratia @ 8.33% to its employees which was payable on Dussehra i.e., October/November 2012 - HELD THAT - The issue-in-dispute in the year under consideration being similar to what has been decided by the Tribunal for assessment year 2011-12 ( 2018 (3) TMI 1970 - ITAT MUMBAI respectfully following the finding of the Tribunal, the claim of the assessee is held to be crystallized in the year under consideration and accordingly allowed. The ground No. 1 of the appeal of the assessee is allowed. Disallowance of professional charges as paid to consultant - HELD THAT - We are of the opinion that evidently when bills were not received by the assessee, though the work was completed in the financial year corresponding to assessment year 2012-13, the liability was crystallized only after the receipt of the bills and therefore, the assessee is justified in claiming the same in the assessment year 2013-14 i.e. current assessment year. The Ground of appeal of the assessee is accordingly allowed. Disallowance of commission on sale - HELD THAT - As the sale proceeds was received on 04.08.2011, therefore, the commission on sales was accordingly crystallized in the year under consideration and not in the year of the sale. We find that the Ld. CIT(A) has also held the claim of the assessee as justifiable, however, directed the AO to verify the fact and ascertain the amount as otherwise payable. We are of the view that if the Assessing Officer has not already verified then we direct him to verify the payment and allow in view of finding of the Ld. CIT(A). This ground is allowed for statistical purposes Liability of transport charges disallowed - HELD THAT - As the expenses have been crystallized only after receipt of the report from the customer as stipulated in the contract for transport charges with the transporter. Accordingly, the claim of the assessee of transport charges in the year under consideration is allowed. Further, we are of the view that in the earlier assessment year as well in current assessment year, the assessee has reported taxable income and rate of tax being unaltered, therefore, the entire exercise of assessing in the year under consideration for AY 2012-13 or in AY 2013-14 is Revenue neutral. The Ground No. 4 of the appeal of the assessee is accordingly allowed.
Issues Involved:
1. Condonation of delay in filing the appeal. 2. Disallowance of prior period expenses: Bonus ex-gratia. 3. Disallowance of prior period expenses: Professional charges. 4. Disallowance of prior period expenses: Commission on sale. 5. Disallowance of prior period expenses: Transport charges. Issue-wise Detailed Analysis: 1. Condonation of Delay in Filing the Appeal: The appeal was filed with a delay of 802 days. The delay was attributed to the misplacement of the order by an employee and subsequent issues including the pandemic and medical problems of the Authorized Representative. The Supreme Court's order in Writ Petition No. 3 of 2020 was referenced, which extended the period of limitation due to the pandemic. The Tribunal found that there was a "reasonable and sufficient cause" for the delay, with no malafide intention or culpable negligence. Therefore, the delay was condoned under Section 253(5) of the Income Tax Act, 1961. 2. Disallowance of Prior Period Expenses: Bonus Ex-Gratia: The assessee claimed a bonus/ex-gratia payment of Rs. 2,66,843/- for the year ending 31.03.2012, which was crystallized and paid in the assessment year 2013-14 due to employee agitation and a subsequent management decision. The Tribunal referenced a similar issue decided in favor of the assessee in ITA No. 754/Mum/2016 for AY 2011-12. The Tribunal held that the liability to make the ex-gratia payment was crystallized during the year under consideration, allowing the claim. 3. Disallowance of Prior Period Expenses: Professional Charges: The assessee claimed professional charges of Rs. 3,53,934/- paid to a consultant against bills dated 06.08.2012 for services rendered in the period July 2011 to March 2012. The Tribunal held that the liability was crystallized upon receipt of the bills in AY 2013-14, justifying the claim in the current assessment year. 4. Disallowance of Prior Period Expenses: Commission on Sale: The assessee claimed commission on sale amounting to Rs. 4,16,600/- for sales proceeds received on 04.08.2011. The Tribunal directed the Assessing Officer to verify the payment and allow it, following the CIT(A)'s direction for verification. 5. Disallowance of Prior Period Expenses: Transport Charges: The assessee claimed transport charges of Rs. 1,43,459/-, which were paid subject to the condition of goods being delivered in good condition as reported by the customer. The Tribunal held that the expenses were crystallized upon receipt of the customer report, allowing the claim in the year under consideration. It was noted that the exercise was revenue-neutral as the taxable income and tax rate remained unaltered across the assessment years. Conclusion: The appeal was partly allowed for statistical purposes, with the Tribunal condoning the delay and allowing the claims for bonus ex-gratia, professional charges, commission on sale (subject to verification), and transport charges. The fifth ground was dismissed as infructuous. The order was pronounced on 18/05/2022.
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