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TMI Blog2021 (4) TMI 911X X X X Extracts X X X X X X X X Extracts X X X X ..... firmity in the order of the CIT(A) and upholding the same, we dismiss the ground No. 2 raised by the revenue on this issue. Disallowance made u/s 43B towards gratuity provision - AO noticed from the audit report that an amount was claimed as provision for gratuity which remained unpaid as on the date of filing of return and the same was not disallowed in the computation of income - HELD THAT:- As gone through the orders of revenue authorities. In the case of CIT Vs Commonwealth Trust (P) Ltd.[ 2004 (4) TMI 51 - KERALA HIGH COURT] , on which reliance placed by the assessee, the Hon'ble High Court of Kerala held that provision towards an approved gratuity fund is allowable u/ s 40A(7)(b) as deduction and is not hit by section 43B o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tant Member For the Assessee : Shri K.C. Devdas For the Revenue : Shri Sunil Kumar Pandey ORDER PER L.P. SAHU, A.M.: This appeal in ITA No. 907/H/2019 filed by the assessee is directed against CIT(A) - 1, Hyderabad s order dated 28/03/2019 involving proceedings u/s 143(3) of the Income Tax Act, 1961 ; in short the Act . Revenue s appeal in ITA No. 252/H/2018 is directed against CIT(A) 3, Hyderabad s order dated 17/11/2017 involving proceedings u/s 143(3) of the Act. 2. First, we take up the revenue s appeal wherein the revenue has raised the following grounds of appeal: 1. The order of the Ld.CIT(A) is erroneous on facts as well as in law. 2. The Ld.CIT(A) erred in deleting the disallowance of Emplo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,65,855/- crores as ESOP Expenditure disallowed to the extent of options not exercised during the year. From the P L Account, the AO noticed that the actual debit to the profit loss account was at ₹ 9,69,25,414/- and this implies that the assessee had not added back the entire provision of ₹ 9,69,25,414/- and claimed an amount of ₹ 26,59,559/-, which is the amount of loss suffered by the company on account of stock options being exercised by the employees. The assessee submitted that the loss suffered by the company is a revenue expenditure since ESOP is an incentive given to the employees which is on par with any perquisite or remuneration. However, the AO relying on the decisions of the Hon ble Supreme Court in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which remained unpaid as on the date of filing of return and the same was not disallowed in the computation of income. Referring to the provisions of section 43B(b) of the Act, the AO disallowed the sum of ₹ 1,28,79,193/- u/s 43B by holding that the same had not been paid before the due date. 7.1 The CIT(A) after considering the submissions of the assessee, allowed this ground by observing as under: The submissions brought out supra were perused. It is seen from the judicial decisions and the decisions of the Tribunal that the provisions made for contribution to approved gratuity fund should be allowed as deduction as per the provision of Section 40A(7)(b). The decisions of the Hon'ble ITAT in the case of Hinduja Exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a similar ground in its appeal in ITA No. 907/Hyd/2019 for AY 2014-15 that the CIT(A) erred in directing the AO to allow deduction on the basis of section 43B of the Act for provision made for an approved gratuity fund of ₹ 50,07,765/- which is deductible u/s 40A(7) of the Act. 7.4 Following the conclusions drawn at para 7.2 in respect of Revenue appeal (supra), we set aside the order of the CIT(A) and direct the AO to allow the deduction of gratuity fund of ₹ 50,07,765/- u/s 40A(7) of the Act. 8. As regards ground No. 4 of the revenue against the action of CIT(A) in deleting the disallowance of interest expenditure of ₹ 48,75,175/-, the AO noticed from the schedule 10 of the balance sheet of the assessee that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the ITAT, Hyderabad in assessee s own case for AYs 2009-10 and 2010-11 before the CIT(A), wherein the Tribunal has held as under: We restore this issue to the file of the AO for the limited purpose of verifying as to whether same loan given by the assessee company to its employees welfare trust is continued even during the year under consideration. If this factual position is found to be correct on such verification, the AO shall delete the disallowance made on account of interest for both the years under consideration. The relevant grounds of the assessee appeal are accordingly treated allowed for statistical purposes 8.3 After considering the submission of the assessee that sufficient internal accruals to fund the advance tru ..... X X X X Extracts X X X X X X X X Extracts X X X X
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