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TMI Blog2022 (7) TMI 1527X X X X Extracts X X X X X X X X Extracts X X X X ..... w and facts of the case and therefore we delete the same and allow Ground No.1 of the appeal. Disallowance out of contribution towards group gratuity scheme paid to Life Insurance Corporation of India - HELD THAT:-While denying the claim to the assessee, the ld. CIT(A) has ignored various case laws which was relied on by the assessee for the proposition that the expenditure incurred by assessee towards payment for gratuity group scheme of Life Insurance Corporation of India is a deductable expenditure. We find that the assessee has made the payment to Life Insurance Corporation of India, therefore, the expenditure is an allowable expenditure in view of the judgment of The Guntur District Cooperative Central Bank Ltd. [ 2018 (8) TMI 192 - IT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at interest bearing funds had been utilized for interest free advances, which connotation of the CIT(A) is based on misconceived facts for the reasons that there being surplus interest free funds and internal accruals, the funds having been used fully for the purpose of business, no disallowance should ought to have been made, the disallowance made and upheld by the CIT(A) be deleted. 02. Because the CIT(A) has erred on facts and in law in upholding the disallowance of Rs. 2,35,493/- being contribution towards Group Gratuity Scheme, paid to Life Insurance Corporation of India on the premise that the Group Gratuity Scheme is not approved by the CIT, such pre-notion is totally misconceived, in as much as, the contribution made to the Group Gr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to about Rs.15.00 lacs. It was submitted that the interest free funds consisting of total reserves and the share capital of the concern is Rs. 4,23,30,014/- which is apparent from the copy of balance sheet of the assessee which is placed at PB pgs. 18 to 53 and it was specifically argued before ld. CIT(A) that in view of the surplus funds available with the assessee the disallowance cannot be made and reliance was placed on the judgment of Malwa Cotton Spinning Weaving Mills Ltd, 80 ITD 65 (TM). It was submitted that the finding of the ld. CIT(A) that the assessee had not filed any cash flow statement to substantiate its claim of surplus fund is not correct as the balance sheet filed before him clearly states the interest free funds ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 15.00 lacs u/s.68 of the Act, the ld. AR submitted that assessee had received advance payments against sales to be made by the assessee and assessee accordingly issued bills to the various persons who had given advances to the assessee. It was submitted that ld. CIT(A) has sustained the addition by holding that not all the sales bills were issued against all the advances. The ld. AR in this respect invited our attention to chart prepared by ld. CIT(A) and reproduced in his order at pg.17 where he has noted down the amount of sales against each persons in the F.Y. 2006-07 whereas he has ignored the amount of sales bill issued to the parties in the subsequent years despite of the fact that the bills issued in two succeeding years were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06-07 and all the material for deciding the appeal is available in the file, therefore, we will be deciding the case herein only. 7. As regards the first issue of disallowance u/s. 36(1)(iii) of the Act, we find that the assessee during the proceedings before ld. CIT(A), vide written submission has clearly mentioned the fact of having interest free funds of an amount exceeding Rs. 4,23,30,014/- but the ld. CIT(A) has wrongly held that the assessee had not submitted any material or evidence in the form of cash flow statement to substantiate its claim. The finding of ld. CIT(A) is not correct as various courts as relied on by the assessee in his written submission before ld. CIT(A) has held that where assessee s own capital and current year p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee for the proposition that the expenditure incurred by assessee towards payment for gratuity group scheme of Life Insurance Corporation of India is a deductable expenditure. We find that the assessee has made the payment to Life Insurance Corporation of India vide receipt dated 15.12.2005, a copy of such receipt is available in the paper book, therefore, the expenditure is an allowable expenditure in view of the judgment of ITAT, Visakhapatnam in the case of ACIT, Circle-1(1), Guntur vs. The Guntur District Cooperative Central Bank Ltd. in ITA No.77 78/Viz/2018 and in view of various other case laws in favour of the assessee, which the ld. CIT(A) has noted in his order. Therefore, Ground No.2 of the appeal of the assessee is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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