Almora Zila Sahkari Bank, Nainital vs Department Of Income Tax

Both these cross appeals filed by the assessee and revenue emanate

from the order of CIT (Appeals)-II, Dehradun dated 16.04.2012 for the

assessment year 2009-10.

2 ITA No.3085 & 3344/Del./2012

2. At the outset of the hearing, ld. AR submitted that issue with regard

to disallowance of provision for gratuity payable in the present appeal has

been considered by the ITAT in assessee' appeal in ITA

No.3501/Del./2010 for the assessment year 2007-08 dated 19.01.2011 and

he pleaded that similar direction may be issued in this year also. He

submitted that in view of the aforesaid ITAT decision, the appeal of the

revenue also becomes infrucutuous. The relevant portion of the ITAT

order, cited supra, read as under :-

"3. We have heard both the parties and have carefully perused the orders of authorities below.

4. The AO has completed the assessment u/s 143(3) of the Act on 22.12.2009. In the assessment, the AO disallowed the assessee's claim of gratuity payable amounting to Rs.1,51,08,408/- by observing that the gratuity fund of the assessee is not an approved fund and therefore, the amount of the provision made for gratuity to meet liability of gratuity of the period other than the current year cannot be deductible as per the provisions of Section 40A(7) of the Act. It was further observed that as the gratuity fund of the assessee is not an approved fund, the amount of contribution made by the assessee as employer to the above fund is not also deductible u/s 40A(9) of the Act. He further observed that as per Section 43B of the Act, a sum payable in respect of unapproved gratuity fund is not deductible, if it is not actually paid by the assessee within the accounting year or on or before the due date of furnishing of income u/s 139(1) of the Act.

5. The AO's action has been confirmed by the learned CIT(A). While confirming the AO's order, CIT(A) observed that in the course of hearing of the appeal before him, a copy of the order dated 10.3.2010 passed by the CIT granting recognition of the fund to the assessee was furnished but CIT(A) has taken a view that the said order granting recognition to the assessee's fund would be applicable only to future years and not to the years for which assessment order has already been passed.

6. Hence, the assessee is in further appeal before us.

7. In the course of hearing of this appeal, the assessee has produced before us the copy of application for approval of gratuity fund 3 ITA No.3085 & 3344/Del./2012

dated 24.12.1990 filed before CIT, Lucknow. The assessee has also filed copy of receipt of gratuity fund dated 10.8.2007 from LIC of India. The assessee has also furnished the copy of the order dated 10.3.2010 of the CIT recognizing the assessee's gratuity scheme. The order recognizing the assessee's gratuity scheme dated 10.3.2010 reads as under:-

"Order 10.03.2010

Under Rule 2(1) of Part C of the Fourth Schedule to the Income Tax Act, 1961, I, the Commissioner of Income Tax, Haldwani, hereby accord recognition w.e.f. 24/12/1990 to The Nainital Almora Kshetriya Gramin Bank Employees Group Gratuity-cum-life Assurance Scheme, Nainital Road, Haldwani."

8. On reading this order passed by the CIT, Haldwani on 10.3.2010, it is clear that the Commissioner has accorded recognition to the assessee's gratuity cum life assurance scheme w.e.f. 24.12.1990. We, therefore find that the assessee's scheme has been approved by the CIT w.e.f. 24.12.1990. We, therefore, restore this matter back to the file of the AO for his fresh adjudication in the light of the order dated 10.3.2010 of CIT, Haldwani according recognition w.e.f. 24.12.1990 to the assessee's gratuity life assurance scheme, and as per the provisions of the Act. The AO shall provide reasonable opportunity of being heard to the assessee. We order accordingly.

9. In the result, the appeal filed by the assessee is treated to be allowed in the manner as indicated above."

CIT, Haldwani has accorded recognition to the assessee's gratuity cum life

assurance scheme w.e.f. 24.12.1990 which was recorded by ITAT in its

aforesaid order. We, therefore, restore this matter back to the file of the

Assessing Officer for fresh adjudication as per the provisions of the Act.

The Assessing Officer shall provide reasonable opportunity of being heard

to the assessee. We order accordingly.

3. In view of the above, the ground of assessee's appeal is allowed on

the same directions as given in aforesaid order of ITAT for assessment

year 2007-08.

4 ITA No.3085 & 3344/Del./2012

4. In the ground no.2, the assessee has challenged the disallowance of

provisions of interest and MT interest.

5. Ld. AR submitted that this disallowance has been made without any

reason. On the other hand, ld. DR relied on the orders of the authorities

below.

6. We have heard both the sides on the issue. The assessee has claimed

relief of Rs.35,77,208/- on account of provisions for MT interest but the

statement of account submitted by the assessee of the provisions of MT

interest showed a provision of Rs.34,94,208/- In our considered view, this

expenditure amount of Rs.83,000/- was rightly disallowed by the ld.

Authorities. The ld. AR has not dislodged the findings recorded by the

Assessing Officer in its para 3(d). Considering all these aspects, we find

no merits in this ground of assessee's appeal and the same is dismissed.

7. The ground no.3 in assessee's appeal is general in nature and does

not require any adjudication.

8. In the result, the appeal of the assessee is partly allowed.

9. In the revenue's appeal, the only issue is related to allowing

disallowance of depreciation by the CIT (A).

10. Ld. CIT (A) has just agreed with the directions given by the CIT (A)

in assessment year 2007-08 wherein he has directed as under :-

"10. In view of the above provision of law in relation to admissibility of depreciation, the ld. Assessing Officer is directed to sit with the tax 5 ITA No.3085 & 3344/Del./2012

payer and take his help in order to allow the correct amount of depreciation to the appellant. The ground is, therefore, allowed."

Thus, the CIT (A) has just agreed with the direction but not granted the

relief. The CTI (A) has already directed the Assessing Officer to verify the

correct actual position and we agree with the same. Therefore, this ground

of revenue's appeal has become infructuous.

11. In the result, the appeal of the revenue is dismissed as infructuous.

12. To sum up : the appeal of the assessee is partly allowed and the

appeal of the revenue is dismissed as infructuous.

4. As the assessee's appeal is restored back on the above directions, the

cross appeal filed by the revenue has become infructuous. The same is

dismissed as infructuous.

5. To sum up : the appeal of the assessee is allowed for statistical

purposes and the revenue is dismissed as infructuous.

Order pronounced in open court on this 11th day of March, 2015.

Sd/- sd/- (G.C. GUPTA) (B.C. MEENA) VICE PRESIDENT ACCOUNTANT MEMBER

Dated the 11th day of March, 2015 TS Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A)-IV, New Delhi 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.