The Income Tax Appellate Tribunal (ITAT), Bangalore Bench ruled that assessee in principle is entitled to claim a deduction of gratuity paid before the appellate authorities.
The assessee, M/s. FNF India Private Ltd raised the issue with regard to non-grant of deduction for gratuity amounting to Rs.17,87,315.
The AO denied deduction of gratuity paid. The assessee submitted before the CIT(Appeals) that it had created a provision for gratuity amounting to Rs.1,4769,903 and that Rs.44,22,139 was actually paid to the employees.
In its return of income, the assessee had erroneously claimed deduction to the extent of Rs.26,34,825 only and the net provision of Rs.1,21,35,078 was disallowed in the computation. During the pendency of the assessment proceedings, the same was brought to the notice of the AO, however, the AO has not granted deduction towards the balance amount of gratuity paid of Rs.17,87,315 and prayed that the same may be allowed.
The CIT(Appeals) observed that undisputedly the claim was not made by the assessee in its return of income or by way of a revised return of income. In Goetze (India) Ltd. v. CIT the Court held that AO has no such power to entertain any claim of fresh deduction if the same is not by way of revised return.
The CIT(A) was of the view that in view of the restriction of the powers of the AO, the powers of the first appellate authority also get restricted accordingly in the absence of any revised return. Therefore, CIT(A) rejected the claim of the assessee.
The coram consisting of George George K and Chandra Poojari held that the assessee in principle is entitled to claim a deduction of gratuity paid before the appellate authorities and remitted the issue to the file of AO to quantify the amount of deduction towards gratuity and decide accordingly.
Subscribe Taxscan Premium to view the Judgment
Support our journalism by subscribing to Taxscan AdFree. We welcome your comments at info@taxscan.in
