The Income Tax Appellate Tribunal (ITAT), of Kolkata bench has held that the claim of Performance Related Pay (PRP) is not sustainable when no documentary evidence was produced to substantiate the claim and restored the matter to CIT(A).
Sh. Praveen Kishore appeared on behalf of the revenue and Sh. Arvind Agarwal appeared on behalf of the Assessee.
The revenue challenged the common order passed u/s 250 of the Income Tax Act, 1961 (“Act”) of Commissioner of Income-tax (Appeals), Asansol [“CIT(A)”] dated 14.02.2020 arising out of separate assessment orders framed u/s 147/143(3) of the Act.
The assessee, Eastern Coalfield Limited a subsidiary of Coal India Ltd. Its main business is raising coal and selling it as per the guidelines issued by the Ministry of Coal from time to time.
The assessee stated that the concept of Performance Related Pay (PRP) was introduced by the Ministry of Heavy Industries for the first time during the F.Yr. 2009-10 relevant to the assessment year 2010-11. The methodology of the calculation of the PRP was recommended by the Remuneration Committee and the same was debited to the P/L account and a liability/ provision was created on a mercantile basis during the F.Yr. 2009-10 relevant to the assessment year 2010-11.
It was observed that there was no document showing the methodology recommended by the Remuneration Committee in the meeting held on 05.02.2010. The CIT(A) failed to examine the implication of the Office Memorandum of Coal India Ltd. dated 15.11.2011 and the employees eligible for PRP who are on roll as on 01.11.2011.
The Tribunal observed that the assessee has not filed any details of computation of income, or calculation of the PRP and the tribunal can’t rely on any specific documents which could show that the alleged amount was part of a crystallised liability which the assessee company ascertained during the year that could make the assessee eligible to claim it as an expenditure.
Sri Manish Borad, accountant member & Sri Sonjoy Sarma, judicial member restored the matter to CIT(A) to examine the relevant documents after giving reasonable opportunity to the assessee This ground of appeal was allowed for statistical purposes.
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