The Income Tax Appellate Tribunal (ITAT) Mumbai bench, while allowing deduction in respect of retirement pension of employees of Hindustan Unilever employees observed that provision for the retirement pension of Hindustan Unilever employees is made for the business purpose.
Assessee, Hindustan Unilever Limited is a company engaged in the manufacture, trading and marketing (including export) of fast moving consumer goods (FMC goods). During the scrutiny proceedings AO noted that assessee deduction towards provision for retirement pension payable to its employees.
Further the AO however, found that though the assessee has made a provision of Rs.4641.43 lac in the P&L Account, the actual payment was Rs.1712.20 lac only. The Assessing Officer asked the assessee to justify the claim of deduction.
Ao did not find any merit in the submission of assessee and observed that the assessee has claimed liability on account of contribution for which a sinking fund must have the requisite approval u/s 36(1)(iv) or any contribution to the fund shall meet the provisions of se.40A(9). Referring to the provisions of sec.43B the Assessing Officer held that only the actual payment made is allowable.
Accordingly he allowed the sum of Rs.1712.20 lac actually paid and disallowed the balance amount of Rs.2929.23 lac.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax Appeals, CIT(A), who dismissed the appeal. Therefore the assessee filed another appeal before the tribunal.
Before the bench Nishant Thakkar, counsel for the assessee submitted that the identical issue was decided in favor of assessee for assessment year 2000-01 by this Tribunal.
Madhu Malti Ghosh, Counsel for the revenue, supported the decision of lower authorities.
The tribunal observed that the identical issue was already decided in favor of the assessee.
After considering the facts submitted by both parties, the two member bench of Padmavathy S (Accountant Member) and Chandra Vikas Awasthy (Judicial Member) decided the case in favor of assessee. Therfore the bench allowed the deduction in respect of retirement pension of employees of Hindustan Unilever employees.
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