ITAT Jodhpur Bench Rules for Assessee, Allowing Appeal & Deleting Additions by AO

The ITAT Jodhpur bench allowed the appeal, ruling in favor of the assessee by deleting the additions made by the AO. The first issue regarding the addition of Rs. 1.47 lacs on account of the provision of PACS Manager salary was resolved in favor of the assessee based on a previous order of ITAT Jaipur bench. The second issue concerning the sustenance of the addition made on account of premium of 47 employees of leave encashment was also decided in favor of the assessee, following a decision of the Hon'ble Kerala High Court regarding the allowability of such expenses for business purposes.

---

---

Issues:
1. Addition of Rs. 1.47 lacs on account of provision of PACS Manager salary.
2. Sustenance of addition made on account of premium of 47 employees of leave encashment amounting to Rs. 26,52,873/- to LIC of the employees against quantified liabilities.

Analysis:

Issue 1:
The first issue in the appeal pertains to the addition of Rs. 1.47 lacs made by the Assessing Officer (AO) on account of the provision of PACS Manager salary. The AO disallowed this provision, stating it was not valid for business purposes. The ld. CIT(A) confirmed this addition. However, during the appeal, the assessee cited a previous order of ITAT Jaipur bench in a similar case where the addition was deleted. The ITAT Jodhpur bench, considering the facts of the present case akin to the previous case, deleted the addition, following the earlier order.

Issue 2:
The second issue revolves around the sustenance of the addition made by the AO concerning the premium of 47 employees of leave encashment amounting to Rs. 26,52,873/- paid to LIC of the employees against quantified liabilities. The AO disallowed this amount, alleging that the expenditure was not related to the business and that the funds were wrongly diverted. The ld. CIT(A) upheld this disallowance based on a similar disallowance in the previous year. However, during the appeal, the assessee referenced a decision of the Hon'ble Kerala High Court, stating that the actual liability towards the premium paid on insurance policy is an allowable deduction under section 37 of the Act for business purposes. Following the Kerala High Court's ruling, the ITAT Jodhpur bench set aside the ld. CIT(A)'s order and directed the AO to allow the claim of the assessee.

In conclusion, the ITAT Jodhpur bench allowed the appeal filed by the assessee, deleting the additions made by the AO in both issues.

---