ITAT allows appeal against Commissioner's order disallowing pension scheme provision.

The ITAT allowed the appeal against the Commissioner's order under section 263 of the Income Tax Act for the assessment year 2007-08. The ITAT found that the Commissioner's decision to disallow the provision for liability on account of the pension scheme under section 43B was erroneous. The ITAT directed the issue back to the Assessing Officer for proper verification and examination, emphasizing that the pension scheme did not fall under section 43B. The appeal was allowed for statistical purposes, setting aside the Commissioner's decision.

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Issues Involved:
Appeal against order u/s 263 of Income Tax Act for A.Y. 2007-08 - Disallowance of provision for liability on account of pension scheme u/s 43B.

Analysis:
1. The Commissioner invoked proceedings u/s 263 due to the disallowance of &8377; 273.60 lacs made by the assessee towards the pension scheme under section 43B. The assessee argued that the provision was based on actuarial valuation and allowable as per AS 15. However, the Commissioner found the order u/s 143(3) erroneous for not disallowing the provision, prejudicial to revenue.

2. The Authorized Representative contended that the Assessing Officer accepted the claim after due consideration, and the revision order was based on a change of opinion. Citing relevant case laws, the representative argued that the Commissioner cannot overturn the decision merely due to disagreement. The DR argued that the assessment order lacked enquiry on the pension scheme liability.

3. The ITAT observed that the assessment order did not discuss the provision for the pension scheme, indicating a lack of enquiry by the Assessing Officer. The absence of any query raised by the Assessing Officer and the silence in the assessment order on this issue led to the conclusion of non-application of mind. Referring to the Malabar Ind. Co. Ltd. case, the ITAT found the assessment order erroneous and justified the Commissioner's invocation of section 263.

4. The ITAT noted that the Commissioner failed to properly examine the allowability of the claim and erroneously applied section 43B to disallow the provision. Relying on the Ranbaxy Laboratories case, the ITAT directed the issue back to the Assessing Officer for verification and examination, emphasizing that the pension scheme did not involve regular contributions to a fund or trust, hence not falling under section 43B.

5. Consequently, the ITAT allowed the appeal for statistical purposes, setting aside the Commissioner's decision and instructing a proper verification and examination of the claim by the Assessing Officer as per law and relevant case laws cited by the assessee.

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