2021 (7) TMI 452 - AT - Income Tax

Tribunal partially allows appeal, directs 'Interest on Investment' verification by AO, dismisses 'Provision for Gratuity'

The Tribunal partially allowed the appeal, directing the issue of 'Interest on Investment' to be verified by the Ld. AO. The 'Provision for Gratuity' ... Interest on Investment - Addition debit of some amount out of interest income shown in earlier year(s) in the profit & loss accounts - amount was debited on account of a wrong credit made - HELD THAT:- Admittedly, the assessee has not debited the said amount on account of any transaction of expenditure. The case of the assessee is that a wrong credit by mistake was made in the earlier year and that the rectification entry has been made in this year. DR has been fair enough to submit that if it is a case of any mistaken entry and rectification thereof, the matter may be restored to the file of Ld. AO for verification of the said fact. The assessee has also made similar request. Both the ld. Representative of the parties, this issue is restored to the file of the Ld. AO for the limited purpose for verification of the fact as to whether the aforesaid amount was debited on account of a wrong credit made in the earlier year by mistake. If the contention of the assessee is proved, then no disallowance will be attracted in this case. Issues Involved: Appeal against CIT(A)'s order sustaining additions on 'Interest on Investment' and 'Provision for Gratuity'.Analysis:1. Ground no. 1 - Interest on Investment:The assessee contested the addition made by the Ld. AO on account of debiting an amount from interest income shown in earlier years under 'Interest on Investment'. The Ld. AO disallowed the debit amount, stating it did not belong to the current year. The Ld. CIT(A) upheld the disallowance. The Tribunal noted that the assessee claimed the debit was due to a mistake in earlier years rectified in the current year. Both parties agreed to restore the issue to the Ld. AO for verification. If the contention of the assessee is proven, no disallowance will be made.2. Ground no. 2 - Provision for Gratuity:The assessee did not press for this ground, leading to its dismissal as not pressed.3. Ground no. 3 - Repetition of Grounds 1 & 2:As Ground no. 3 was a repetition of Grounds 1 & 2, no separate adjudication was required.4. Ground no. 4 - General Ground:Ground no. 4 was of a general nature and did not require specific discussion. The Tribunal partly allowed the appeal for statistical purposes.In conclusion, the Tribunal restored the issue of 'Interest on Investment' to the Ld. AO for verification, dismissed the 'Provision for Gratuity' ground as not pressed, and treated the appeal as partly allowed for statistical purposes. The order was pronounced on 07-07-2021.