2017 (3) TMI 954

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....nd leave encashment, while disregarding the fact that it is seen from the Tax Audit Report that the assessee had liability to pay gratuity, leave encashment of Rs. 19,67,267/- and Rs. 6,81,416/respectively, which was not paid during the year by the assessee and in the absence of having made any payment towards gratuity and leave encashment. 2 "On the facts and in the circumstances of the case and in law, the CIT(A) has erred in disallowing the deduction made by the AO of Rs. 4,72, 17,435/- being difference between the f reman commission receivable of Rs. 18,37,13,435/- and the foreman commission actually received of Rs. 13,64,95,000/- while disregarding the fact that the assessee company would receive foreman commission @ 5 times of the a....

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.... pay gratuity, leave encashment of Rs. 19,67,267/- and Rs. 6,81,416/respectively, which was not paid during the year by the assessee and in the absence of having made any payment towards gratuity and leave encashment. The Ld. DR relied upon the order passed by AO. 6. On the other hand Ld. AR relied upon the order passed by Ld. CIT(A). 7. We have heard the counsel of both the parties and we have also perused the material placed on record as well as the orders passed by the revenue authorities. Before we decide the merits of the case it is necessary to evaluate the orders passed by Ld. CIT(A). The operative portion is reproduced below:- "I find that the appellant had a balance of Rs. 19,67,294/- in the gratuity account as on 01.04.09. It g....

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....ring the year, the total provision as worked out towards leave encashment as on 31.03.10 was Rs. 3,81,466/- thereby resulting in excess provision of Rs. 2,99,950/-. The Ld. CIT(A) after considering the facts of the case had correctly find that the excess provision has been rightly added back by the assessee company to the total income in the computation of income, therefore the additions made by AO were deleted. We have noticed that the Ld. CIT(A) while deciding this issue had also taken into consideration the submission made by assessee which are contained in para no. 4 and also the findings of AO which are contained in para no. 3 of CIT(A)'s order. Apart from the above, the Ld. DR appearing for the appellant has not placed on record any ....

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....earns a commission of 5% on the total chit fund collection. Such, chit schemes-are-normally-of-30. months to 50 months duration. Therefore, the said commission of 5% is spread over a period of more than 2 to 5 years. It is also seen that the assessee earns commission on a month to month basis on the monthly collection made and on the successful bidding by the subcribers. However, the agtnts are paid a commission of 1% of the total chit value, in respect of each subscriber enlisted by him provided such subscriber pays at least four months instalment, immediately on receipt of four such instalment. Thus there is no definite co-relation between the foreman commission earned and the agency commission paid. The appellant also may have to make ad....