TaxTMI 
TaxTMI 
2022 (10) TMI 220
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.... facts. b. That the assessee having already added sum of Rs.34,581/- u/s. 14A of the Act in the computation of income (returned income), Rule 8D is not applicable and the sustaining of the addition of Rs. 2,01,724/- u/s.l4A of the Act is unjustified, arbitrary, contrary to facts, erroneous and bad in law. c. The appellant's computation of the aforesaid Rs.34,581/- u/s. 14A of the Act is based on its books of accounts and is worked out in a reasonable and fair manner, the learned lower authorities have mis appreciated/misconstrued the same and the disallowance U/S.14A of the Act is incorrect, arbitrary, erroneous and bad in law. d. That the learned CIT(Appeals) holding that the aforesaid Rs.34,581/- has no reasonable basis is incorrect, contrary to facts, arbitrary and erroneous and bad, both in the eye of law and on facts. 3. Disallowance under 'Deduction on Audit Fees - Rs. 15,00,000/- a. That the learned CIT (Appeals) has misconstrued/mis-appreciated the facts and the confirming of disallowance of Rs. 15,00,000/- under audit fees is contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. b. That on the facts and in the circumstanc....
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....lowance of Rs.l,63,26,134/- Under 'Other provisions relating to estimated Liability towards staff and sub-staff for pay revision and arrears as per 9th Bipartite and per-Court orders is contrary to facts, arbitrary, erroneous and bad, both in the eye of law and on facts. b. That on the facts and in the circumstances of the case, the assessee having made a fair estimate of Liability towards staff and sub-staff for pay revision and arrears as per 9th Bipartite and per-Court orders, the sustaining of the addition/ disallowance of Rs.1,63,26,134/- is unjustified, arbitrary, contrary to facts, excessive, erroneous and bad in law. 6. Enhancement and Addition under "Other provisions" - Rs.1,44,77,000/- a. That on the facts and in the circumstances of the case, the order of the learned CIT(Appeals) dated 03.11.2017 in making addition of Rs. 1,44,77,000/- under "Other provisions" by enhancing the assessments is contrary to facts, against the principles of natural justice, arbitrary, excessive, erroneous and bad, both in the eye of law and on facts. b. That on the facts and in the circumstances of the case, the order of the learned CIT(Appeals) dated 03.11.2017 in enhancing the a....
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....P of the I.T Act by the lower authorities is arbitrary, erroneous, bad, both in the eye of law and on facts and legally untenable. e. That the CBDT Circular relied on by the learned CIT(Appeals) is contrary to the express provisions of law and cannot be applied in the assessee's case. f. Without prejudice to Ground (e) above, in any case, CBDT Circular is neither binding on the assessee nor on the appellate authority ought not be applied in the case of the assessee. 8. Without prejudice to Ground (2) to (7) above, in any case, even after making the disallowances, the deduction u/s.80P of the Act ought to have been to that extent and accordingly, the 'NIL' total income as per returns of the assessee ought to be accepted. 9. That the appellant craves leave to add, supplement, modify the grounds herein-in-above before or at the time of hearing of the appeal. 2. Ld. AR before us has not argued ground Nos.1, 8 & 9, which are general in nature, therefore, the same are not required separate adjudication. 3. Ground No.2 is with regard to confirming the disallowance made u/s.14A of the Act to the extent of Rs.2,01,724/-. 3.1 It was submitted by the ld. AR that the ass....
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....this is only a provision and the provision is not allowable as an expenditure. It was the submission that the order of the ld. CIT(A) and that of the AO is liable to be upheld. 4.4 We have considered the rival submission. 4.5 As it is noticed that the assessee has paid the audit fees of Rs.16,17,336/- before the due date of filing of the return and it has also been recognised by the AO in the assessment order, we are of view that the addition of Rs.15 lakhs made on the ground that it is a provision, is not called for. In the circumstances, the addition made by the AO and as confirmed by the CIT(A) under the head Deduction on Audit Fees stands deleted. 5. Ground No.4 is with regard to the disallowance on contribution to the recognised Gratuity Fund of Rs.1,21,62,000/-. 5.1 It was submitted by the ld. AR that the assessee had made a payment of Rs.1,21,62,000/- to LIC Gratuity Fund being LIC Master Policy. Ld. AR drew our attention to LIC Master Policy at page 135-139 of the paper book. It was submitted that the AO disallowed Rs.1,21,62,000/- on the ground that the LIC Master Policy was not a recognised gratuity fund. Ld. AR drew our attention to page 14 of the assessment order. I....
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....ounts have been paid to the employees. 6.3 We have considered the rival submissions. 6.4 As it is noticed that the computation of the revision of pay has been made by the assessee for 31 months and the same has been accepted by the AO for a period of 27 months, obviously the computation is on scientific basis, it is not an unascertained liability. The liability has crystalised. In these circumstances, in line with the principle laid down by the Hon'ble Supreme Court in the case of Bharat Earth Movers Ltd. (supra), the disallowance of the provisions for pay arrears as made by the AO and as confirmed by the CIT(A) stands deleted. 7. Ground No.6, is with regard to enhancement and addition under the head other provisions to an extent of Rs.1,44,77,000/-. 7.1 It was submitted that this amount consisted of two figures, one is ex-gratia to the deceased employee to an extent of Rs.1,15,00,000/- and the second is provision for fraud to the extent of Rs.29,77,000/-. The ld. CIT(A) has enhanced the assessment by making the disallowance on the ground that these were only provisions. It was the submission that the ex-gratia to the deceased employee were in respect of such employees, who are....
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....t in the case of Bharat Earth Movers Ltd. (supra) as the amount has been crystalised, we are of the view that the said amount is an allowable expenses. Thus, the addition as made by the ld. CIT(A) for enhancement of provision with regard to ex-gratia to the deceased employee for the relevant assessment year stands deleted. 7.6 Coming to the issue of provision for fraud, at the outset, it is noticed that the said amount is not crystalised in any manner whatsoever. The provision is made on the basis of allegation. This allegations needs to be verified. It needs to be proved. An attempt for recovery must be made from the persons, who have committed the fraud. Where the fraud amount is recovered is not known. Obviously, it cannot be said that the liability is crystalised. In these circumstances, in respect of provision for fraud, we find strength in the submission of the ld. CIT-DR that the same is allowable in the year in which the amount has been written off from the books of accounts on account of fraud. Thus, the disallowance as made by the CIT(A) under the head provision for fraud would have to be verified and consequently, it is restored to the file of AO for verification as to ....