2025 (11) TMI 1415

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.... facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), ADDL/JCIT (A)-3 Chennai (hereinafter referred to as CIT(A)}: 1) Erred in upholding the intimation issued u/s. 143(1) of the Income-tax Act, 1961 ("the Act"), dated 22.09.2022 without considering Appellant's submission in response to the adjustments proposed u/s. 143(1)(a). 2) Erred in confirming the adjustment made u/s 143(1), though same is beyond the scope of adjustments specified u/s 143(1)(a). 3) Failed to appreciate that the addition on account of mismatch with tax audit report amounting to Rs. 37,21,235, being gain on actuarial valuation of gratuity liability routed through 'Other Comprehensive I....

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....ted that the assessee was granted a short TDS credit of Rs. 2,26,634/- and interest u/s 244A was short granted. Before the Ld. CIT(A), assessee submitted that at the time of processing of return by the CPC assessee was issued communication proposing the alleged adjustment on account of mismatch with the audit report in relation to gain on account of valuation of gratuity liability on the basis of actuarial valuation report. Assessee in response submitted that, the said amount was reported in the tax audit report as items not credited to the profit and loss account being any other item. It was submitted that the assessee disclosed the said amount based upon the IndAS and the same was not the actual income and, therefore, no adjustment was re....

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....ncerned have clarified that the same is in accordance with "Guidance note issued by the ICAl". Further in the said response, the Tax Auditors have further stated that, the appellant though have not given an effect on the Actuarial Gain / Loss in the computation of income in the normal provisions, the relevant effect on the gain / loss has been given in MAT computation u/s. 115JB. Further in the year under consideration, the appellant has opted for new tax regime u/s. 115BAA, hence the MATU/s. 115JB is not applicable. 6.3.9. The submissions of the appellant are considered. The appellant had reported the actuarial gain on the gratuity liability of Rs. 37,21,235, as "Amount not credited to Profit & Loss account-any other item of incom....

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....oss account being any "other item of income". The Ld. AR submitted that, the said amount is mainly in the nature of notional gain on account of actuarial valuation of gratuity routed through "other Comprehensive income" which is shown below the line item of net profit before tax at page 4 of the paper book. The Ld. AR submitted that the same does not have any impact on the tax computation since the starting point for computation of income under the head profit and gains from business and profession is net profit before tax followed by various other adjustment that are debited/credited to profit and loss account. 4.3. The Ld. AR submitted that the assessee maintains a number of gratuity funds as per section 43B of the Act and the deductio....

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....d separately to tax in the computation of income and income tax return. 4.5. He submitted that such consistent approach followed by the assessee on year after year basis has been accepted in the earlier years and accordingly any reduction in the gratuity liability of Rs. 37,21,235/- for financial year relevant to the assessment year under consideration being notional in nature can not to be added in the computation of income and return of income filed. 4.6. On the contrary, the Ld. DR relied on the orders passed by the authorities below. We have perused the submissions advance by both the sides in light of the records placed before us. 5. On perusal of AS-19, it is noted that changes to actuarial valuation can be because of chan....