Pawan Hans Limited Vs ACIT (ITAT Delhi)
The Income Tax Appellate Tribunal (ITAT), Delhi, disposed of cross appeals filed by the assessee and the Revenue against the order of the Commissioner of Income Tax (Appeals) for Assessment Year 2017-18. The Tribunal partly allowed the assessee’s appeal and dismissed the Revenue’s appeal.
The assessee withdrew its additional grounds challenging the validity of the notice under Section 143(2) and the scope of limited scrutiny. These grounds were dismissed as not pressed.
The first substantive issue in the assessee’s appeal related to the disallowance of Rs.15,49,151 under Section 40A(7) towards gratuity payable to employees. The Assessing Officer treated the amount as a mere provision based on actuarial valuation. The assessee explained that the amount represented an adjustment against excess contributions made to an approved gratuity fund in earlier years and that the gratuity fund was duly approved. The Tribunal accepted the explanation, holding that the amount was only an adjustment against excess payment already made to the approved gratuity fund. Alternatively, it held that contributions to an approved gratuity fund were allowable under Section 40A(7)(b). The disallowance was accordingly deleted.
The next issue concerned disallowance of Rs.1,83,30,058 under Section 40(a)(ia) for non-deduction of tax at source on lease rentals paid to the Airport Authority of India. The Commissioner (Appeals) had sustained the disallowance for the relevant year while directing the Assessing Officer to allow the deduction in the subsequent assessment year after verification, since tax had been deducted and deposited later. Both the assessee and the Revenue challenged this finding. The Tribunal upheld the Commissioner (Appeals)’ order, holding that it was in conformity with the provisions of Section 40(a)(ia). Accordingly, both appeals on this issue were dismissed.
