Case Law Details
Astra Zeneca Pharma India Ltd. Vs DCIT (LTU) (ITAT Bengaluru)
ITAT Bangalore held that disallowance merely considering the provisions of section 144C(8) of the Income Tax Act without verification of details furnished by the assessee is unsustainable in law.
Facts- The assessee incurred Rs.4,63,24,847 (4,63,24,847 – 72,87,811) towards contribution to gratuity fund and paid to the said funds before the due date for filing return of income. The same was also disclosed in the tax audit report. It was therefore submitted that the entire amount is eligible for deduction u/s. 36(1)(va) of the Act. However, the assessee by inadvertence claimed only Rs.3,90,37,036 while filing the return which was rectified by filing revised return where the entire amount of Rs.4,63,24,847 was claimed as a deduction.
AO noted that Rs.72,87,811 pertaining to contribution towards gratuity fund has not been specifically disclosed in the tax audit report and accordingly disallowed the same. The DRP directed that amount paid before the due date for filing the return was allowable deduction. The AO, however, upheld the disallowance on the ground that no further enquiry can be made by the AO in view of section 144C(8) of the Act.
Conclusion- We noticed that the AO has not examined the details as per the directions of the DRP and has admitted that gratuity payment required further enquiry. The AO has made disallowance considering the provisions of Section 144C(8) of the Act and sustained the disallowance. Since the AO has not verified the details of gratuity based on the details furnished by the assessee we remit the issue back to the AO with a direction to examine the details of payment of gratuity and decide the allowability accordingly. This ground is allowed for statistical purposes.
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