Income Tax Appellate Tribunal - Delhi
M/S. Dlf Universal Limited, Gurgaon vs Addl.Cit, Gurgaon on 18 August, 2017
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCHES : B : NEW DELHI
BEFORE SHRI R.S. SYAL, VICE PRESIDENT
AND
SHRI K. NARASIMHA CHARY, JUDICIAL MEMBER
ITA No.2459/Del/2014
Assessment Year : 2009-10
DLF Universal Limited, Vs. Addl. CIT,
3rd Floor, Shopping Mall, Range-I,
Arjun Marg, DLF City Phase-1, Gurgaon.
Gurgaon.
PAN: AAACJ1655P
(Appellant) (Respondent)
Assessee By : Shri R.S. Singhvi &
Shri Satyajeet Goel, CAs
Department By : Shri Anshul Prakash, Sr. DR
Date of Hearing : 17.08.2017
Date of Pronouncement : 18.08.2017
ORDER
PER R.S. SYAL, VP:
This appeal filed by the assessee arises out of the order passed by the CIT(A) on 10.02.2014 in relation to the assessment year 2009-10.ITA No.2459/Del/2014
2. The only issue raised in this appeal is against the confirmation of disallowance of Rs.61,34,922/- on account of leave encashment and Rs.64,21,793/- on account of provision for gratuity for non-payment.
3. Succinctly, the facts of the case are that the assessee originally filed its return at a loss of Rs.107.99 crore. Subsequently, a revised return was filed at an income of Rs.182.30 crore. The revised return was filed to give effect to the amalgamation of 11 companies into the assessee company pursuant to a merger petition filed with the Hon'ble Delhi High Court with effective date of 01.04.2008. In the computation of income, the assessee reduced Leave encashment amounting to Rs.75.83 lac and Gratuity amounting to Rs.64.21 lac. The Assessing Officer recorded in the assessment order that payment of gratuity and leave encashment was not made to the employees and hence the liability was not discharged. The assessee's submission that : `Service till the date of transfer was actually taken by the Transferor company and debited to the P&L Account by the Transferor company' did not find favour with the Assessing Officer. Invoking the provisions of section 2 ITA No.2459/Del/2014 43B(b) and (f), he made the above disallowances. The ld. CIT(A) gave direction to the Assessing Officer for verifying the amount of provision for leave encashment as per para 3.3 of his order and sustained the disallowance on account of provision for gratuity. The assessee has come up in appeal before us against such sustenance of disallowances.
4. We have considered the rival submissions and perused the relevant material on record. It can be seen from the assessment order that the assessee made a claim of deduction towards leave encashment and gratuity by contending that some of its employees were transferred and the amounts standing to their credit were also transferred to other companies and, hence, such transfer of amounts should be construed as payment of gratuity to be eligible for deduction. Similar contention was made by the ld. AR as well before us. The AO has reproduced Schedule 22 of Audit report, which reads as under:-
"Schedule 22 - Note to the combined financial information
1. The combined-financial information is prepared for filing of Income Tax Return based on the scheme of amalgamation of M/s Necia Builders and Developers Private Limited, M/s PAT Infrastructures Private Limited, M/s Adrienne Builders and constructions Private Limited, M/s 3 ITA No.2459/Del/2014 DLF Food Courts Private Limited, M/s DLF Retail Services Limited, M/s DLF Commercial Complexes Ltd, M/s Callisla Builders and Constructions Pvt. Ltd. M/s Gavin Builders and Developers Private Limited, M/s Alastair Builders and Developers Private Limited, M/s Amoda Builders and Developers Pvt. Ltd. and M/s Leandra Builders & Developers Pvt. Ltd. ("Amalgamating Companies") with DLF Retail Developers Limited ("transferee company") with the Appointed date as April 10, 2008.
2. The combined financial information as at March 31, 2009 have been prepared to present the combined capital, assets and liabilities and financial performance of the Amalgamating Companies on a line by line basis and after adjustment of elimination of common transactions as of and for the year ended March 31, 2009."
5. The above note indicates that 11 companies amalgamated with the assessee company. This fact has also been recorded by the ld. CIT(A) in para 3.3 of his order while dealing with the disallowance u/s 43B(b) and
(f). We are unable to appreciate as to how the employees of the assessee were transferred to other companies when the fact is that certain other companies got amalgamated with the assessee. In such a scenario, the employees of other companies should have joined the assessee company. The entire case of the assessee is based on the premise that its employees were transferred to other group companies and transfer of the amount payable as leave encashment and gratuity should be considered as 4 ITA No.2459/Del/2014 payment to be eligible for deduction. When we view the position in entirety, it clearly emerges that there is some confusion in the factual scenario as recorded by the authorities below. It is not clear as to whether the disallowance pertains to the employees of the assessee company transferred to other companies or the employees of some other companies getting transferred to the assessee company on amalgamation. Since the necessary factual position is not clear, we are constrained to give any finding on the deductibility or otherwise of the amounts in question. We, therefore, set aside the impugned order and remit the matter to the file of AO for firstly ascertaining the correct facts and then deciding the issue as per law after allowing a reasonable opportunity of hearing to the assessee.
6. In the result, the appeal is allowed for statistical purposes.
The order pronounced in the open court on 18.08.2017.
Sd/- Sd/-
[K. NARASIMHA CHARY] [R.S. SYAL]
JUDICIAL MEMBER VICE PRESIDENT
Dated, 18th August, 2017.
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ITA No.2459/Del/2014
dk
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT (A)
5. DR, ITAT
AR, ITAT, NEW DELHI.
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