Income Tax Appellate Tribunal - Ahmedabad
Pragati Glass Pvt.Ltd.,, Bharuch vs Assessee on 30 November, 2010
आयकर अपीलीय अिधकरण,
अिधकरण, अहमदाबाद Ûयायपीठ 'डȣडȣ'
डȣ अहमदाबाद
IN THE INCOME TAX APPELLATE TRIBUNAL
AHMEDABAD BENCH "D" AHMEDABAD
ौी डȣ.के.×यागी, Ûयाियक सदःय ौी ए.के.गरोǑडया, लेखा सदःय
Before Shri D.K. Tyagi, Hon'ble Judicial Member and
Shri A.K.Garodia, Hon'ble Accountant Member
ITA No.54/Ahd/2011
Assessment Year:2007-08
Pragati Glass Private V/s. Deputy Commissioner
Limited, Kharach, of Income-tax,
Kosamba (R.S.), Bharuch Circle,
District Bharuch Bharuch
Pin 394 120
PAN No.AABCP7377H
(Appellant) .. (Respondent)
Appellant by :- Shri Surendra Modiani, AR
Respondent by:- Shri James Kurair, DR
Date of hearing 02-12-2011
Date of pronouncement 09-12-2011
आदे श /O R D E R
PER A.K. Garodia, Accountant Member:-
This is an assessee's appeal directed against the order of Ld. Commissioner of Income-tax (Appeals)-VI, Baroda dated 30-11-2010 for assessment year 2007-08. The ground raised by the assessee is as under:-
"2. The learned Commissioner (Appeals) erred in confirming addition of Rs.1218627/- being provision for bonus, to the book ITA No.54/Ahd/2011 A.Y. 2007-08 Pragati Glass Pvt. Ltd. V. DCIT, Bharuch Page 2 profits under section 115JB. Your appellate submits that the addition is not justified and prays that the same be deleted."
2. The brief facts are that it is noted by the Assessing Officer in para- 6 of the assessment order that assessee has debited Rs.12,18,627/- to profit and loss account towards provision for bonus. In the same para, the AO has also referred to some other expenditure debited by the assessee to the profit and loss account but on these issues, the matter has attained finality and there is no dispute before us with regard to those items. Regarding this amount of provision for bonus, the AO has stated in the assessment order that it is unexplained liability and made addition while computing book profit u/s. 115JB of the Income-tax Act, 1961. Being aggrieved, the assessee carried the matter before Ld. CIT(A) but without success and now the assessee is in further appeal before us.
3. It was submitted by Ld. AR of the assessee before us that as per the provision of payment of Bonus Act, the assessee is liable to pay bonus @ 20% of eligible salary for the year and amount payable was computed at Rs.12,18,627/- and the same was provided in the books of account as per applicable accounting standard and the provision of Companies Act, 1956. It was also committed that there was no uncertainty about it and hence, the addition made by AO is not justified. He also submitted a copy of the relevant page of tax audit report for the next year i.e. A.Y. 2008-09 and pointed out that same amount was actually paid in the next year as noted by the tax auditor. A query was raised by the Bench as to what is the basis of making provision @ 20% of salary and where is the computation of allocable of surplus as per the payment of Companies Act, 1965 justifying provision @ 20%. In reply, it ITA No.54/Ahd/2011 A.Y. 2007-08 Pragati Glass Pvt. Ltd. V. DCIT, Bharuch Page 3 was submitted by Ld. AR of the assessee that this working is not readily available.
4. Ld. DR of the Revenue supported the order of authorities below.
5. We have considered the rival submissions and perused the materials on record and gone through the orders of authorities below. We find that it is noted by Ld. CIT(A) in para-5.2a of his order that the assessee has not made any submission as to why the provision of bonus was certain liability. Before us also, no such evidence has been placed on record to show and establish that the provision was for ascertained liability and in our considered opinion, to establish that provision for bonus @ 20% of salary is ascertained liability, the assessee was required to show the amount of allocable surplus as per the payment of Bonus Act to establish that such allocable surplus was more than 20% of salary of this year and then only, it may be accepted that it was a certain liability but merely on this basis that equal amount was paid in the subsequent year, it cannot be said that on the date when the provision was made i.e. on 31-03-2007, it was a certain liability. However, to meet the ends of justice, we feel that assessee deserves one more opportunity to establish this aspect because proper representation was not made by assessee before authorities below but at the same time, no relevant query was raised by Assessing Officer and therefore, in view of these facts that equal amount was paid in the next year, there appears to be bona fide case of the assessee and hence, for natural justice, in our considered opinion, the assessee deserves one more opportunity in the facts and circumstances of the present case. Therefore, we set aside the order of Ld. CIT(A) on this issue and restore the matter back to the file of AO for a fresh decision. We want to make it ITA No.54/Ahd/2011 A.Y. 2007-08 Pragati Glass Pvt. Ltd. V. DCIT, Bharuch Page 4 clear that the burden is on the assessee to bring the evidence on record in respect of this contention that it was a provision for ascertained liability by showing the allocable surplus for the present year as per the payment of Bonus Act, 1965 or any other relevant material to establish that it was a provision of ascertained liability. Thereafter, the AO should pass necessary order according to law after providing reasonable opportunity of being heard to the assessee.
6. In the result, appeal of assessee stands allow for statistical purposes.
Order pronounced in Open Court on 09/12/2011 इस आदे श कȧ घोषणा Ǒदनांकः 09/12/2011 को खुले Ûयायालय मɅ कȧ गई ।
Sd/- Sd/- (डȣ.के.×यागी) (ए.के.गरोǑडया) (D.K.Tyagi) (A.K. Garodia) (Ûयाियक सदःय) (लेखा सदःय) (Judicial Member) (Accountant Member) *Dkp Ǒदनांकः-09/12/2011अहमदाबाद ।
आदे श कȧ ूितिलǒप अमेǒषत / Copy of Order Forwarded to:-
1. अपीलाथȸ / Appellant
2. ू×यथȸ / Respondent
3. संबंिधत आयकर आयुƠ / Concerned CIT
4. आयकर आयुƠ- अपील / CIT (A)
5. ǒवभागीय ूितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad
6. गाड[ फाइल / Guard file.
By order/आदे श से, /True copy/ उप/सहायक पंजीकार आयकर अपीलीय अिधकरण, अहमदाबाद ।