TMI Blog2010 (11) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... On considering the commonality of issues, facts of the issue and the representatives, all the appeals are consolidated and they are being disposed in this composite order. The issue-wise adjudication is given the subsequent paragraphs. 1. Allowability of gratuity premium provision for payment u/s. sec. 43B vs. 40A(7)(b) of the Act 2. This issue is relevant to appeal Vide ITA No. 1019/PN/09 for the A.Y 2001-02. In connection with this issue, Ld. Counsel for the assessee filed a chart showing that the identical issue was covered in favour of the assessee by the decision of the Tribunal in the assessee own case for the A.Y 2003-04 vide ITA 381/PN/07 a copy of which is placed at page 1 of the paper book. In this regard, Ld. Counsel mentioned that para 4 to 7 are relevant. Ld. DR for Revenue relied on the relevant orders of the Revenue. 3. We have heard both the parties and perused the said order of the Tribunal and reproduced para 4 to 7:- 4. The observation of the A.O was that the assessee had made a provision of the premium payable towards the policy taken by the assessee under the Group Gratuity Scheme of the LIC. According to A.O only a provision was made howev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... but on the basis of 15 days wages for each year of completed service and a group insurance policy had been taken with the Life Insurance Corporation, the assessee was held entitled to claim only the incremental liability relating to the accounting year as a deduction. 5. However the A.O was not convinced and held that since the payment of gratuity fund was a liability of the employer therefore the provision was to be added back to the total income. Against the addition an appeal was preferred. It was explained that since the assessee was facing sever liquidity crunch and also facing non-cooperation from its bankers, therefore could not make the payment of premium of gratuity during the year under consideration. Further the reliance was placed on George Williamson (Assam) Ltd. v. CIT 228 ITR 343. Ld. CIT(A) was not convinced and upheld the addition. 6. We have heard both the sides in the light of the material placed before us and case laws cited. At the out set it is worth to mention that in the case of George Williamson (Assam) Ltd. v. CIT 228 ITR 343 (Gauhati) the identical issue had cropped up wherein it was held as under:- In case a provision is made for payment of g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court Judgement in the case of Maddi Venkataraman And Co. (P) Ltd 229 ITR 534(SC) the facts of which are entirely different. The Bench has raised certain questions about the details of the business nature of the expenditure, nature of and quantum of the gross expenses, what are the impugned receipts adjusted to arrive at the impugned of loss of ₹ 53,30,778/-. Ld. Counsel fairly admitted the lack of such details with him and he mentioned that if needed the issue may be sent to the files of the A.O for examining of this issues. Ld. DR. have no objection for the same. Further, Ld. Counsel relied on the order of the Tribunal in the case of Sanchay Finance Co. Ltd. (2005) 93 TTJ 153. 5. We have heard both the parties and perused the orders of the Revenue and from the orders, we find that nobody has gone into the bonafides of expenditure, nature and quantum of the expenditure, if they are revenue or capital. Revenue has also not examined the details of the receipts adjusted against the expenditure incurred by the joint venture and what are the terms and conditions which resulted in grant of such set off of income with the impugned loss. There is no discussion on the status of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otes appended alongwith the return but the amount of interest from Uttar Pradesh State Electricity Board was not offered to tax though it had accrued to the assessee as per the Court order. This observation of the A.O was contested and the facts in this regard were narrated as follows:- a) Uttar Pradesh State Electricity Board (UPSEB) awarded to Western India Erectors Limited (now known as UB Engineering Limited) as job of erection, testing and commissioning of 3 X 210 MW Boilers and Auxiliaries at An Para A TPS in the year 1981. b) The Contract value of the project was ₹ 5,13,03,180/-. c) Job was to be completed within 3 years + 1 years grace period from the date of commencement of work. d) Work was actually completed on March 1989. Since delay was attributable to UPSEB, they paid overrun charges. e) Company raised bills towards additional claims for regular as well as extra work which were not accepted by UPSEB. The dispute was referred to Hon. Mr. Justice D.B. Deshpande, Retired Judge of Bombay High Court by the assessee and Hon. Mr. Justice B. Lumba, retired judge of Allahabad High Court by UPSEB. f) Since the Arbitrators could not give joint award, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier, UPSEB challenged the judgment of the Lucknow Court, no further interest is accounted for by the assessee Company . 8.2. The theory of real income was not accepted by the A.O and on the basis of the arbitration award being in favour of the assessee and that was confirmed by the Court of Civil Judge, Senior Division, Lucknow the A.O has decided to tax the interest accrued on the sum outstanding calculated at ₹ 2,03,03,959/-. Against the addition an appeal was filed. 9. The first appellate authority was also not convinced and held that till the High Court takes an adverse view to reverse the decision of the Civil Judge the income will continue to accrue in the hands of the assessee. From the side of the appellant strong reliance was placed on Godhra Electricity Co. Ltd. 225 ITR 746, Western India Oil Distributing Co. Ltd. vs. CIT (Bom.) 206 ITR 359, Kewal Chand Bagri vs. CIT (Cal.) 183 ITR 207 and M/s. Shoorji Vallabhdas And Co. 46 ITR 144. However the Ld. CIT(A) was not convinced and finally held that the passing of decree by the Court of Civil Judge, Senior Division, Lucknow , was not negatived by any of the authorities and taking the probability of realization ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eteness the other order referred by the Ld. AR viz. Sri Kewal Chand Bagri vs. CIT (Cal.) 183 ITR 207 is also to be discussed wherein the past judgments have been considered at length and thereafter it was held that in case assessee is unable to realise interest on loan from debtor or in case debtor is unable to pay, then in a situation of uncertainty accrual of interest is not assessable in the hands of the assessee. Facts of this case have demonstrated the existence of uncertainty specially when the dispute was strongly contested and during the year under consideration was still sub-judice before Hon ble Court hence not judicially advisable to hold that such an income is the real income in the hands of the assessee or hypothetically accrued in the hands of the assessee that too for the purpose of levy of tax. The view taken by the authorities below is therefore reversed and ground allowed. 7. Considering the above comparability of the facts and the arguments, we are of the opinion that the decision of the Tribunal holds good for the year under consideration also. Accordingly, the relevant grounds of the assessee s appeals are allowed. 4. Claim of prior period expenses: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atable to the term loans taken from the Bank of Maharashtra and Development Credit Bank and it has to be examined the applicability of the amended provisions. Both the parties concurred in sending this issue to the files of the A.O for deciding the issue afresh in the light of the fact law and decision existing in this regard. Accordingly, the relevant ground is set aside to the files of the A.O for deciding the issue afresh after giving opportunity to the assessee. 6. Claims of Provident Fund: This issue is relevant to ITA No. 1573/PN/09 for the A.Y 2005-06. During the proceedings Ld. Counsel for the assessee stated that the A.O disallowed the claim of provident fund contribution relying on the then existing judgements. Further, Ld. Counsel mentioned that there are various judgements in favour of the assessee for the proposition that the P.F contribution if paid before the due date for filing of return of income, the claim should be allowed. Some of these decisions are judgement of Delhi High Court in the case of AIMIL Ltd. 321 ITR 508 (Del.), judgement of Supreme Court in the case of Alom Extrusions Ltd. 319 ITR 306 (SC). 8. We have heard both parties and perused the orde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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