9911796707
TMI Blog2023 (1) TMI 20X X X X Extracts X X X X X X X X Extracts X X X X ..... circumstances of the case and in law, Ld. CIT(A) has erred in allowing the provisions related to gratuity and earned leave as provisions are mere estimate of the liabilities by the assessee and in no way can be treated as application of income." 3. The brief facts are that the assessee is a charitable trust running hospital in the name of Rajiv Gandhi Cancer Institute and Research Centre at Rohini, Delhi. For AY 2016-17, the assessee filed return on 27.09.2015 declaring nil income. The case was selected for scrutiny under CASS and the assessment was completed on 26.12.2018 under section 143(3) of the Income Tax Act, 1961 (the "Act") disallowing, inter alia provision for gratuity of Rs. 1,31,44,162/- and for leave encashment of Rs. 1,00,32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be deducted from the income if there is apprehension that the debt might become bad. There is nothing brought on record to show that the provision was not made bona fide. In such a situation, the ratio of the decisions cited by us while dealing with the deductibility o f the taxes paid under the VDIS will equally apply We accordingly hold that while computing the income available to the trust for application to charitable purposes in India in accordance with section ll(l)(a) the provision for doubtful debts must be deducted . 4.2.3 In the case of CIT vs. Birla Janhit Trust [208 ITR 372 (Cal)], the Hon'ble Calcutta High Court have held that expenditure on salaries and miscellaneous expenses for purpose of carrying out the purpose o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... meaning of section 11(1) (a). 4.2.5 Further, on the issue, the Hon'ble ITAT Delhi in appellant's own case have held as under: "7. Now coming to Ground No A relating to the deletion of Rs. 6,09,12,176/- added by disallowing the provisions relating to the gratuity, leave encashment and cancer care scheme, on a careful consideration of the material produced before us by way of paper book-11 vide page nos. 1 to 17, we are satisfied that such a provision was made on scientific basis inasmuch as the explanation of the assessee is that the employees accrue a right of gratuity on their continuous service for five years and the society has to pay them the gratuity as and when they retire, so also the leave encashment, which are ascerta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d liability. The Ld. AR on the other hand submitted that the issue is covered in favour of the assessee by the order of the Tribunal in assessee's own case for AY 2006-07. He further submitted that there is no change in the methodology adopted for making the impugned provisions in the year under consideration. 7. We have considered the submissions of the parties and perused the material available in the records. Assessment order shows that on query and show cause notice dated 11.12.2018 as to why provisions created be not disallowed, the assessee filed submissions. But the Ld. AO did not record what submissions were made and no reasons have been given by him why the submissions were not found tenable by him. It is one of the principles of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n assessee's own case for AY 2006-07 was deleted by the Ld. CIT(A) against which the Revenue's appeal stands dismissed by the Tribunal vide order in ITA No. 2607/Del/2013 dated 28.03.2019. 8.3 The Ld. CIT(A) considered the above submission of the assessee and placing reliance on the decision of the Hon'ble Delhi High Court in National Association of Software and services Companies (supra); Hon'ble Calcutta High Court in CIT vs. Birla Janhit Trust 208 ITR 272 (Cal): Hon'ble Andhra Pradesh High Court in CIT vs. Trustees of H.E.H the Nizam's Charitable Trust 131 ITR 497 (AP) and the decision of the Tribunal in assessee's own case (supra) deleted the impugned disallowance. There is no substance in the contention of the Ld. DR that there is no ..... X X X X Extracts X X X X X X X X Extracts X X X X
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