Punjab Bewel Gears Ltd. Employees, Delhi v. DCIT, New Delhi

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F: NEW DELHI BEFORE SHRI I.P. BANSAL JUDICIAL MEMBER AND SHRI R.C. SHARMA ACCOUNTANT MEMBER ITA NO. 260/DEL/2009 ASSESSMENT YEAR: 2003-04 PUNJAB BEVEL GEARS LTD. EMPLOYEES GROUP GRATUITY TRUST FUND 107 CHOPRA COMPLEX COMMUNITY CENTRE PREET VIHAR NEW DELHI. VS. DCIT CIRCLE 14(1) NEW DELHI. (APPELLANT) (RESPONDENT) APPELLANT BY : SH. P.S. KOHLI CA RESPONDENT BY: SHRI H.K. LAL SR. DR O R D E R PER I.P. BANSAL J.M. THIS IS AN APPEAL FILED BY THE ASSESSEE. IT IS D IRECTED AGAINST THE ORDER OF CIT(A) DATED 22 ND JULY 2008 FOR A.Y. 2003-04. GROUNDS OF APPEAL READ AS UNDER: - 1. THAT THE LD. AUTHORITY BELOW HAS GROSSLY ERRED IN PASSING THE ORDER WHICH IS ERRONEOUS AND BAD AT LAW AND AGAINST THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. THAT THE ASSESSEE HAS NOT CONCEALED ANY INCOME. 3. THAT THE LD. AUTHORITY BELOW HAS WRONGLY ASSESSE D THE INTEREST INCOME OF THE TRUST BY DISREGARDING THE PENDANCY OF THE APPLICATION FOR REGISTRATION AND RECOGNITION OF GRO UP GRATUITY TRUST. 4. THAT EXEMPTION U/S 10(25)(IV) HAS BEEN WRONGFULL Y DISALLOWED. 2 ITA NO. 260/DEL/2009 5. THAT THE ASSESSEE RESERVE THE RIGHT TO ADD AMEN D OR ALTER ANY OF THE GROUNDS OF APPEAL. 2. THE ASSESSMENT IN THE PRESENT CASE HAS BEEN FRAM ED VIDE ORDER DATED 25 TH OCTOBER 2005 PASSED U/S 143(3) OF INCOME TAX ACT 1961 (ACT). THE ASSESSEE IS A TRUST OF EMPLOYEES OF M/S PUNJAB BEVEL GEARS LTD. AND THE AO FOUND THAT GRATUITY SCHEME OF THE S AID TRUST IS NOT APPROVED HENCE EXEMPTION U/S 10(25)(IV) CANNOT BE ALLOWED. THE ASSESSEE HAS EARNED INTEREST INCOME OF RS. 1 19 153 /- WHICH WAS DISALLOWED AND TREATED AS TAXABLE INCOME. 3. IT HAS BEEN THE CONTENTION OF THE ASSESSEE THAT AN APPLICATION FOR APPROVAL OF THE SAID SCHEME WAS FILED BY THE ASSESS EE WELL IN TIME LONG BACK ON 1 ST SEPTEMBER 1998 AND THEREAFTER SEVERAL REMINDERS W ERE GIVEN TO ACT UPON THE SAID APPLICATION AND TO PROVI DE THE NECESSARY APPROVAL BUT TILL DATE NO SUCH APPROVAL OR REJECTIO N IS CONVEYED TO THE ASSESSEE. IT HAS SO BEEN THE CASE OF THE ASSESSEE BEFORE CIT(A) ALSO WHO HAS UPHELD THE ORDER OF AO IN ABSENCE OF ANY AP PROVAL REQUIRED TO ALLOW SUCH EXEMPTION. THE ASSESSEE IS AGGRIEVED H ENCE IN APPEAL. 4. AFTER NARRATING THE FACT IT WAS SUBMITTED BY LD . AR THAT ASSESSEE WAS ONLY REQUIRED TO SUBMIT THE APPLICATION FOR APP ROVAL OF THE GRATUITY SCHEME AND IT WAS NOT IN THE HANDS OF THE ASSESSEE TO GET THE APPROVAL. HE CONTENDED THAT NOT ONLY THE APPLICATION WAS FILE D IN TIME BUT SEVERAL REMINDERS WERE ALSO GIVEN BUT TILL DATE NO CONVERSA TION HAS BEEN RECEIVED EITHER FOR APPROVAL OR REJECTION OF APPROV AL. HE CONTENDED THAT 3 ITA NO. 260/DEL/2009 THE APPEAL OF THE ASSESSEE MAY BE ALLOWED OR KEPT I N ABEYANCE TILL SUCH APPROVAL IS RECEIVED. HE SUBMITTED THAT AUTHORITIE S MAY BE DIRECTED TO ACT UPON THE SAID APPLICATION OF THE ASSESSEE. THU S HE SUBMITTED THAT APPEAL OF THE ASSESSEE MAY BE ALLOWED. 5. ON THE OTHER HAND LD. DR REFERRING TO THE PROVI SIONS OF SEC. 10(25)(IV) PLEADED THAT IN ABSENCE OF ANY APPROVAL SUCH EXEMPTION CANNOT BE GRANTED TO THE ASSESSEE AND THUS LD. CI T(A) WAS RIGHT IN UPHOLDING THE ORDER OF AO. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO N IN THE LIGHT OF MATERIAL PLACED BEFORE US. IT IS TRUE THAT IN ABSE NCE OF APPROVAL SUCH EXEMPTION CANNOT BE ALLOWED. IF AN APPLICATION HAS BEEN FILED BY THE ASSESSEE WITH THE COMPETENT AUTHORITY FOR GRANT OF APPROVAL THEN IT IS NECESSARY FOR THAT AUTHORITY TO DECIDE THE SAME AND CONVEY THE RESULT OF THE SAME TO THE ASSESSEE. BUT ITAT IS NOT A FORUM WHERE SUCH GRIEVANCE OF THE ASSESSEE CAN BE ADDRESSED. THE AS SESSEE IF SO ADVISED MAY APPROACH THE COMPETENT AUTHORITY OR ITS HIGHER AUTHORITY TO INTERVENE IN THE MATTER SO THAT THE APPLICATION OF THE ASSESSEE CAN BE CONSIDERED ACCORDING TO LAW. HOWEVER GOING INTO T HE PECULIAR FACTS OF THE PRESENT CASE THOUGH WE CANNOT ACCEPT THE CLAIM OF THE ASSESSEE AS THE GRATUITY SCHEME OF THE ASSESSEE IS NOT APPROVED WHICH IS A PRIMA FACIE CONDITION FOR THE ALLOWABILITY OF EXEMPTION WE GIVE THE LIBERTY TO THE ASSESSEE TO APPROACH THIS TRIBUNAL TO SEEK RECALL O F THIS ORDER AS PER APPLICABLE PROVISIONS OF THE ACT IN CASE ASSESSEE IS ABLE TO GET APPROVAL 4 ITA NO. 260/DEL/2009 OF ITS GRATUITY SCHEME HEREAFTER. WITH THESE REMAR KS WE DISMISS THE APPEAL FILED BY THE ASSESSEE. ORDER WAS PRONOUNCED IN THE OPEN COURT ON 30.4.2010 (R.C. SHARMA) ACCOUNTANT MEMBER (I.P. BANSAL) JUDICIAL MEMBER DATED: 30.4.2010 *KAVITA COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR ITAT NEW DELHI. TRUE COPY BY ORDER DEPUTY REGISTRAR