ITAT allows expenditure of bonus to employees if paid before due date for filing of return

The brief facts of the case is that the assessee is a widely held company deriving income from its business of cultivation and manufacturing of tea and investment in shares and securities. The assessee had filed its return of income on 27.09.2015 declaring loss (-) of Rs.57,45,310/-. In the course of assessment proceedings u/s. 143(3) of the Act, Ld. AO took note of certain details from the tax audit report in Form 3CD and called for explanations from the assessee. The assessing officer made addition in respect of bonus to employees unpaid for Rs.5,20,300/-. Ld. AO made this addition by taking note from clause 26 of Form 3CD wherein the total bonus liability of Rs.63,13,178/- was reported whereas in the computation of total income, the assessee had added back only Rs.57,92,878/-. Thus, the difference of the two figures coming to Rs.5,20,300/- was added back by the Ld. AO for arriving at the assessed total income. Ld. Counsel pointed out that the tax audit report in Form 3CD was obtained by the assessee from the tax auditor on 26.09.2015. Till this date of 26.09.2015, assessee had not paid bonus to its employees of Rs.5,20,300/- which was paid on 27.09.2015 and on the same day, assessee had filed its return of income.

Aggrieved, assessee preferred an appral before the CIT(A). Before the ld. CIT(A) the assessee had submitted that the deduction in respect of payment of bonus should have been allowed as it was paid before the filing of the return. The ld. CIT(A) however, dismissed the appeal filed by the assessee in the absence of any cogent material evidence. Aggrieved by the additions so sustained, the assessee filed an appeal before the Tribunal.

ITAT observed that there is no documentary evidence available on record in respect of the claim of payment made by the assessee of Rs.5,20,300/- on 27.09.2015 even though it has been claimed to have been so paid. In the given set of facts, it direct the Ld. AO to consider the claim of the assessee if the verification reveals that the amount has been paid by the assessee before filing of return for which no addition is called for. However, if the verification reveals otherwise, the addition shall remain sustained. Accordingly, this ground of appeal of the assessee is allowed for statistical purposes.

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