COMMISSIONER OF INCOME TAX HALDWANI, NAINITAL vs. M/S THE BAZPUR COOPERATIVE SUGAR FACTORY LTD

ITA/24/2010HC UttarakhandUKHC01008221201010 June 2013Author: HON'BLE THE CHIEF JUSTICE5 pages
AI SummaryDismissed

What were the facts?

The assessee, M/s The Bazpur Co-Operative Sugar Factory Ltd., filed its return for Assessment Year 2006-2007 declaring a loss. The Assessing Officer assessed the net loss at ₹45,44,482. The assessee appealed to the Commissioner of Income Tax (Appeals), who granted minor relief. The assessee then appealed to the Income Tax Appellate Tribunal (ITAT). The ITAT allowed the assessee's appeal, deleting a disallowance of ₹52,41,209 relating to TDS, including ₹17,90,785. The ITAT observed that the assessee was not liable to make TDS deductions under Section 40(A)(a)(ia) for provident fund contributions not paid before the due date. The Revenue has appealed this order of the ITAT.

What did the High Court hold?

The High Court held that the due date referred to in Section 36(1)(va) of the Income Tax Act, 1961, must be read in conjunction with Section 43B(b) of the Act. Section 43B(b) provides that a deduction for employer's contribution to provident fund is allowed only in the year it is actually paid. The proviso to Section 43B states that this deduction is allowed if the sum is paid on or before the due date for furnishing the return of income for the previous year in which the liability was incurred, and evidence of such payment is furnished. The Court noted that the ITAT had allowed the deduction following the judgment of the Apex Court in CIT vs. Vinay Cement Ltd. However, the High Court, following its own Division Bench judgment in CIT vs. Kichha Sugar Company Limited (Income Tax Appeal No. 50 of 2009), held that the employees' contribution paid before the filing of the return is allowable to the extent of payment made before furnishing the return. Therefore, the substantial question of law was answered in the negative. The appeal was dismissed.

What were the issues?

1. Whether the Income Tax Appellate Tribunal erred in law in deleting the disallowance of ₹17,90,785 on account of delayed payment of employees' contribution to the E.P.F. Account, which was disallowed by the Assessing Officer under Section 36(1)(va) of the Income Tax Act, 1961? Assessee's Contention: The judgment does not explicitly record the assessee's arguments before the ITAT or the High Court. However, it is implied that the assessee contended that the disallowance was incorrect. Revenue's Contention: The Revenue contended that the disallowance made by the Assessing Officer under Section 36(1)(va) was justified. The Revenue's appeal to the High Court raises the question of law regarding the ITAT's deletion of this disallowance.

Which sections of the Income-tax Act were involved?

Section 260A,Section 143,Section 40(A)(a)(ia),Section 36(1)(va),Section 43B(b),Section 139,Section 28

AI-generated summary — verify with the full judgment below

1 IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL Income Tax Appeal No. 24 of 2010

Commissioner of Income Tax Haldwani, Nainital. …..........Appellant

Versus M/s The Bazpur Co-Operative Sugar Factory Ltd., Bazpur (U.S. Nagar) through its General Manager

…..................Respondent Shri Hari Mohan Bhatia, Advocate, present for appellant. Ms. Puja Banga, Advocate, present for the respondent. Coram: Hon’ble Prafulla C. Pant, J. Hon'ble Servesh Kumar Gupta, J. Oral: Hon'ble Prafulla C.Pant, J. This appeal preferred under section 260A of Income Tax Act, 1961, (for short ITA), is directed against the order dated 23.10.2009, passed by Income Tax Appellate Tribunal (for short ITAT) Delhi, Bench “A”, New Delhi, in ITAT No. 2309/Del/09 whereby

2 said Tribunal has allowed the appeal of the assessee. (2) Heard. (3)

Brief facts of the case are that the assessee/respondent is a Public Sector Undertaking which is a co-operative society. It submitted its return for the assessment year 200

The order continues below.

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