C I T vs. M/S BHUSHAN LTD.

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ITA/196/2007HC Punjab & HaryanaPHHC01072875200729 November 2010Author: MR. JUSTICE ADARSH KUMAR GOEL,MR. JUSTICE GURDEV SINGH3 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the issue was covered against the revenue. The Court noted that the view taken by the ITAT was consistent with the Supreme Court's decision in CIT v. Alom Extrusions Limited, which reiterated an earlier identical view in Allied Motors P. Limited v. CIT. These judgments established that the amendment to Section 43B, allowing deduction for payments made by the due date of filing the return, was applicable retrospectively. Therefore, the ITAT was correct in deleting the disallowance made by the AO. The appeal preferred by the revenue was dismissed.

What were the facts?

The Commissioner of Income Tax I, Chandigarh (the revenue) appealed to the High Court of Punjab and Haryana against an order of the Income Tax Appellate Tribunal (ITAT), Chandigarh Bench. The appeal concerned assessment year 2003-04. The ITAT had deleted a disallowance of Rs. 9,78,518/- made by the Assessing Officer (AO) on account of the employer's contribution towards ESI and PF paid after the due date. The AO had disallowed the deduction, holding that the amendment to Section 43B of the Income Tax Act, 1961, which allowed such payments if made by the due date of filing the return, was not applicable. The ITAT reversed this decision, relying on its previous ruling in Kwality Milk Foods Limited v. ACIT.

What were the issues?

1. Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT is right in deleting the disallowance of Rs.9,78,518/- made on account of employer’s contribution towards ESI and PF paid after the due date, by holding that amendment made in section 43B by the Finance Act, 2003 w.e.f 1.4.2004 relating to the PF and ESI is applicable retrospectively? (Question of law) Assessee's Contention: The judgment does not record any specific contentions made by the assessee before the High Court. However, the ITAT's decision, which was upheld, indicates that the assessee likely argued for the retrospective applicability of the amendment to Section 43B, allowing deduction for payments made by the due date of filing the return. Revenue's Contention: The revenue contended that the amendment to Section 43B of the Act, effective from 1.4.2004, which allowed deduction for ESI and PF contributions paid by the due date of filing the return, was not applicable to the assessment year in question. The AO had disallowed the deduction on this basis.

Which sections of the Income-tax Act were involved?

Section 43B,Section 260A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH.

Date of decision: 29.11.2010 The Commissioner of Income Tax I, Chandigarh -----Appellant Vs. M/s Bhushan Limited ----Respondent CORAM:- HON'BLE MR JUSTICE ADARSH KUMAR GOEL HON’BLE MR. JUSTICE GURDEV SINGH Present:- Ms. Urvashi Dhugga, Advocate for the appellant. Adarsh Kumar Goel,J. This appeal has been preferred by the revenue under section 260A of the Income Tax Act, 1961 (for short, ‘the Act’) against order dated 19.10.2006 passed by the Income Tax Appellate Tribunal, Chandigarh Bench ‘B’ in ITA No.743/CHANDI/2005 for the assessment year 2003-04, proposing to raise following substantial question of law:- “Whether on the facts and circumstances of the case and in law, the Hon’ble ITAT is right in deleting the disallowance of Rs.9,78,518/- made on account of employer’s contribution towards ESI and PF paid after the due date, by holding that amendment made in section 43B by the Finance act, 2003 w.e.f 1.4.2004 relating to the PF and ESI is applicable retrospectively?”

The Assessing Officer disallowed deduction in respect of employer’s contribution towards ESI and PF by holding that amendment to section 43B of the Act w.e.f 1.4.2004 permitting the payment to be taken into account if the same was on or before the due date applicable, if evidence of payment is furnished by assessee alongwith the return, was not applicable. The Tribunal reversed the said view following its earlier order in Kwality Milk Foods Limited v. ACIT Comibatore (Chennai,) 100 ITD 199 (SB).

We have heard learned counsel for the revenue. Learned counsel for the revenue does not dispute that the view taken by the Tribunal is consistent with the view taken by the Hon’ble Supreme Court in CIT v. Alom Extrusions Limited, (2009) 319 ITR 306, reiterating the earlier identical view in Allied Motors P.Limited v. CIT, (1997) 224 ITR 677. In view of above, the issue being covered against the revenue, this appeal is dismissed. (Adarsh Kumar Goel) Judge November 29, 2010 (Gurdev Singh) ‘gs’ Judge

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