M/S.VISWADEVI CASHEW EXPORTS vs. INCOME TAX OFFICER AND ANOTHER

WP(C)/30965/2009HC KeralaKLHC01072551200919 December 2014Author: HONOURABLE DR. JUSTICE A.K.JAYASANKARAN NAMBIAR6 pages
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What were the facts?

The petitioner, M/s. Viswadevi Cashew Exports, engaged in raw cashew nut processing, was assessed for the assessment year 2000-2001. The Income Tax Officer (ITO), the 1st respondent, reopened the assessment under Section 147. By an order dated 28.09.2009 (Ext.P1), the ITO disallowed payments totaling Rs.34,180/- made under the Employees State Insurance Act and Labour Welfare Fund, citing late payment. The petitioner filed a revision petition under Section 264 before the Commissioner of Income Tax (CIT), the 2nd respondent, who confirmed the disallowances by an order dated 17.03.2009 (Ext.P3). The petitioner challenged these orders in a writ petition, seeking to allow the deduction of Rs.34,180/-.

What did the High Court hold?

The High Court held that the disallowances made by the respondents needed modification. It was found that the disallowance of the employer's contribution under the Employees State Insurance Act was erroneous. The Court noted that the eligibility for deduction of employer's contribution is now settled by the retrospective amendment to Section 43B by the Finance Act, 2003, and clarified by the Supreme Court in Commissioner of Income Tax v. Solar Export [(2012) 210 Taxman 520]. Consequently, the orders of the ITO and CIT were set aside to the extent they disallowed an amount of Rs.24,447/- out of the total Rs.34,180/-. The ITO was directed to pass consequential assessment orders within two months. The issue regarding the employees' contribution under the Employees State Insurance Act, which was disallowed due to late payment, was not explicitly decided, but the relief granted pertained to the employer's contribution.

What were the issues?

1. Whether the disallowance of Rs.34,180/-, representing payments under the Employees State Insurance Act and Labour Welfare Fund, by the Income Tax Officer and confirmed by the Commissioner of Income Tax, is sustainable in law, particularly concerning the timing of these payments, under Section 43B of the Income Tax Act. Assessee's contention: The petitioner argued for the allowance of the deduction of Rs.34,180/-. The judgment notes that the respondents admitted that the employer's contribution under the Employees State Insurance Scheme should be allowed. However, the petitioner's claim for deduction of employees' contribution was contested by the revenue due to late payment. Revenue's contention: The revenue contended that the deduction for employees' contribution under the Employees State Insurance Act cannot be accepted as the payments were made beyond the due date stipulated under the Act. The revenue did not record any specific argument regarding the employer's contribution or the Labour Welfare Fund.

Which sections of the Income-tax Act were involved?

Section 147,Section 43B,Section 264

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 19TH DAY OF DECEMBER 2014/28TH AGRAHAYANA, 1936 WP(C).NO. 30965 OF 2009 (M) ---------------------------- PETITIONER(S): --------------- M/S.VISWADEVI CASHEW EXPORTS ANNOOR, KOTTARAKKARA, KOLLAM DISTRICT RERPESENTED BY V.SHAJI, PARTNER. BY ADVS.SRI.HARISANKAR V MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): -------------- 1. INCOME TAX OFFICER WARD IV, KOLLAM RANGE, KOLLAM.

2.

COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

WP(C).NO. 30965 OF 2009 (M) APPENDIX

PETITIONER'S EXHIBITS: EXT.P1: COPY OF ORDER ISSUED BY THE 1ST RESPONDENT DATED 28.09.2009 EXT.P2: COPY OF REVISION PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 15.02.2008 EXT.P3: COPY OF ORDER ISSUED BY THE 2ND RESPONDENT DATED 17.03.2009 RESPONDENTS' EXHIBITS: NIL //// P A

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