TIRIYOGI NARAYAN SINGH,KOLKATA vs. ACIT, CIRCLE-28, KOLKATA

The issue raised in ground no. 1 is against the order of CIT(A) upholding the order of AO confirming the disallowance of Rs. 24,286/- on account of delayed payment of employee’s contribution to Provident Fund and ESI.

At the outset, it is submitted that the issue is squarely covered in favour of the assessee by the decision of Jurisdictional High Court in the case of CIT Vs M/s. Vijay Shree Limited (2014) 43 taxman.com 396 (Cal) wherein the decision of Hon’ble Apex Court in the case of CIT vs Alom Extrusion Ltd. 390 ITR 306(SC) has been followed. The ld AR submitted before us that the Hon’ble Kolkata High Court has held the payment made by the assessee beyond the time as prescribed under the Provident Fund Act but before the due date of filing the return of income u/s 139(1) of the Act as allowable deduction by interpreting the amendment brought about by Finance Act 2003 to proviso to Section 43B of the Act to be curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. The ld AR therefore prayed the order of ld CIT(A) may kindly be reversed by allowing the ground no. 1. The ld DR on the other hand relied on the order of authorities below.

We have heard rival submissions and perused the materials available on record including the decisions cited by the learned counsel for the assessee. The undisputed facts are that employees contribution under the Employees Provident Fund Act was paid beyond the due date as has been stipulated under the Provident Fund Act but before the due date of filing the return u/s 139(1) of the Act. The contention of the learned counsel of the assessee is that since the payment of employees contribution was made before the due date of filing the return u/s 139(1) of the Act, the same deserves to be allowed in terms of ratio laid down in the above decisions cited. We have perused the decision in the case of CIT vs M/s. Vijay Shree Limited (supra) which has been passed by the Hon’ble Calcutta High Court after following the decision of the Apex Court in the case of CIT vs Alom Extrusion Ltd. (supra). We note that the it has been held by

The facts in brief are that the assessee has incurred a sum of Rs. 35,500/- towards donations in connection with Durga Puja and subscriptions given to various association/trusts and claimed the same as business expenditure. The AO during the course of assessment proceedings noted that these expenses have no nexus with the business of the assessee and accordingly called upon the assessee to furnish the details and justify the claim. The AO added the same to the income of the assessee when the assessee failed to reply the same.

In the appellate proceedings, the Ld. CIT(A) upheld the order of the AO observing that the AO correctly disallowed the expenses as there is no nexus between the assessee’s business and these expenses . Even at the appellate stage, the assessee has failed to prove as to how expenses of donations and subscriptions incurred in

After hearing both the parties and perusing on records , we note that these expenses have incurred in connection with the local Kali/Durga puja organized by various clubs/associations the ledger copy whereof is filed at page 35 of the Paper Book. We observe from the examination of the ledger account that these expenses were incurred by way of donations given for Durga/Kali Puja and comprised of donations on various dates amounting to Rs. 9,500/- for Durpa Puja & Shyama Puja, Rs. 20,000/- paid to East Indian Charitable Trust, Rs. 4,000/- to Kalyankrit Sangha and Rs. 2,000/- to Calcutta Port Employees Association. The learned counsel has cited the decision of Bata India reported in 201ITR 884 (Cal) and submitted that although these expenses were not incurred directly in connection with the running and operation of business of the assessee but certainly in connection with the very famous Durga/Kali Puja. After taking into consideration the arguments of both the sides , we find that the Durga/Kali Puja is very famous in Bengal and certainly there is important bearing and relevant to the business of the assessee. Therefore these expenses have to be allowed as the expenses incurred in connection with the business o the assessee as the assessee place of business is located in Kolkata. Accordingly we are inclined to set aside the order of ld CIT(A) on this issue and direct the AO to allow the deduction. Ground No. 2 is allowed.

Ground no. 3 is against the confirmation of disallowance of Rs. 2,625/- by CIT(A) as made by the AO towards interest on late payment of TDS.

The facts in brief are that the AO during the assessment proceedings noted that the assessee is claimed interest of Rs. 2,625/- in the profit and loss account and the same is not admissible expenses in view of the interest being penal in nature. The Ld. CIT(A) confirmed the order of the AO on the ground that non-payment of TDS within time is a default on the part of the assessee in the payment of statutory dues and therefore not allowable.

After hearing parties and perused the material on record, we find that issue is covered in favour of the assessee by the two decisions namely Mahalakshmi Sugar Mills Co. vs CIT 123 ITR 429 (SC) and Lachmandas Mathuradas vs CIT 254 ITR 799 (SC). In the first decision the Hon’ble Supreme Court has held that interest paid u/s 3(3) of the Cess Act cannot be described as a penalty paid for an infringement of law whereas in the second decision, the interest paid the assessee to the Sales-tax Department on arrears of sales tax is held to be an admissible deduction u/s 37(1) of the Act. We, therefore, respectfully follow the same to set aside the order of ld CIT(A) and direct the AO to allow the deduction of interest on late payment of TDS of Rs. 2,625/-.The ground no. 3 is accordingly allowed.

The issue raised in ground no. 4 is against the order of CIT(A) confirming the disallowance of Rs. 25,36,129/- under various heads of expenses namely Oil & Fuel, Truck Running ,Truck Hire Charges and Tyre Expenses etc.

The facts in brief are that the assessee is a heavy goods transporter and is also engaged in cargo lifting business at ports etc. The assessee owns different types of trucks like Heavy Vehicles, Trailer, Tankers, Fork Lift, Hydra, Crane, Reach Stacker etc. Besides

In the appellate proceeding, the Ld. CIT(A) confirmed the order of AO on this issue by observing that the assessee did not produce before the AO the bills and vouchers relating to expenses incurred

After hearing the rival contentions and perusing the records as placed before us , we note that the assessee could not furnish before the AO the bills/vouchers in respect of expenses incurred various heads such as oil & fuel, truck running, truck hire charges and tyre charges etc. citing the reason that due to vast area of operation these bills and vouchers could not be produced as the same are very voluminous and, therefore, the AO made disallowance on estimated basis in proportion to the business turnover. According to the AO, the disallowance was accepted by the counsel of the assessee however the same was denied by the ld AR before ld Ld. CIT(A) as well as before us. We note that though the assessee could not produce the evidences of expenses incurred under various heads as stated above but that does not mean that the business is carried on without incurring expenses. Even the AO has recognized the fact that the assessee has incurred the expenses carrying on the business of transportation and disallowed a fraction of the total expenses for not producing the records for verification. We have also noted that the total turnover of the assessee during the year was Rs. 15,02,78,365/- and the assessee has earned a net profit of Rs. 25,46,086/- from the business of transportation which approximately works out 1.69%. Thus making a disallowance almost of equal amount would be unfair and unreasonable. Under these circumstances it would be fair and reasonable if a lump sum disallowance made to cover the non vouched expenses. Considering all these facts and circumstances, we are of the opinion that Rs. 5 lacs would be reasonable amount of disallowance to cover all the non vouched expenses . Accordingly the

In the result, the appeal of the assessee is partly allowed.