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Income Tax Appellate Tribunal, DELHI BENCH “SMC”, NEW DELHI
Before: SHRI R. K. PANDA
O R D E R
PER R. K. PANDA, AM :
This appeal filed by the assessee is directed against the order dated 21.06.2017 of CIT(A)- 35, New Delhi relating to assessment year 2013-14.
Despite service of notice, none appeared on behalf of the assessee. Therefore, this appeal is being disposed of on the basis of material available on record and after hearing the ld. DR. 3. Facts of the case, in brief, are that the assessee is a Private Limited Company incorporated on 20.01.1998 and is engaged in the business of manufacturing of PVC Chappals and Footwear Soles etc.. It filed its return of income on 07.09.2013 declaring total income of Rs.2,49,609/-. The Assessing Officer completed the assessment u/s 143(3) determining the total income of Rs.14,26,960/- by making the following three additions :-
(a) Disallowance of depreciation on Motorcycle and Motorcycle Running and Maintenance - Rs.4,02,183/- (b) Addition on account of interest on income-tax refund - Rs.2,91,111/- (c) Disallowance of expenses u/s 36(1)(va) on account of delayed payment of Employee’s Contribution of ESI and EPF - Rs.4,84,056/-
In appeal, the ld. CIT(A) upheld the action of the Assessing Officer for which the assessee is in appeal before the Tribunal by raising the following grounds :-
“1) Whether on facts and under the circumstances and in law, the learned CIT(A) was justified in confirming addition on account of depreciation of Rs.2,81,564/- on the Motorcycle and Rs.1,20,619/- towards Motorcycles Running & Maintenance expenses, provided to the Director of the Company for discharging, attending and executing the business obligation of the appellant company. The action based on presumptions and assumptions is liable and urged to be deleted. 2) Whether on facts and under the circumstances and in law, the learned CIT(A) was within the law in confirming addition on account of Interest on Income Tax Refund of Rs.2,91,111/- generated by the CPC-Bangalore and suo-motto adjusted against the outstanding demands in arrear without any intimation and in the absence of notice u/s. 245 of the Act; in as much as, interest on income-tax refund is not appearing in Form 26AS. The uncalled for action is liable and urged to be set aside. 3) Whether on facts and under the circumstances and in law, the learned CIT(A) was within the law in confirming addition on account of delayed payment of EPF and ESI of Rs.4,84,056/- (Employees Contribution) with the interpretation that the amount deposited beyond due date as provided under the relevant statute, thereby, ignoring the CBDT Circular no. 22.2015, dated 17.12.2015. The arbitrary disallowance is liable and urged to be deleted. 4) The appellant craves to be allowed to add any fresh/additional grounds of appeal and/or withdraw, modify and of the grounds of appeal either before or at the time of hearing of appeal.”
5. So far as first ground is concerned, the same relates to addition on account of depreciation of Rs.2,81,564/- on the Motorcycles and Rs.1,20,619/- towards Motorcycles Running & Maintenance expenses provided to the Director of the assessee company. Since the assessee is a Private Limited company, therefore, depreciation on Motorcycle and Motorcycle Running & Maintenance expenses cannot be disallowed as an expenditure being personal in nature in the hands of the assessee company. The addition, if any, can be made in the hands of the Directors as perquisite and no disallowance can be made in the hands of the assessee company. For the above proposition I find support from the decision of the Hon’ble Gujarat High Court in the case of Sayaji Iron & Engineering Co. vs. CIT reported in 253 ITR 749. I, therefore, set-aside the order of the ld. CIT(A) on this issue and direct the Assessing Officer to delete the disallowance so made.
6. So far as the second ground is concerned, the same relates to the order of the ld. CIT(A) in confirming the addition on account of interest on income-tax refund. Since the assessee has received interest of Rs.2,91,111/- on the income- tax refund during the impugned assessment year, therefore, the same in my opinion is taxable in the hands of the assessee company. Therefore, the order of the ld. CIT(A) on this issue is upheld and the ground raised by the assessee is dismissed.
7. So far as the third ground is concerned, the same relates to the order of the ld. CIT(A) in confirming the addition of Rs.4,84,056/- on account of delayed payment of employees’ contribution to EPF and ESI.
8. A perusal of the order of the ld. CIT(A) shows that the assessee has deposited the employees’ contribution to EPF and ESI after the due date prescribed in the said provisions but before the due date of filing of the return u/s 139(1) of the I.T. Act. Such details have been reproduced by the ld. CIT(A) in his order at page 5 which gives the details as under :-
Month Amount Actual Date Due Date April, 2012 92,809/- 28.05.2012 15.05.2012 Dec., 2012 1,09,087/- 21.01.2013 15.01.2013 Feb., 2013 1,34,738/- 22.03.2013 15.03.2013 Mar., 2013 1,47,422/- 01.05.2013 15.04.2013 Total 4,84,056/-
Since the assessee in the instant case has admittedly deposited the employees’ contribution to PF and ESI before the due date of filing of the return, therefore, following the consistent decisions of the Co-ordinate Bench of the Tribunal that disallowance cannot be made on account of delayed payment of EPF and ESI paid before the due date of filing of the return, I set-aside the order of the ld. CIT(A) and direct the Assessing Officer to delete the addition.
The third ground raised by the assessee is accordingly allowed.
In the result, the appeal filed by the assessee is partly allowed. Order pronounced in the open Court on this 30th day of October, 2017.