LAXMI NARAYAN YADAVA,NEW DELHI vs. ITO, NEW DELHI

The first ground is general which does not require any separate adjudication.

The ground No.2 is against the sustenance of disallowance of Rs.2,01,121/- out of Vehicle running and maintenance, Depreciation on car and Telephone expenses on account of personal use.

Briefly stated, the facts of the case are that the assessee is an individual who filed return declaring income of Rs.13,49,900/- from his proprietorship concern in the name and style of M/s Ess Bee International engaged in the business of manufacture and export of readymade garments. The AO observed that a total of Rs.20,11,209/- was debited to the Profit & Loss Account on account of Vehicle running and maintenance, Depreciation on car and Telephone expenses. Considering 1/10th towards personal use, the AO made disallowance for a sum of Rs.2,01,121/-, which was sustained in the first appeal.

I have heard the rival submissions and perused the relevant material on record. It is noticed that the assessee is an individual. There is no log book maintained by the assessee to show that vehicle was run and telephone was used only for business purposes. In these circumstances, element of personal user from these expenses cannot be ruled out.

The next ground is against sustenance of the remaining addition at Rs.54,483/- on account of low drawings. The assessee had shown household withdrawals of Rs.2,55,572/-. The assessee was asked to justify the household expenses with reference to the size and status of the family.

Having heard the rival submissions and perused the relevant material on record, I find that the assessee did not furnish any justification for the household withdrawals before the AO. Considering the totality of facts and circumstances prevailing in this case, I am of the considered opinion that the sustenance of addition at this level does not require any interference.

The last ground is against not allowing fresh deduction of Rs.8,01,463/- which was not claimed in the return, but, taken up before the AO. The assessee voluntarily disallowed a sum of Rs.8,01,463/- in his return of income on account of late deposit of ESI and PF, etc. u/s 36(1)(va) of the Act. Upon the advent of the judgment by the Hon’ble Delhi High Court in the case of CIT vs. Aimil Ltd. (2010) 321 ITR 508 (Del), the assessee claimed before the AO that since the amount of ESI and EPF etc., was deposited before the due date u/s 139(1) of the Act and, hence, the same should be allowed as deduction. The AO denied this claim by observing that such a claim was not entertainable otherwise than through a revised return. For this proposition, he relied on the judgement of the Hon’ble Supreme Court in the case of Goetze India Pvt. Ltd. vs. CIT (2006)

Having heard the rival submissions and perused the relevant material on record, it is found as an admitted position that the assessee paid EPF and ESI etc. before the due date of filing the return u/s 139(1) of the Act.

As regards the AO’s point of view about not allowing deduction due to absence of such a claim in the return of income, I find that the Hon’ble Supreme Court in Goetze (India) Ltd. vs. CIT (2006) 284 ITR 323 (SC) has held that though the AO has no power to entertain claim made otherwise than by way of revised return, but, the powers of the appellate authorities are not affected by it. In view of this judgment of the Hon’ble Supreme Court, it is clear that the Tribunal has power to consider the claim made before the AO otherwise than through the return of income.

On merits, I find that the question of deletion of disallowance under such circumstances as are instantly prevailing is no more res integra. The Hon’ble Supreme Court in the case of CIT v. Alom Extrusions Limited [(2009) 319 ITR 306 (SC)] has held that the amendment to first proviso and omission of the second proviso to section 43B by the Finance Act, 2003 is retrospective. The Hon’ble Delhi High Court in the case of CIT v. Aimil Limited [(2010) 321 ITR 508 (Delhi)] has allowed deduction in respect of employees’ share when the amount was paid before the due date. When I consider these two judgments, it becomes patent that both the employer’s and employees’ contribution are allowable as deduction if the amount of provident fund etc., though belatedly, but is paid before the due date of filing of return u/s 139(1) of the Act. Adverting to the facts of the instant case, it is seen as an admitted position that the assessee deposited its and employees’ share in EPF etc. before the due date u/s 139(1) of the Act.

The first issue is against the sustenance of disallowance of Rs.50,000/- out of Vehicle running and maintenance and Telephone expenses. The assessee claimed deduction for a sum of Rs.14,45,318/- under the head ‘Vehicle running and maintenance.’ Considering the personal user by the assessee, the AO made an addition of Rs.50,000/-, which got sustained in the first appeal.

Having heard the rival submissions and perused the relevant material on record, it is seen that the assessee is an individual and has not maintained any log book in respect of vehicle etc. In such circumstances, the element of personal use cannot be ignored. On a holistic basis, I consider the sustenance of disallowance as reasonable. This ground is not allowed.

The only other ground is against not allowing fresh deduction of Rs.1,09,763/- towards late payment of EPF etc., which was not claimed in the return, but, made before the AO. The claim was refused not only by the AO but also the ld. first appellate authority.

After considering the rival submissions, I find that this issue is similar to Ground No.4 raised by the assessee in his appeal for AY 2011-12, which has been allowed hereinabove. Following the same, I reverse the view of the ld. CIT(A) and order for granting deduction of Rs.1,09,763/-. This ground is allowed.