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Income Tax Appellate Tribunal, “B” BENCH: KOLKATA
Before: Shri J. Sudhakar Reddy & Shri S.S. Viswanethra Ravi
ORDER Shri S.S.Viswanethra Ravi, JM:
This appeal by Assessee is arising out of order dated 24-06- 2015 of Commissioner of Income Tax (Appeals), for short CIT(A) herein, 2, Kolkata for the assessment year 2003-04.
Ground no.1 is general in nature and requires no adjudication. Hence, the same is dismissed.
Ground nos. 2 & 3 are read together raised regarding the addition made by the AO on account of employees’ and employer’s contribution to P.F Rs. 74,430/- & Rs.7,39,504/- beyond the due date u/s. 2(24)(x) r.w.s 36(1)(va) and section 43B(ii) of the Act.
The assessee is a company and engaged in manufacturing & trading in tea and property. The AO added the amount of Rs. 10,29,905/- and Rs. 9,16,568/- towards employees’ and employer’s contribution to PF for nonpayment of the same within stipulated time prescribed under section 2(24)(x) r.w.s 36(1)(va) of the Act. Before
ITA No. 1190/Kol/2015 Page | 1 the AO the assessee stated that the manager and superintendent of the assessee company was empowered to grant PF and settle the PF dues on retirement and the tea estate of the assessee was in remote area and the said delay caused due to the said fact. In support of the contention, the assessee relied on ITAT’s order in ITA No. 1400/K/03. The AO also found that neither in the IT Act nor in the AIPPF Act that there is any relaxation ( apart from the grace period for payment) in the date of payment of PF. However, the AO has not accepted the submissions of assessee including the said order of the ITAT and by invoking the provisions of section 2(24)(x) r.w.s 36(1)(va) of the Act added the impugned amount of Rs.10,29,905/- towards employees’ contribution to PF.
Similarly, on perusal clause 21(ii)(B) of the Tax Audit Report filed along with the return the AO further found that the assessee did not deposit the amount of Rs.9,16,568/- towards employer’s contribution to PF beyond the due date required u/s. 43B(ii) of the I.T Act. In view of above, he also added the sum of Rs.9,16,568/- to the total income of the assessee.
Before the CIT-A the assessee in support of its contention relied on various following case laws:-
• CIT Vs. J.H Gotla 156 ITR 323 (SC) • K.P Verghese Vs.ITO 131 ITR 597(SC) • CIT Vs. Alom Extrusion Ltd 319 ITR 306(SC) • CIT Vs. Vijyashree Ltd ITAT No. 245 of 2011 • GA No. 2607 of 2011(Cal. H.C) • Assessee’s own case ITAT Kolkata ‘A ‘Bench order for the A.Y 1998-99
The CIT-A after considering the submissions and case laws mentioned hereinabove restricted the addition to Rs.74,430/- by stating as under:-
Decision : During the course of hearing and in the written submission the ld.A/R had placed reliance on the decision held by the Hon’ble ITAT in the appellant’s own case for the assessment year 1998-99 wherein the same facts were considered and the Hon’ble ITAT has given the verdict in favour of the assessee deleting the addition. The appellant has also invited attention towards the decision taken on similar issues by he Hon’ble apex court and jurisdictional High Court wherein it is held that “The amendment to the second proviso to section 43B of the Income Tax Act, 1961 as introduced by the Finance Act, 2003 was curative in nature and is required to be applied retrospectively w.e.f 01.04.1998. Such being the case the Employee’s Contribution to PF can be paid before the due date of filing of return. In the instant case the appellant has Page | 2 paid the Employees’ Contribution to PF to the concerned authority before filing its income tax return in due time except for an amount of Rs.74,430/-, which was not deposited. The A.R argued that the addition towards Employees ‘Contribution to PF amounting to Rs. 10,29,905/- should be deleted. In view of the A.R’s submission and the verdicts of the Hon’ble Courts, hence the addition is limited to Rs.74,430/-. In view of the above said I have no hesitation in holding that the assessee succeeds on this ground partly. “ 8. Regarding the addition of Rs. 9,16,568/- towards employer’s contribution to PF made u/s.43B(ii) of the Act, the CIT-A restricted the same to the tune of Rs.7,39,504/- by observing as under:-
Decision: From the perusal of the submission and argument made by the A.R and the decisions relied upon, the addition made on the ground of default in payment of Employer’s Contribution to PF is restricted to the tune of Rs.7,39,504/-. “ 9. Before us the ld.DR relied on the order of the AO in making the impugned additions on account of employees’/employer’s contribution to P.F (Rs.10,29,905/-) & (Rs.9,16,568/-) beyond the due date prescribed u/s. 2(24)(x) r.w.s 36(1)(va) and section 43B(ii) of the Act. He also submits that the CIT-A has erred in restricting the same as the same was paid beyond the due date specified u/s. 2(24)(x) r.w.s 36(1)(va) and section 43B(ii) of the Act and prayed to allow these grounds of appeal raised by the revenue.
On the other hand, the ld.AR relied on the impugned order of the CIT-A in doing so. He reiterated his same submissions made before the CIT-A in support of claim of the assessee.
Heard rival submissions and perused the material and the case laws relied on by the assessee before the CIT-A. We find that the Tribunal in assessee’s own case for the A.Y 1998-99 has given relief to the assessee by placing reliance on various decisions of the Hon’ble Supreme Court and High Courts. We further find that the Hon’ble Apex Court/Jurisdictional High Court held that the amendment to the second proviso to section 43B of the Act as introduced by the Finance Act, 2003 was curative in nature and is required to be applied retrospectively w.e.f 01-04-1998. Therefore, the employees’ contribution and employer’s contribution to PF can be paid before the due date of filing of return of income. The CIT-A in his order has discussed the case laws as relied on by the assessee
ITA No. 1190/Kol/2015 Page | 3 before him and found that the assessee deposited to the extent, which was allowed by him before filing of return of income. We find no infirmity in the impugned order of the CIT-A and it was justified. Thus, the ground nos. 2 & 3 raised by the revenue are dismissed.
Ground no.4 is relating to deletion of addition of Rs.85,11,138/- on account of bad debt written off.
The AO for not substantiating the return of income and non- compliance of notice issued u/s. 143(2) of the Act added an amount of Rs.85,11,138/- on a/c of bad debts written off.
The CIT-A by placing his reliance on the decision of Hon’ble Supreme Court in the case of TRF Limited Vs. CIT deleted the impugned addition of Rs.85,11,138/- by observing that it is not necessary to establish the bad debt after April 1989 that, if the assessee writes off bad debt in its books of account , the assessee is entitled to claim deduction. Relevant portion of CIT-A order is reproduced herein below:-
Decision: During the course of hearing the Ld.AR argued and cited decision by the Hon’ble Apex Court and High court. The ld.A.O also drew attention towards the provision of section 36 of the act along with the decision held by the apex court in the case of TRF Limited Vs. CIT wherein it was held that “after April 1989 it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable. It is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.” The Ld.AR has also drawn attention towards the profit & Loss account along with the notes attached therewith evidencing that the amount written off during the year is of interest nature which is credited to the profit & loss account. In the facts of the case, relying upon the decision taken by the Hon’ble apex court and submission made by the Ld. A.R addition made on account of sundry balance written off to the tune of Rs.85,11,138/- is deleted.”
The ld.DR submitted that no details were submitted by the assessee before the AO and nothing was brought on record by the assessee that the bad debt was written off in the year under consideration in its books of account and, therefore, prayed to remand the issue to the AO for his fresh consideration.
On the other hand, the ld.AR submitted that the assessee produced the balance sheet before the AO and referred to clause 13A of the said balance sheet and argued that inspite of having these details the AO did not consider the same and made the impugned Page | 4 addition. But, however, the ld.AR agreed to the submissions of the ld.DR in remitting the matter to the file of the AO. In view of above, we remit the issue to the file of the AO for his fresh consideration. Thus, ground no.4 raised by the revenue is allowed for statistical purpose.
Ground no. 5 is relating to addition of Rs.21,19,607/- on account of non-submission of details of opening stock of flats.
The AO found that the assessee did not make any entries regarding the purchase and sale or closing stock of flats. According to AO, the assessee did not produce the books of account and for non reflection of entries regarding purchase and sale or opening stock in the Profit/Loss A/c & Balance sheet added the impugned amount of Rs.21,19,160/- to the total income of the assessee.
The CIT-A on perusal of the Profit/Loss account with that of detailed chart showing valuation of closing stock by the assessee deleted the said addition. The ld.DR opposed to the finding of the CIT-A as no details were submitted to the AO by the assessee. The CIT-A did not seek any remand report from the AO. The ld.DR prayed to remand the issue to the file of the AO for his fresh consideration. On the other hand, the ld.AR of the assessee did not object to the same. Having considered the arguments of both the parties, we remit the issue to the file of the AO for his fresh consideration. Ground no. 5 is allowed for statistical purpose.
In the result, the appeal of the revenue is partly allowed for statistical purpose.
Order pronounced in the open court on 13.12.2017.