DCIT, CIR-10(2), KOLKATA, KOLKATA vs. M/S S & IB SERVICES PVT. LTD., KOLKATA

It is noticed that neither the assessee nor any one appeared for the assessee nor any application filed seeking adjournment. Therefore, we proceed to hear the ld.DR for the appellant and dispose of the appeal on merits and by perusing the material available on record.

Ground no.1 is relating to allowance of depreciation @ 30% on written down value of motor cars.

As per Form 3CD, the AO found that the assessee claimed depreciation @ 30% on Written down value of motor car used for commercial purposes. The assessee was asked why such depreciation will not be restricted to 15% on WDV. Before the AO the assessee submitted that motor buses, motor lorries and motor taxies are used in a business running on hire and the assessee is entitled to avail

Before the CIT-A the ld.AR of the assessee has relied on following case laws in support of the contention:- In the case of Magma Fincorp Ltd Vs. ACIT Reported in (2010) 128 TTJ 715(Kol) of ITAT Kolkta.

The CIT-A after considering the above case laws and submissions of assessee directed the AO to apply the depreciation @ 30% as claimed by the assessee and to delete the addition made in this regard. Relevant portion of the CIT-A order on this issue is reproduced herein below:- “5.2 I have considered the contention of the AR of the appellant in the matter in the backdrop of the assessment order I have also considered the judicial precedence in this regard. I find that the decision of the Hon'ble Mumbai Tribunal in case of CIT vs. M/s. Brinks Arya India Pvt. Ltd. [I. T.A. No. 8455/Mum/2010] wherein the Tribunal has held that if the assessee is engaged in the business of transportation of cash,valuables belonging to the third parties. for which it uses motor lorries customized as Armoured/Security vans and further that these Armoured/Security vans are customized motor lorries which are used in the business of running them on hire for transportation of valuables, thus depreciation thereon is allowable at higher rate to be applicable in the appellant's case as well. The judgment of the Apex Court in the case of Union of India and Others vs. Kamlakshi Finance Corporation reported in AIR 1992 SC 711 as referred to by the AR has also been considered. I find the findings of the AO on this point in his order to be not in consonance with the decision of the Hon'ble Mumbai Tribunal in case of CIT v M/s. Brinks Arya India Pvt. Ltd. [I.T.A. No. 8455/Mum/2010 supra. Therefore, going by the judicial precedence. I do not find any avenue to sustain the action of the AO in charging 15% as depreciation on the vehicles used for the purpose as discussed in the foregoing as against the claim @ 30% by the appellant. In view of this the AO is directed to apply the rate of 30% on account of depreciation on the vehicles as discussed in the foregoing. The addition made on this count is deleted. This ground is therefore allowed.”

Before us the ld. DR relied on the order of the AO in adopting the rate of deprecation @ 15% on WDV of motor cars. He also submits that the CIT-A has erred in allowing the same @ 30% instead of 15% as applied by the AO.

Heard the ld. DR and perused the record. We find that the case law relied on by the assessee in the case of Magma Fincorp Ltd of Kolkata Tribunal reported in (2010) 128 TTJ 715 (Kol), which in turn relied on a decision of Hon’ble Jurisdictional High Court of Calcutta in the case of Agarwal Finance, which held that if the motor cars are used by the assessee in the business of running them on hire, the claim of higher rate of depreciation is maintainable. We find that the assessee is engaged in the business of transportation of cash and valuables belonging to the third parties, for which it uses motor lorries customized as armoured vehicles. The security vans are customized, used for transportation of cash and valuables on hire and, therefore, we find the ratio of the decision of Calcutta High Court in the case of Agarwal Finance is applicable and the depreciation is allowable at higher rate. The CIT-A was justified in directing the AO and in allowing @ 30 depreciation as claimed by the assessee. We find no infirmity in the impugned order of the CIT-A and it is justified. Thus, ground no. 1 raised by the revenue is dismissed.

The next effective issue is to be decided as to whether the CIT- A is justified in deleting the impugned addition of Rs.86,28,073/- made u/s. 2(24) r.w.s 36(1)(va) of the Act towards employees’ contribution to PF in the facts and circumstances of the case.

The AO found that the assessee company received the sum of Rs.86,28,073/- from its employees towards Employees ‘Contribution to Provident Fund, which was deposited by the assessee after the due date of payment claimed the same as allowable expenditure by relying on its own order decided by ITAT Kolkata, wherein it has been held that PF/ESI are allowed, when the same was deposited before furnishing of return of income. But, the AO was of the view that since

Aggrieved by such order of the AO, the assessee preferred an appeal before the CIT-A. Before him the assessee has relied on various case laws in support of its claim.

The CIT-A after considering the submission and the case laws as relied on by the assessee directed the AO to delete the impugned addition. The CIT-A in his order has also held that amounts on account of Employees’ Contribution to Provident Fund were deposited well before the date of filing of return of income u/s. 139(1) of the Act and directed to be deleted on this issue.

Before us the ld. DR relied on the order of the AO in making the impugned addition on this issue. He also relied on the judgment of Hon’ble Gujarat High Court in the case of CIT Vs. GSRTC and prayed to allow the appeal of revenue.

Heard the ld. DR and perused the record. We find that the issue in hand is squarely covered by the decisions of the Hon’ble Supreme Court and High Court of Calcutta High Court in the cases of Vinay Cement Ltd, Alom Extrusions Ltd reported in (2009) 313 ITR (St.1)(SC), in (2009) 319 ITR 306(SC) respectively and Vijay Shree Ltd. We find that the impugned amount towards employees’ contribution to Provident Fund were deposited well before the due date of filing of return. We find that the Hon’ble High Court of Calcutta in the case of Vijay Shree Ltd supra has upheld the finding of the Tribunal basing on same identical facts on the ratio of decision as laid down by the Hon’ble Supreme Court in the case of Alom

The Hon’ble Supreme Court found that the amendment to 1st proviso to Section 43B extended the benefit of deduction of tax to contributions to Employee’s Provident Fund, superannuation fund and other welfare funds on par with duty, cess and fee and, whereby, the Hon’ble Supreme Court held that bringing the uniformity to the contributions of Employee’s Provident Fund, superannuation fund and other welfare funds on par with duty, cess and fee came into force with effect from 01-04-2004 by Finance Act, 2003, was curative in nature and should be read as retrospective and shall operate from 01-04-1988 when the 1st proviso was actually inserted. The relevant portion of which is reproduced herein below:

Applying the principle as laid down by the Hon’ble Supreme Court in the aforementioned case as followed by the Hon’ble High Court of Calcutta to the present case, We may usefully read the 1st proviso as amended by Finance Act 2003 as under:

A plain reading of the aforementioned proviso explains that the deduction is available that if the employer deposits the contributions collected from its employees to any fund created for the welfare of the employees beyond due date of payment in terms of the amendment to 1st proviso to Section 43B of the Act and within the due date of filing return of income.

In the present case, the CIT-A found satisfied with the submissions of the assessee that the impugned amounts were paid before filing return of income. Therefore, respectfully following the decision of the Hon’ble High Court of Calcutta in the case of Vijay Shree Ltd supra, we hold that the Assessee is entitled to claim deduction as per 1st proviso to Section 43B of the Act and the order of the CIT-A is justified and needs no interference. Therefore, the employees’ contribution to PF can be paid before the due date of filing of return of income. We find no infirmity in the impugned order of the CIT-A and it was justified. Thus, the ground raised by the revenue in this regard is dismissed.

In the result, the appeal filed by the revenue is dismissed. Order pronounced in the open court on 06-12-2017