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Income Tax Appellate Tribunal, “A” BENCH, CHENNAI
Before: SHRI N.R.S. GANESAN & SHRI S. JAYARAMAN
आदेश /O R D E R
PER S. JAYARAMAN, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order of the Commissioner of Income Tax (Appeals)-1, Chennai dated 07.11.2016.
:-2-: I.T.A. N0. 212/Mds/2017
M/s. Best & Crompton Engineering Projects Ltd, the assessee, is engaged in doing engineering projects. In the assessment made u/s. 143(3), the assessee’s depreciation claim aggregated to Rs. 31,89,358/- was not entertained by the AO. The AO was of the view that asset under consideration was self-generated by the de-merger company and passed on to the resulting company, being the assessee company. The AO disallowed the claim holding that the department had consistently held that the depreciation is not allowable for the elaborate discussion made on this issue in the earlier years. Further, the AO disallowed delayed remittance of Employee Contribution to PF & ESI at Rs. 1,95,226/- and Rs. 1,47,970/-, respectively, as these payments were not made as per the due date specified and not even paid before the grace period allowed.
The assessee filed an appeal before the CIT(A)-1 Chennai. The CIT(A) in his order in dated 07.11.2016, on the depreciation issue found that the appellant’s own case on similar issue, the Hon’ble ITAT Chennai for the assessment years 2002-03 to 2005-06 has given a finding that Explanation 2 and 2A to section 43(6) of the Income Tax Act is not applicable in the appellant’s case and also given a finding that the hiving off the projects division in the appellant’s own case is not a demerger.
Following it, he directed the AO to allow the depreciation on pre-qualification rights and technical proprietary information of Rs. 31,89,358/-. On the issue
:-3-: I.T.A. N0. 212/Mds/2017 of disallowance of delayed remittance of employee contribution to PF & ESI the assessee contested before the CIT(A) that the impugned amounts were paid within the due date for filing the return as stipulated under provision to section 43B which is 30.09.2013, the CIT(A) observed that “it will serve useful purpose to refere to Circular No 22/2015 dated 17.12.2015 in F. No. 279/Misc./140/2015-ITJ. It has been clarified therein, that the Apex Court decision in the case of CIT Vs. Alom Extrusions Ltd 185 Taxmann416 has been accepted with regard to the employer’s contribution to the PF Fund or Superannuation Fund or Gratuity Fund if deposited on or before the due date.
No disallowance could be made u/s. 43B of the Act. It has also been clarified that the circular does not apply to claim of deduction relating to employees’ contribution to Welfare Funds governed by a s. 36(1)(va). However, in view of the jurisdictional High Court’s decision dated 24.07.2015 in the case of CIT Vs Industrial Security and Intelligence India (P) Ltd in TC(A) No. 585 & 586 of 2015 and MP No. 1 of 2015, it has been held therein placing reliance on the Delhi High Court’s decision in the case of Aimil Ltd 321 ITR 508, that if the assessee had deposited employees contribution towards PF and ESI after the due date as prescribed under the relevant Act, but before the due date of filing of the return under the Income Tax Act, no disallowance could be made in view of the provisions u/s. 43B as amended by Finance Act, 2003.” Thus respectfully following the ratio laid down by the Hon’ble High Court, the :-4-: I.T.A. N0. 212/Mds/2017 CIT(A) allowed the assessee’s appeal. Aggrieved, the revenue filed this appeal.
The DR submitted his arguments on the lines of ground of appeal. Per contra, the AR submitted a copy of this Tribunal decision in & 647/Mds/2016 for the assessment year 2011-12 dated 28.02.2017 and relied on the decision.
We have considered the rival submissions and gone through this Tribunal order. The relevant portion of the order, supra, is extracted as under:
“6. We have considered the submissions of the Ld. D.R., and perused the material available on record. The assessee claimed depreciation on the technical proprietary information and prequalification rights which was said to be transferred by the parent company. This issue was examined by the Tribunal in the assessee’s own case for the assessment years 2002-03 to 2005-06 in to 1678/Mds/2008 dated 20.04.2011. This Tribunal apparently placed its reliance on the judgment of the Supreme Court in Techno Stocks and Shares v CIT 327 ITR 323 and found that the assessee is eligible for depreciation. The CIT (Appeals) by placing reliance on the order of this Tribunal allowed the claim of the assessee. Now, the Revenue claims that an appeal was already filed before the high Court against the order of this Tribunal and it
:-5-: I.T.A. N0. 212/Mds/2017 is pending. This Tribunal is of the considered opinion mere pendency of an appeal before the high court cannot be a reason for taking a different view. It is not the case of the Revenue that the order of this Tribunal was stayed by the High Court. In those circumstances, this Tribunal is of the considered opinion the CIT (Appeals) has rightly placed his reliance on the order of this Tribunal and allowed the claim of depreciation. Accordingly, this Tribunal do not find any reason to interfere with the order of the lower authority and the same is confirmed. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
We have considered the submissions of the Ld. D.R., and perused the material available on record. Both the employees’ and employer contribution has to be allowed on payment before the due date for filing the return of income in view of Section 43B of the Act. In this case, the assessee claims that the employees’ contribution was paid to the account of the Government before the due date for filing the return of income under Section 139(1) of the Act. However, the Assessing Officer has no occasion to exempt the actual payment said to be made by the assessee. Therefore, the CIT (Appeals) has directed the Assessing Officer to verify the exact date of payment and allow the claim of the assessee provided the same was paid within the due date provided under Section 139(1) of the Act. This Tribunal is of the considered opinion, in view of the judgment of Madras High Court in Nexus Computer (P) Ltd supra, the payment made before the due date of filing
:-6-: I.T.A. N0. 212/Mds/2017 of return of income under Section 139(1) of the Act has to be allowed. Accordingly the Assessing Officer needs to verify the exact date of payment of employees’ contribution to the PF account and if it is paid before the due date for filing of return of income, the same has to be allowed as found by the CIT(Appeals). Therefore this Tribunal do not find any reason to interfere with the order of the lower authority. Accordingly the same is confirmed. “
Since, this Tribunal has examined those issues in the appellant’s case in the earlier years and passed the above order, following it, the revenue’s appeal is dismissed.
In the result, the revenue appeal is dismissed.
Order pronounced on Wednesday, the 07th day of June, 2017 at Chennai.