JAGANNATH POLYMERS LIMITED,CUTTACK vs. ACIT, CIRCLE-1(1), CUTTACK

IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK BENCH, CUTTACK

BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER AND PAVAN KUMAR GADALE, JUDICIAL MEMBER

ITA No. 145/CTK/2016 Assessment Year : 2012-2013

Jagannath Polymers Limited, Vs. ACIT, Circle 1(1), Cuttack Shastri Nagar, Naya Bazar, Cuttack PAN/GIR No.AAACJ 5664 L (Appellant) .. ( Respondent)

Assessee by : Shri B.V.R.Swamy, AR Revenue by : Shri D.K.Pradhan, DR

Date of Hearing : 23/08/ 2017 Date of Pronouncement : 28 /08/ 2017

O R D E R Per N.S.Saini, AM This is an appeal filed by the assessee against the order of the

CIT(A)-Cuttack, dated 18.2.2016 for the assessment year 2012-2013.

separate adjudication by us.

erred in confirming the addition made by the Assessing Officer towards

employees contribution to ESI of Rs.54,146/- and PF of Rs.3,68,277/-.

not deposited employees contribution to ESI of Rs.54,146/- and to PF of

Rs.3,68,277/- within the prescribed limit given under the respective Act.

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Therefore, the Assessing Officer disallowed the amount as per provisions

of section 2(24)(x) r.w.s 36(1)(va) of the Act.

contribution to PF and ESI was allowable deduction to the assessee if the

same was deposited within the due date of filing the return of income

u/s.139(1) of the Act. He submitted that it will be observed from the

assessment order that the payments are made by the assessee before

due date of filing the return of income u/s.139(1) of the Act and,

therefore, the deduction should be allowed.

authorities and materials available on record. In the instant case, it is not

in dispute that the employees’ contributions to PF of Rs.3,68,277/- and

ESI of Rs.54,146/- were deposited by the assessee before due date of

filing the return of income u/s.139(1) of the Act. The Hon’ble Delhi High

Court in CIT Vs. AIMIL Limited [2010] 321 ITR 508 (DEL) has held that

the employees’ contribution towards EPF and ESI etc. deposited after the

due date but before the time allowed for filing the return u/s.139(1) will

not call for any disallowance u/s.36(1)(va). Therefore, we set aside the

orders of lower authorities and delete the disallowance of employees

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contribution to PF of Rs.3,68,277/- and ESI of Rs.54,146/- and allow this

part of ground of appeal of the assessee.

erred in confirming the canteen expenses of Rs.43,220/- and viswakarma

puja expenses of Rs.74,926/- and puja expenses of Rs.1130/-.

assessee has incurred total expenditure of Rs.4,71,151/- towards running

a canteen. Since the bills and vouchers were not properly maintained by

the assessee, the Assessing Officer taking into nature and volume of

business, disallowed Rs.43,220/- u/s.37 of the Act out of total claim of

Rs.4,71,151/- by the assessee. The Assessing Officer further found that

the assessee has debited an amount of Rs.74,926/- and Rs.1130/-

towards viswakarma Puja & puja expenses, respectively. Since the

assessee could not explain before the Assessing Officer how such

expenditure relates to business of the assessee, the Assessing Officer

disallowed the amount of Rs.76,056/- and added the same to the income

of the assessee.

authorities and materials available on record. In the instant case, the

assessee has claimed canteen expenses of Rs.4,71,151/-. The Assessing

Officer disallowed Rs.43,220/- out of canteen expenses on the ground

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that the vouchers were not properly maintained and in appeal, the action

of the Assessing Officer was upheld. We find that the assessee has

incurred these expenses voluntarily for the general welfare and benefit ot

the employees. Such expenditure has nexus with the conduct of business

and the expenditure incurred for maintaining for cordial relations with the

employees is an expenditure for the carrying on of a business. It is not

the case of the revenue that the assessee has not incurred the amount for

the welfare of the employees, therefore, the amount is deductible

under Section 37 of the Income Tax Act. Hence, we allow this part of the

ground of appeal.

the decision of the Mumbai Benches of the Tribunal in the case of Deloitte

Haskins & Sells vs ACIT (2017) 155 TR (A) 609 (Mum), wherein, it has

been held that satyanarayan puja is done at the business premises for the

larger interest of the professional and employees of assessee firm. It was

more in the nature of goodwill gesture and keeping good relationship and

environment amongst the colleagues. If any expenditure which was

incurred for the general benefit of the professional and employees, the

same could not be held to be incurred for non-business purposes.

Therefore, the Tribunal allowed the puja expenses. In the instant case

also, the assessee has incurred puja expenses for Viswakarma Puja and

other puja in the vicinity of the company. Therefore, respectfully

following the decision of Mumbai Benches of the Tribunal in the case of

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Deloittee Haskins & Sells (supra), we delete the puja expenses of Rs.

Rs.76,056/-.

Order pronounced in the open court on 28 /08/2017. Sd/- sd/- (Pavan Kumar Gadale) (N.S Saini) JUDICIALMEMBER ACCOUNTANT MEMBER Cuttack; Dated 28 /08/2017 B.K.Parida, SPS Copy of the Order forwarded to : 1. The Appellant : Jagannath Polymers Limited, Shastri Nagar, Naya Bazar, Cuttack 2. The Respondent. ACIT, Circle 1(1), Cuttack 3. The CIT(A)- Cuttack 4. Pr.CIT- Cuttack 5. DR, ITAT, Cuttack 6. Guard file. //True Copy// BY ORDER,

SR.PRIVATE SECRETARY ITAT, Cuttack