M/S.LAN MARK SHOPS(INDIA) P. LTD,COCHIN vs. THE ACIT, COCHIN

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ITA 182/COCH/2021Status: DisposedITAT Cochin30 November 2022AY 2014-153 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The tribunal dismissed the disallowance for late PF/ESI contribution following the Supreme Court's decision in Checkmate Services. It deleted the disallowance for interest on late TDS deposit by following the Karnataka High Court's ruling. The disallowance for provision for advances was decided in the assessee's favor, following a previous ITAT Cochin decision.

What were the facts?

The assessee appealed against disallowances made by the AO, including late payment of employee's PF/ESI contribution, interest on late TDS deposit, and provision for advances. The CIT(A) had confirmed some of these disallowances.

What were the issues?

Whether disallowance for late payment of employee's PF/ESI contribution is justified, and whether interest on late TDS deposit and provision for advances are deductible.

Which sections of the Income-tax Act were involved?

Section 36(1)(va),Section 201(1A),Section 36(1)(vii)

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Income Tax Appellate Tribunal, COCHIN BENCH, COCHIN

Before: HON’BLE SHRI SATBEER SINGH GODARA, J.M & HON’BLE SHRI MANOJ KUMAR AGGARWAL, A.M

आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member) 1. Aforesaid appeal by assessee for Assessment Year (AY) 2014-15 arises out of the order of learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [CIT(A)] dated 26-08-2021 in the matter of an assessment framed by Ld. Assessing Officer [AO] u/s.143(3) of the Act on 02-12-2016.

1.

2 - 2. The Ld. AR advanced arguments supporting the case of the assessee. The Ld. Sr. DR has controverted the arguments of Ld. AR. Having heard rival submissions, the appeal is disposed-off as under.

3.

The first issue in the appeal is disallowance u/s 36(1)(va) for Rs.72,035/- which has been made on account of late payment of employee’s contribution to PF / ESI by the assessee. This issue is now covered against the assessee by the recent decision of Hon’ble Supreme Court in bunch of appeals titled as Checkmate Services P. Ltd. Vs CIT (Civil Appeal No.2833 of 2016 dated 12.10.2022). Respectfully following the same, this ground is dismissed.

3. The second ground is disallowance of interest of Rs.26,449/- as paid by the assessee u/s 201(1A) on account of late deposit of TDS. We find that this issue stand decided in assessee’s favor by the decision of Hon’ble Karnataka High Court in CIT vs. Oriental Insurance Co. Ltd. (315 ITR 102) which has held that such interest is not penal in nature. Respectfully following the same, we delete the impugned disallowance.

4.

The last ground urged in the appeal is disallowance of provision for advances for Rs.4,30,325/-. Before lower authorities, the assessee has submitted that the provision has been reduced from advances and only net amount has been shown on asset side of the Balance Sheet and therefore, the same would amount to write-off as per the decision of Hon’ble Supreme Court in the case of Vijaya Bank (323 ITR 166). However, Ld. CIT(A) confirmed this disallowance. We find that similar issue, under similar factual matrix, has been decided by Cochin Tribunal in assessee’s favor in the case of Hi-Build Coatings Pvt. Ltd. vs. Addl. CIT (ITA No.310/Coch/2014 order dated 19.09.2014)

3 - wherein the Bench has chosen to follow the cited decision of Hon’ble Apex Court and held that when the amount was reduced from loans and advances, it shall be allowed as deduction u/s 36(1)(vii). Following the same, this issue is decided in assessee’s favor. 5. The appeal stands partly allowed.

Order pronounced on 30th November, 2022.

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