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Income Tax Appellate Tribunal, “A” BENCH: KOLKATA
Before: Shri Mahavir Singh, JM & Shri M. Balaganesh, AM]
Per Shri Mahavir Singh, JM: All these three appeals by assessee are arising out of separate orders of CIT(A)-I, Kolkata vide Appeal Nos. 623/CIT(A)-1/Cir-2/07-08, 652/CIT(A)-1/Cir-2/07-08 and 597/CIT(A)-1/Cir- 2/09-10 dated 02.08.2011 respectively. Assessments were framed by ACIT, Cir-2, Kolkata u/s. 254/143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for Assessment Years 2003-04, 2005-06 and 2007-08 vide his separate orders dated 28.12.2007, 26.12.2007 and 14.12.2009 respectively.
At the outset, it is noticed that these three appeals by assessee are barred by limitation by 27 days and assessee has filed condonation petition stating the reasons that the Chairman of the Board was out of India for Government official duties for more than two months and finally Chairman joined on 09.12.2011. The assessee should have filed appeal on or before 25.11.2011 as the order of CIT(A) was received on 26.09.2011. But appeal was actually filed on 22.12.2011. Thereby the delay of 27 days but only with a cause that the Chairman has to sign the appeal papers, who was on government official duties and was out of India. When these were confronted to Ld. Sr. D.R, he could not contest the same. In view of the above reasons filed by the assessee, we condone the delay and admit the appeals.
2 ITA No.1761-1763/Kol/2011 WB State Warehousing Corporation AY 2003-04, 2005-06 & 2007-08 3. The only issue in ITA No.1761/Kol/2011 for AY 2003-04 of assessee’s appeal is as regards to the order of CIT(A) confirming the action of AO in disallowing provision for gratuity amounting to Rs.42,27,977/- for the reason that the LIC fund was not registered with the CIT. 4. We have heard rival submissions and gone through facts and circumstances of the case. The AO disallowed provision for gratuity for the reason that the gratuity fund of LIC of assessee is not approved by CIT and according to him, contribution or provisions towards an approved gratuity fund is allowable only. The CIT(A) also confirmed the action of the AO. Aggrieved, now assessee is in second appeal before Tribunal. 5. We find from the facts of the case that the assessee has applied for approval of gratuity fund and despite numerous reminders the CIT has not taken any action. We find that there is no fault on the part of the assessee and the CIT has not raised any dispute contrary to the application till date. We also find that the assessee has filed several reminders but of no avail. In such circumstances, we are of the view that there is no fault on the part of the assessee and approval can be treated as deemed approval and assessee is allowed to take benefit of provision for gratuity. Accordingly, this issue of assessee’s appeal is allowed. 6. The next issue in assessee’s appeal in ITA No. 1763/Kol/2011 is for AY 2007-08 is as regards to the order of CIT(A) confirming the disallowance made by AO being amortised value of cost of boundary wall on leasehold land and claimed the expenditure as revenue. 7. We have heard rival submissions and gone through facts and circumstances of the case. We find that the assessee claimed a sum of Rs.44,628/- being amortised value of cost of boundary wall on leasehold land for const of construction of boundary wall being expenditure of improvement of cost of land. The AO and CIT(A) dismissed the claim of the assessee. Before us, it was claimed that it is in the nature of depreciation and fixed amount of expenditure for the cost of boundary wall was equally spread over for the period of lease. We find that the AO has taken the cost of boundary wall as cost improvement and the assessee has claimed the same as amortization of such expenditure but section 35D of the Act does not provide amortization of expenses which are capital in nature. Accordingly, we confirm the order of CIT(A) and this issue of assessee’s appeal is dismissed. 8. The next common issue in ITA No. 1763&1762/Kol/2011 for AY 2005-06 and 2007-08 is as regards to the order of CIT(A) disallowing leave salary amounting to Rs. 22,09,962/- and Rs.19,57,355/-.
3 ITA No.1761-1763/Kol/2011 WB State Warehousing Corporation AY 2003-04, 2005-06 & 2007-08
At the time of hearing, Ld. Counsel for the assessee argued that this issue is pending before Hon’ble Supreme Court in the case of Exide Industries Ltd. Vs. Union of India (2007) 292 ITR 470 (Cal) but he fairly conceded that subsequently Hon'ble Supreme Court has stayed this judgment of Hon'ble jurisdictional High Court vide order 08-05-2009 by following observations:- “Pending hearing and final disposal of the Civil Appeals, Department is restrained from recovering penalty and interest which has accrued till date. It is made clear that as far as the outstanding interest demand as of date is concerned, it would be open to the Department to recover that amount in case Civil Appeal of the Department is allowed. We further make it clear that the assessee would, during the pendency of this Civil Appeal, pay tax as if section 43B(f) is on the Statue Book but at the same time it would be entitled to make a claim in its returns.”
In view of the above, Ld. counsel for the assessee fairly stated that let Hon'ble Supreme Court decide the issue and by that time the matter can be remitted back to the file of AO for fresh adjudication in term of the decision of Hon'ble Supreme Court. On this, Ld. CIT DR has not objected to the same. Accordingly, we set aside this issue to the file of the AO to await the decision of Hon'ble Supreme Court and decide the issue accordingly. This issue of assessee’s appeals is remitted back to the file of AO and allowed for statistical purposes. 10. The next issue in ITA No. 1762/Kol/2001 of assessee’s appeal is as regards to the order of CIT(A) confirming the addition of Rs.4,59,124/- u/s. 41(1) of the Act by brought forward of liabilities from past several years and not ceased yet. For this, assessee has raised following ground no.1: “1. That how far the Assessing Officer is correct in making additions and the CIT(A) is correct in making confirmation to income the sum of Rs.4,59,124/- u/s. 41(1) by brought forward of liabilities from past several years and not ceased yet.” 11. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO during the course of assessment proceedings added the liabilities of Rs.4,59,124/- by deeming that those liabilities instead of carrying forward over the years should have been written back in the accounts. Accordingly, he added by invoking the provisions of section 41(1) of the Act. The CIT(A) also confirmed the action of the AO. When bench put a query to ld. Sr. DR, whether the assessee has written off these liabilities or are outstanding. Ld. Sr. DR replied that these are outstanding from years and assessee should have written the same off. On query from the Bench, Ld. Counsel for the assessee stated that these are outstanding
4 ITA No.1761-1763/Kol/2011 WB State Warehousing Corporation AY 2003-04, 2005-06 & 2007-08 liabilities and these are very much inexistence. We find that the AO has invoked provisions of section 41(1) of the Act to the outstanding liabilities on his own motion and liabilities are very much outstanding. Accordingly, we reverse the orders of lower authorities and allow this issue of assessee’s appeal. 12. The next issue in ITA No. 1762/Kol/2011 for AY 2005-06 is against the order of CIT(A) confirming the disallowance made by AO being payments made to Employees’ Provident Fund within the due date of filing of return of income . 13. We have heard rival submissions and gone through facts and circumstances of the case. We find that the AO himself has noted the dates of payment of employees’ contribution to Provident fund, which are as under: Amount Due date Date of payment Rs.3,10,271/- 15.01.2005 24.01.2005 Rs.3,07,729/- 15.02.2005 25.02.2005 Rs.3,79,130/- 15.03.2004 23.03.2005 Rs.9,97,130/-
We find that these payments within the grace period as provided in Provident Fund Act itself and even otherwise these payments are made within the due dates of filing of return of income rather within the financial year. These are clearly allowable deduction and accordingly, we allow the same. This issue of assessee’s appeal is allowed. 14. In the result, ITA No. 1761& 1762/Kol/2011 are allowed and ITA No. 1763/Kol/2011 is partly allowed. Order is pronounced in the open court on 11.05.2016 Sd/- Sd/- (M. Balaganesh) (Mahavir Singh) Accountant Member Judicial Member Dated : 11th May, 2016 Jd. (Sr. P.S.) Copy of the order forwarded to: 1. Appellant – West Bengal State Warehousing Corporation, 6A, Raja Subodh Mullick Square, 4th floor, Kolkata-700 013 2. Respondent- DCIT, Circle-2, Kolkata. 3. CIT(A) , Kolkata. 4. CIT , Kolkata 4. DR, Kolkata Benches, Kolkata /True Copy, By order, Asstt. Registrar.