2011 (4) TMI 1345 - AT - Income Tax

Summary

Issues Involved:
1. Addition u/s 2(24)(x) r.w. Explanation to sec. 36(1)(va) for employees' contribution to PF.
2. Disallowance u/s 43B r.w. Explanation to sec. 36(1)(va) for employer's contribution to PF.
3. Depreciation rate on Dumpers.
4. Disallowance of penalty.
5. Deduction u/s 80IA(4)(i).
6. Prior period expenses.
7. General grounds.

Summary:

1. Addition u/s 2(24)(x) r.w. Explanation to sec. 36(1)(va) for employees' contribution to PF:
The assessee contested the addition of Rs. 18,97,330/- made by the Assessing Officer for employees' contribution to PF not paid before the due date but paid before filing the return. The Tribunal, referencing the Supreme Court decision in CIT vs Alom Extrusions Ltd and other relevant cases, held that the contribution paid before the due date of filing the return cannot be disallowed. Thus, the order of the CIT(A) was set aside, and the ground raised by the assessee was allowed.

2. Disallowance u/s 43B r.w. Explanation to sec. 36(1)(va) for employer's contribution to PF:
The assessee challenged the disallowance of Rs. 23,05,077/- for employer's contribution to PF paid after the grace period but before the due date of filing the return. The Tribunal, following consistent views of coordinate Benches, held that such contributions paid before the due date of filing the return must be allowed as a deduction. The order of the CIT(A) was set aside, and the ground raised by the assessee was allowed.

3. Depreciation rate on Dumpers:
The assessee claimed higher depreciation rates on Dumpers, which the Assessing Officer restricted to 25%, treating them as plant & machinery. The Tribunal, referencing its previous decision in the assessee's own case and distinguishing it from the Madras High Court decision in CIT vs Bajrang Enterprises, held that Dumpers registered as Heavy Goods Vehicles qualify for higher depreciation rates applicable to commercial vehicles. The order of the CIT(A) was set aside, and the ground raised by the assessee was allowed.

4. Disallowance of penalty:
The assessee did not press this ground due to the smallness of the amount (Rs. 47,235/-). The ground was dismissed as not pressed.

5. Deduction u/s 80IA(4)(i):
The assessee acknowledged that due to retrospective amendment, contractors are not eligible for deduction u/s 80IA. Consequently, this ground was dismissed.

6. Prior period expenses:
The assessee sought allowance of prior period expenses disallowed in subsequent assessment years. The Tribunal admitted the additional ground and directed the Assessing Officer to allow the expenditure in the year it was incurred after due verification. The additional ground was allowed.

7. General grounds:
Grounds of appeal that were general in nature were dismissed.

Conclusion:
All three appeals by the assessee were partly allowed, with specific grounds being allowed or dismissed based on the merits of each issue. The order was pronounced on the 27th day of April 2011.