2009 (6) TMI 984 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition made u/s 2(24)(x) read with section 36(1)(va) for late payment of employees' contribution to PF and ESI.
2. Allowance of depreciation on let out building.
3. Deletion of addition for security expenses of directors.
4. Deletion of addition for late payment of employees' and employer's contribution to PF, EPF, and FPF.
5. Deletion of addition for under-valuation of stock.
6. Deletion of addition for car expenses.
7. Confirmation of addition for interest paid to parties for delayed payments.

Summary:

1. Deletion of addition made u/s 2(24)(x) read with section 36(1)(va) for late payment of employees' contribution to PF and ESI:
The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for late payment of employees' contribution to PF and ESI. The Tribunal relied on the Delhi High Court judgment in the case of P.M. Electronics Ltd., which allowed such contributions if paid before the due date of filing the return.

2. Allowance of depreciation on let out building:
The Tribunal upheld the CIT(A)'s decision to allow depreciation on the let out building. The CIT(A) verified that only 10% of the building was let out and disallowed depreciation proportionately. The Tribunal found no infirmity in the CIT(A)'s order.

3. Deletion of addition for security expenses of directors:
The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for security expenses of directors. The CIT(A) found that the expenses were incurred for business purposes and were supported by sufficient evidence, including police reports and newspaper cuttings.

4. Deletion of addition for late payment of employees' and employer's contribution to PF, EPF, and FPF:
The Tribunal dismissed the revenue's appeal, following its decision for the assessment year 1999-2000, and upheld the CIT(A)'s order allowing the deduction for late payment of employees' and employer's contribution to PF, EPF, and FPF.

5. Deletion of addition for under-valuation of stock:
The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for under-valuation of stock. The CIT(A) found that the Local Area Development Tax (LADT) was not attributable to the purchase of goods and could not be included in the closing stock valuation.

6. Deletion of addition for car expenses:
The Tribunal upheld the CIT(A)'s decision to delete the addition made by the AO for car expenses. The CIT(A) found that the company is a separate legal entity, and any disallowance for personal use of cars should be made as a perquisite in the hands of the directors, not the company.

7. Confirmation of addition for interest paid to parties for delayed payments:
The Tribunal dismissed the assessee's appeal, refusing to admit additional evidence regarding the status of parties as SSI units. The Tribunal found no merit in the assessee's justification for the admission of additional evidence and upheld the disallowance made by the AO.

Order pronounced in the open court on 19th June, 2009.