2015 (9) TMI 1481 - AT - Income Tax

Payment of Privilege fees paid to the State Government - - Nature of expenditure - Held that - As decided in Rajasthan State Beverages Corporation Ltd 2013 (9) TMI 557 - ITAT JAIPUR there is no contravention in paying the privilege fee as the fee is paid under section 24 of the Excise and the provisions of section 28, 29 are not applicable as they are on separate aspect - held as business expenditure - Decided in favour of assessee. Addition in respect of depositing the ESI and PF - Held that - As the assessee deposited the payment of PF and ESI before the due date of filing of return for the impugned assessment year which is in accordance with the provisions of section 43B of the Act addition need to be deleted. See CIT Versus Vinay Cement Ltd. 2007 (3) TMI 346 - Supreme Court of India - Decided in favour of assessee.

Summary

Issues:
1. Disallowance of payment of Privilege Fees by AO
2. Deletion of addition for depositing employees' Contribution to PF beyond prescribed time limit
3. Applicability of section 43B vs. section 36(1)(va) r.w.s. 2(24)(x) of I.T. Act

Issue 1: Disallowance of payment of Privilege Fees by AO:
The appeal pertains to the disallowance of a payment of Rs. 24 crores as Privilege Fees by the Assessing Officer (AO). The AO contended that the payment was an appropriation of profit and of capital nature. However, the ld. CIT (A) observed that the issue was previously allowed by ITAT Jaipur Bench for the assessee's earlier assessment years. The Tribunal found that the payment of Privilege Fees was a revenue expenditure and allowed it under section 37(1) of the IT Act. The Tribunal relied on its previous decisions and dismissed the Revenue's appeal.

Issue 2: Deletion of addition for depositing employees' Contribution to PF beyond prescribed time limit:
The second issue involved the deletion of an addition of Rs. 22,23,566 made for depositing employees' Contribution to PF beyond the prescribed time limit. The ld. CIT (A) allowed the payment following the provisions of section 43B of the Act and relied on previous decisions. The assessee contended that the payment was made before the due date of filing the return for the assessment year, in compliance with section 43B. The Tribunal found in favor of the assessee, citing the judgment of the Hon'ble Supreme Court and previous Tribunal decisions. The grounds raised by the Revenue were dismissed as devoid of merit.

Issue 3: Applicability of section 43B vs. section 36(1)(va) r.w.s. 2(24)(x) of I.T. Act:
The issue raised in this regard was whether employees' contribution to PF is governed by section 43B or section 36(1)(va) r.w.s. 2(24)(x) of the IT Act. The ld. CIT (A) held that the contributions were covered under section 43B and not section 36(1)(va). The Tribunal, in line with previous decisions and the judgment of the Hon'ble Supreme Court, dismissed the Revenue's grounds as lacking merit. The appeal was ultimately dismissed, upholding the decision of the ld. CIT (A) in favor of the assessee.

This detailed analysis of the judgment provides insights into the issues raised, the arguments presented, and the Tribunal's decision based on legal provisions and precedents.