2016 (1) TMI 1282 - AT - Income Tax

Contribution to State Renewable Fund - Held that - The issue is already considered by the Coordinate Bench in assessee s own case in A.Y. 2005-06 and 2006-07 which is squarely covered in favour of the assessee. Addition on account of gratuity fund - Held that - The issue is already considered by the Coordinate Bench in assessee s own case in A.Y. 2005-06 and 2006-07 which is squarely covered in favour of the assessee. As per Section 36(1)(v) such payment is allowable if paid for the approved gratuity fund. See Commissioner of Income-Tax Versus Electra (Jaipur) (P.) Ltd. 2005 (7) TMI 55 - ALLAHABAD High Court . Addition of prior period expenses - Held that - There is no revenue loss in allowing the prior period expenses in subsequent year. The genuineness of the expenses have not been doubted by the lower authorities. Therefore we uphold the order of the ld CIT(A) in allowing claim. See CIT Vs. Excel Industries Ltd. 2013 (10) TMI 324 - SUPREME COURT Addition on account of employee s contribution and ESI beyond the prescribed time limit - Held that - The assessee had paid ESI and PF before due date of filing of return of income tax. Revenue appeal dismissed.

Summary

Issues Involved:

1. Deletion of addition related to contribution to the State Renewable Fund.
2. Deletion of addition related to contribution to the Gratuity Fund.
3. Deletion of addition related to prior period expenses.
4. Deletion of addition related to employee's contribution to ESI and PF beyond the prescribed time limit.

Issue-wise Detailed Analysis:

1. Contribution to State Renewable Fund:

The first issue pertains to the deletion of the addition of Rs. 10,00,000/- made by the AO for contribution to the State Renewable Fund. The AO disallowed the claim, arguing it was an application of income and not an expenditure incurred for business expediency. The CIT(A) allowed the appeal, referencing previous ITAT Jaipur Bench decisions for A.Y. 2005-06 and 2006-07, which had ruled in favor of the assessee. The Tribunal upheld the CIT(A)'s decision, noting that the issue was already covered in favor of the assessee by the Coordinate Bench in earlier years.

2. Contribution to Gratuity Fund:

The second issue involves the deletion of the addition of Rs. 19,52,975/- related to the Gratuity Fund. The AO disallowed the claim due to the absence of approval from the competent authority. The CIT(A) allowed the appeal, citing ITAT Jaipur Bench decisions for A.Y. 2005-06 and 2006-07, which had ruled that the assessee had applied for approval, and there was no lapse on its part. The Tribunal upheld the CIT(A)'s decision, noting that the issue was already covered in favor of the assessee by the Coordinate Bench in earlier years.

3. Prior Period Expenses:

The third issue concerns the deletion of the addition of Rs. 13,29,889/- related to prior period expenses. The AO disallowed the claim, arguing that the expenses were contrary to the accrual method of accounting followed by the assessee. The CIT(A) allowed the appeal, noting that the expenses were booked only after approval by the appropriate authority, following a consistent view taken by the ITAT Jaipur Bench in similar cases of State Government Undertakings. The Tribunal upheld the CIT(A)'s decision, referencing the ITAT order in the case of Rajasthan State Seeds Corporation Ltd. and the Supreme Court decision in CIT Vs. Excel Industries Ltd., which supported the assessee's claim.

4. Employee's Contribution to ESI and PF:

The fourth issue involves the deletion of the addition of Rs. 2,99,104/- related to employee's contribution to ESI and PF beyond the prescribed time limit. The AO disallowed the claim, citing Section 36(1)(va) read with Section 2(24)(x) of the Act. The CIT(A) allowed the appeal, referencing ITAT Jaipur Bench decisions that allowed contributions made before the due date of filing the return. The Tribunal upheld the CIT(A)'s decision, noting that the payments were made before the due date of filing the return and referencing relevant case laws, including CIT Vs. SBBJ, CIT Vs. JVVNL, and CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd.

Conclusion:

The Tribunal dismissed the revenue's appeal on all grounds, upholding the CIT(A)'s decisions and referencing consistent judicial precedents in favor of the assessee. The order was pronounced in the open court on 29/01/2016.