2009 (4) TMI 481 - HC - Income Tax

Addition u/s 43B - Scrutiny - retrospective or prospective - The Assessing Officer completed the assessment vide his order dated March 16, 2001 making addition to the total income under different heads including addition on account of Employees Provident Fund contribution for Rs. 31,767 and short-term capital gains of Rs. 1,50,500 - Section 43B(a), the first proviso to section 43B and Explanation 2 have to be read together as giving effect to the true intention of section 43B - In view the judgment of the hon ble Supreme Court in Allied Motors case (1997 -TMI - 5575 - SUPREME Court) and Circular No. 7 of 2003 dated September 5, 2003, the appeal disposed by way of remand

Summary

Issues:
1. Whether the Tribunal was justified in sustaining the additions under section 43B for delay in deposit of Employees' Provident Fund contribution when the payment was made before the due date of submission of returns.
2. Whether the Tribunal was justified in sustaining the additions of capital gains when the appellant inherited the properties through a will and the property was under his father's possession for over 40 years.
3. Whether the additions made on account of capital gains were correct under the circumstances and the amounts determined.

Analysis:
1. The appellant, an income-tax assessee, owned an industrial unit and filed a return for the assessment year 1998-99. The Assessing Officer made additions to the total income, including Employees' Provident Fund contribution and short-term capital gains. The appellant appealed, and the Tribunal confirmed the additions. The appellant argued that as per section 43B, deductions should be allowed on actual payment, and the Provident Fund was paid before the return submission deadline. Referring to Allied Motors P. Ltd. v. CIT [1997] 224 ITR 677 (SC) and Circular No. 7 of 2003, the appellant contended that the Tribunal did not consider these properly. The court remitted the matter back to the Tribunal to consider the judgment and circular.

2. Regarding the capital gains additions, the Tribunal upheld them based on the possession duration of the property, concluding it was a short-term asset. The Tribunal's decision was based on factual aspects like purchase and sale dates, determining the asset as short-term. The court, considering the Tribunal as the final fact-finding authority, found no substantial legal questions to interfere with the Tribunal's decision. The appeal was disposed of with this observation.

3. The judgment was delivered by B. N. Mahapatra J., with agreement from Dr. B. S. Chauhan C. J. The court's detailed analysis focused on the legal aspects of deductions under section 43B and the treatment of capital gains, emphasizing the importance of considering relevant legal precedents and circulars in tax matters. The judgment highlighted the need for adherence to legal provisions and factual considerations in tax assessments, ultimately upholding the Tribunal's decision on the capital gains issue while remitting the section 43B matter back for further review.