2012 (8) TMI 236 - AT - Income Tax

Legality of allowing the claim for deduction by way of filing revised statement of income during the assessment proceedings - revenue contended that since the assessee has not claimed the deduction in its original return, the assessee cannot claim any benefit which the assessee has forgotten to claim while filing the return - Held that - It is found that TDS on the alleged payment was deposited on 19.05.2007 i.e. in the F.Y. 2007-08 relevant to the AY under consideration. Even by the pre amendment provision of section 40(a)(ia), the said payment was allowable in the year of payment of TDS i.e. the year under consideration. Even if no revised statement of income was filed , the claim was allowable as the deduction has been claimed on the payment of TDS . We do not find any reason to interfere with the findings of the CIT(A) - Appeal of revenue dismissed. Employees contribution to PF and ESIC - dis-allowance - belated payment - Held that - If the employee s share of contribution is paid before the due date of filing of the return u/s 139(1), then no dis-allowance can be made - Decided in favor of assessee. Following precedent year decision deduction is allowed in respect of interest paid to the parent company and depreciation on expenses under the head R & D treated as capital expenses is allowed - Decided in favor of assessee.

Summary

Issues:
1. Revenue's appeal against deduction allowed in revised statement of income.
2. Assessee's appeal on disallowance of employees' contributions, interest expenses, and R&D expenditure.

Analysis:
1. The Revenue challenged the deduction allowed by the Ld. CIT(A) based on the assessee filing a revised statement of income during assessment proceedings. The Revenue contended that the claim for deduction, not initially made in the original return, cannot be allowed. The A.O. disallowed the claim, citing the Supreme Court's decision in Goetze India Ltd. case. However, the Ld. CIT(A) noted that the claim was not new but a revival of a previous claim disallowed due to late TDS payment. Referring to judgments by various High Courts and Tribunals, the Ld. CIT(A) held that the A.O. should consider valid claims even without a revised return. The ITAT upheld the Ld. CIT(A)'s decision, emphasizing that the claim was allowable as it was based on TDS payment, even without a revised statement of income.

2. In the assessee's appeal, three grounds were raised. Ground one challenged the disallowance of employees' contributions to P.F. and ESIC paid after due dates but before filing the return. The ITAT found that these payments were made before the return due date and thus allowable under relevant provisions, following the Supreme Court's decision in Alom Extrusions case. Ground two contested the disallowance of interest expenses, which the ITAT allowed based on a similar previous decision by the ITAT 'C' Bench. Ground three involved the disallowance of R&D expenses, which the ITAT upheld, noting that the Ld. CIT(A) had directed the A.O. to allow depreciation on the capital expenditure, in line with past treatment of such expenses. As a result, the ITAT partly allowed the assessee's appeal, overturning the disallowance of employees' contributions and interest expenses but upholding the disallowance of R&D expenses.