2013 (7) TMI 37 - AT - Income Tax

Employees contribution towards PF and ESI - late deposits - CIT(A) deleted the addition - Held that - Though the payment was effected beyond the time prescribed in section 36(1)(va) but the same was duly paid by the appellant before due date of furnishing of the return disallowance made by the A.O u/s. 43B/36(1)(va) is deleted. See CIT v. Sabari Enterprises (2007 (7) TMI 169 - KARNATAKA HIGH COURT) CIT vs. Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT and CIT v. AIMIL Limited 2009 (12) TMI 38 - DELHI HIGH COURT . In favour of assessee. Profit on sale of car i.e. depreciating asset & temporary site shed - CIT(A) deleted the addition - Held that - As both the assets sold by assessee form part of block of assets and were entitled to depreciation under the Act as stated by assessee the depreciation chart reveals that block of asset has not come to an end. It is very much available and once the respective block is not wiped out, the profit cannot be assessed on account of sale of asset. Also as that opening WDV far exceeds the full value of consideration received on sale for this asset. Hence, the profit cannot be brought to tax on capital gains. In favour of assessee.

Summary

Issues:
1. Addition made by Assessing Officer on account of non-payment of Employees' contribution towards PF and ESI.
2. Deletion of the addition of profit on the sale of a depreciating asset.

Analysis:

Issue 1:
The first issue in this appeal concerns the addition made by the Assessing Officer for non-payment of Employees' contribution towards PF and ESI within the prescribed due dates. The Revenue challenged the order of the CIT(A) that deleted the addition. The ITAT Kolkata, after considering the arguments and facts, upheld the CIT(A)'s decision. The CIT(A) based the deletion on the payment being made before the due date of filing the income tax return, citing relevant legal precedents. The ITAT confirmed the CIT(A)'s order, noting that the issue was covered by various court decisions as referred to by the CIT(A).

Issue 2:
The second issue in this appeal revolves around the deletion of the addition of profit on the sale of a depreciating asset. The Assessing Officer added the profit amount, including profit on the sale of a car and a temporary site shed. The CIT(A) overturned this addition after considering the submissions and Section 50 of the Income Tax Act. The ITAT Kolkata analyzed the provisions of Section 50, emphasizing that capital gains for depreciable assets are determined differently. The ITAT noted that the assets sold were part of a block of assets entitled to depreciation and that the profit could not be taxed as capital gains since the block of assets had not been fully depreciated. The ITAT upheld the CIT(A)'s decision, dismissing the Revenue's appeal.

In conclusion, the ITAT Kolkata dismissed the Revenue's appeal concerning both issues, affirming the CIT(A)'s orders in each instance. The judgment was pronounced on 21st June 2013.