2014 (7) TMI 477 - HC - Income Tax

Allowability of delayed payment of PF Held that - Section 43B was amended and the first proviso was inserted which provides that in the context of any sum payable by the Assessee by way of tax duty cess or fee if paid by the Assessee even after the closing of the accounting year but before the date of filing of the return of income the Assessee would be entitled to the deduction u/s 43B on actual payment basis and such deduction would be admissible for that accounting year - the Assessees employers were entitled to deductions only if the contributions to any fund for the welfare of the employees stood credited on or before the due date given in the relevant Act - the amendments introduced by the Finance Act 2003 put on par the benefit of deductions of tax duty cess and fee on the one hand with contributions to various Employee s Welfare Funds on the other. Relying upon Commissioner of Income Tax v/s Alom Extrusions Ltd. 2009 (11) TMI 27 - SUPREME COURT - the amendments to the section brought about by the Finance Act 2003 with effect from 1st April 2004 were retrospective in nature and would operate from 1st April 1988 thus the Tribunal was fully justified in deleting the addition on account of delayed payment of Provident Fund of employees contribution thus no substantial question of law arises for consideration Decided against Revenue. Bond registration charges u/s 37(1) of the Act Held that - CIT (Appeals) as well as the Tribunal merely followed the decisions in the case of this very Assessee in the preceding years in deleting the disallowance incurred towards bond registration charges Tribunal came to the finding that the expenditure was a revenue expenditure and allowable u/s 37(i) of the Act the finding of the Tribunal cannot be in any way said to be vitiated on the ground of perversity or any error apparent on the face of the record - thus no substantial question of law arises for consideration Decided against Revenue.

Summary

Issues:
1. Allowance of delayed payments of employees' P.F. contribution
2. Deletion of disallowance on bond registration charges

Analysis:

Issue 1: Allowance of delayed payments of employees' P.F. contribution
The appeal under section 260A of the Income Tax Act, 1961 involved two substantial questions of law. The first question addressed whether the Tribunal was correct in allowing the claim of the Assessee for delayed payments of P.F. employees' contribution, relying on a Supreme Court decision. The Appellant argued that the CIT (Appeals) erred in directing the Assessing Officer to allow deductions for payments made within the grace period and disallowing those made after. However, the Court found that the amendments to section 43B, introduced by the Finance Act 2003, were retrospective from 1st April 1988 as per the Supreme Court judgment in Commissioner of Income Tax v/s Alom Extrusions Ltd. Consequently, the ITAT was justified in deleting the addition of delayed P.F. contribution, and no substantial question of law arose in this regard.

Issue 2: Deletion of disallowance on bond registration charges
The second question pertained to the deletion of disallowance on bond registration charges. The CIT (Appeals) and ITAT followed previous decisions in the Assessee's case, allowing the deduction under section 37(1) of the IT Act 1961. The ITAT's finding that the expenditure was a revenue expenditure and hence allowable was upheld. The Court concluded that this finding did not warrant any substantial question of law for consideration. Therefore, the ITAT's decision to delete the disallowance on bond registration charges was deemed appropriate.

In summary, the Court dismissed the appeal, finding no merit in challenging the ITAT's decisions on both issues. The judgment provided a detailed analysis of the legal provisions, amendments, and precedents, ensuring a comprehensive understanding of the case and the reasoning behind the decisions.