2015 (7) TMI 721 - HC - Income Tax

Disallowance u/s.43B(b) on account of late payment made to PF & ESI beyound due date - Held that - Considering the fact that it was the case of employees contribution which was not deposited within the prescribed period under the PF Act and ESI Act, the said question / issue is to be held in favour of revenue and against the assessee in view of the decision of this Court in COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 (1) TMI 502 - GUJARAT HIGH COURT wherein it has been held that if the assessee has not deposited employees contribution towards PF and ESIC Act, the assessee shall not be entitled to the deductions in the same year. - Decided in favour of the revenue.

Summary

Issues:
Challenge to ITAT order by Revenue for A.Y. 1999-2000 regarding bogus expenses claimed by assessee, additions/disallowances made by AO, concealment of income, questions on disallowance under section 43B and re-computation of interest under section 234B.

Analysis:
1. The appeal was filed by the revenue challenging the ITAT order for A.Y. 1999-2000 where the Tribunal dismissed the appeal filed by the Revenue. The respondent-assessee had claimed certain bogus expenses against the income during a survey at their business premises. The AO made additions/disallowances and issued a notice for concealment of income under the Income Tax Act, 1961. The assessee partially succeeded in their appeal before the CIT(A), leading to the Revenue's appeal before the Tribunal.

2. The main questions of law framed by the Court were regarding the disallowance made under section 43B and the re-computation of interest under section 234B. The appellant raised concerns about the reduction of disallowance on late payments made to PF & ESI without considering the relevant provisions of the IT Act, 1961. The Court clarified that the second question raised was not necessary to be answered.

3. The appellant argued that the first part of the question regarding section 43B was covered by the decision in "CIT VS. ALOM EXTRUSIONS LTD." where the Supreme Court observed the retrospective operation of a proviso to remedy unintended consequences. The second part of the question concerning Section 36(1)(va) was addressed by a decision in "CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION" where it was held that non-deposit of employee's contribution before the due date would disallow deductions.

4. Both counsels agreed on the legal position presented. The Court, after considering the arguments and relevant legal precedents, ruled in favor of the Revenue and against the assessee. The appeal was allowed, quashing the Tribunal's order and answering the question in favor of the Revenue. No costs were awarded in the matter.