2015 (8) TMI 133 - AT - Income Tax

Disallowance of bonus payable to employees u/s 43B - the same was not paid before the due date of filing of return - Held that - As find from the balance sheet as on 31.3.2009 that an amount of ₹ 30 lakhs was appearing under the head Bonus payable (2008-09) and this amount was not paid till 30.9.2009. When this fact was confronted to the assessee, the assessee vide reply dated 26.12.2011 admitted that the bonus payable at ₹ 30 lakhs could not be paid before the due date of filing of the return i.e. 30.9.2011. He, however, claimed that a provision under section 43B of the Act is applicable in the present case, but this argument cannot be appreciated as the provision for bonus payable cannot be allowed under section 43B of the Act. Since the assessee has not made payment before the due date of filing of the return, the lower authorities have rightly disallowed the claim of payment of bonus - Decided against assesee. Whether Bonus pertaining to earlier year actually paid during the year under appeal should have been allowed as per provision of section 43B - Held that - This amount was not disallowed in earlier years, therefore, it cannot be allowed and adjusted in the current year. Accordingly, the order of the ld. CIT(A) on this issue is confirmed.- Decided against assessee. Disallowance of amount deposited under the Group Gratuity Scheme of LIC of India - the Gratuity Fund of the appellant was not approved by the Competent Authority for recognition of the gratuity fund as provided under the provisions of section 36(l)(v) - Held that - In the absence of proper recognition by the competent authority, the expenditure under the head employers contribution towards provident fund, cannot be allowed. We accordingly confirm the order of the ld. CIT(A) on this issue.- Decided against assessee. Addition being the difference between deposits and deduction of employees provident fund - Held that - As during the course of assessment proceedings, the Assessing Officer has noticed that total deduction on account of employee s contribution towards EPF from April, 2008 to March, 2009 was ₹ 58,87,417/- whereas the amount deposited was ₹ 59,52,666/-. The difference of ₹ 65,249/- was added as income by the assessee treating the same as penal interest, against which an appeal was filed before the ld. CIT(A), but no submission was advanced and the ld. CIT(A) has correctly confirmed the addition. - Decided against assessee.

Summary

Issues:
1. Disallowance of bonus payable under section 43B of the Income-tax Act.
2. Disallowance of amount deposited under Group Gratuity Scheme of LIC of India.
3. Disallowance of employer's contribution to employees provident fund.
4. Disallowance of the difference between deposits and deduction of employees' provident fund.
5. General grounds of appeal.

Issue 1 - Disallowance of Bonus Payable:
The appellant appealed against the disallowance of a bonus payable to employees under section 43B of the Income-tax Act. The Assessing Officer disallowed the bonus amounting to Rs. 30 lakhs as it was not paid before the due date of filing the return. The appellant also contested the disallowance of Rs. 17,62,422 paid during the year but pertaining to an earlier period. The CIT(A) upheld the disallowance of both amounts, stating that the bonus payable was not paid before the due date. The Tribunal confirmed the disallowance, emphasizing that the provision for bonus payable cannot be allowed under section 43B.

Issue 2 - Disallowance of Gratuity Scheme Deposit:
The appellant contested the disallowance of Rs. 36,76,819 deposited under the Group Gratuity Scheme of LIC of India as the gratuity fund was not approved by the Competent Authority. The CIT(A) confirmed the disallowance, citing non-recognition of the group gratuity fund as per the Act's requirements. The Tribunal upheld the CIT(A)'s decision, noting the absence of evidence regarding approval for the gratuity fund by the competent authority, which is a mandatory requirement under the Act.

Issue 3 - Disallowance of Employer's Contribution to Provident Fund:
The disallowance of Rs. 36,16,503 as the employer's contribution to employees' provident fund was challenged by the appellant. The Assessing Officer disallowed the expenditure as the provident fund was not recognized by the competent authority. The CIT(A) upheld the disallowance, emphasizing the lack of recognition by the competent authority. The Tribunal confirmed the disallowance, stating that without proper recognition, the expenditure cannot be allowed under the Act.

Issue 4 - Disallowance of Difference in EPF Deposits:
The disallowance of Rs. 65,249, representing the difference between EPF deductions and deposits, was contested by the appellant. The Assessing Officer treated this difference as penal interest. The CIT(A) confirmed the addition, and the Tribunal upheld this decision as no arguments were presented to challenge it.

Conclusion:
The Tribunal dismissed the appeal of the appellant, upholding the decisions of the lower authorities on the disallowances related to bonus payable, gratuity scheme deposit, employer's contribution to provident fund, and the difference in EPF deposits. The Tribunal emphasized the importance of complying with the statutory requirements and providing necessary approvals as mandated by the Income-tax Act.