2015 (9) TMI 1298 - AT - Income Tax

Late deposit of employer s contribution to PF - entitlement to any deduction under section 43B(b) read with section 36(1)(va) and 2(24)(x) denied - CIT(A) deleted the addition - Held that - The record shows that the employer s contribution to PF has been deposited by the assessee with a delay of 1 to 3 days which certainly fall within the statutory grace period of five days. The stand of the Assessing Officer is therefore not sustainable because five days grace period has been allowed to the employer s for payment of provident fund contributions under clause (iii) of CPFC s Circular No. E. 128(1) 60-III dated 19.03.1964 as modified by circular No. E11/128 (section 14-B Amendment)/73 dated 24.10.1973. Moreover the Assessing Officer has quoted the provisions of section 36(1)(va) and section 2(24)(x) of the Act which deal with the employees contribution to PF and not the employer s contribution. We therefore find no material on record to interfere with the order of the learned CIT(A) on this issue - Decided against revenue. Disallowance of depreciation on various assets at various rates - Held that - As regards the depreciation on Cylinder valves & regulators the learned CIT(A) has allowed depreciation @ 80% in respect of gas cylinders including valves and regulators. He observed that the assessee had claimed depreciation on CO2 gas plant and has not restricted it to the cylinders valves and regulators. While allowing depreciation on these assets the ld. CIT(A) has considered clause (x) of sub-clause (viii) of clause (3) )Part A. The learned DR could not be able to rebut the findings reached by the learned CIT(A) in the impugned order. We therefore find no material on record to interfere with the order of ld. CIT(A) on this count. As far as the depreciation on water treatment plant is concerned the AO restricted the depreciation to 25% observing that the rate claimed by assessee is applicable in the case of effluent Treatment Plant and the assessee is not an infrastructure company u/s. 80IA. The learned CIT(A) has examined the issue in detail and allowed depreciation on this asset at the rate of 80% after considering the note No. 4 given below the depreciation chart in the Rules and has categorically observed that water treatment plant refers to Effluent treatment plant only. This finding of the learned CIT(A) does not stand rebutted on behalf of the Revenue before us. We therefore do not find any good reason to interfere with the findings of the ld. CIT(A) on this account also. In respect of depreciation on Racks Bins & Trolleys CIT(A) allowed depreciation @ 25% on these assets after considering the contention of assessee that the racks are placed in the workshop to place the WIP components and bins and trolleys are meant for movement of components inside and outside the workshop. These assets are used in a very rough manner thus rightly allowed depreciation on these assets at the rate of 25% as against 15% allowed by the AO particularly when the assessee has been claiming the same rate of depreciation under the category of plant & machinery since inception and there has been no litigation on this point in the history of the assessee. We therefore do not find any material to support the conclusion arrived at by the Assessing Officer and to interfere with the impugned order on this count. AO had restricted the depreciation to 25% as against 100% claimed by the assessee on sewage treatment plant for the reason that some of the bills as mentioned in the impugned order were not available. The learned CIT(A) allowed the depreciation at the rate of 100% on these assets observing that the deficit bills are available for submission of which the AO did not give reasonable opportunity to the assessee. No contrary evidence could be adduced on behalf of the revenue to contradict the finding of fact recorded by the learned CIT(A). We therefore endorse the view expressed by the ld. CIT(A) on this account. As regards the depreciation on LPG gas plant including cylinders valves & regulators in Speedomax Unit the learned CIT(A) allowed depreciation @ 80% for the reason that the assessee has not restricted the depreciation on Cylinders Valves and regulars but has claimed depreciation on LPG gas plant. While doing so the ld. CIT(A) appears to have accepted the contention of the assessee that the LPG gas plant is nothing but a plant to regulate the functioning of gas cylinders and therefore such LPG gas plant is covered in sub-clause (x) of sub-clause 8 of Item III (Part A) which consists of gas cylinders including valves and regulators. The learned DR failed to place any contrary material before us to contradict the findings of the learned CIT(A) that the assessee has claimed depreciation on LPG Gas Plant and has not restricted it to the cylinders valves and regulators. Therefore the conclusion reached by the ld. CIT(A) is liable to be supported. - Decided against revenue.

Summary

Issues Involved:

1. Deletion of addition made by the Assessing Officer on account of late deposit of employer's contribution to PF.
2. Allowance of depreciation at different rates for various assets including cylinders, valves, regulators, water treatment plant, water pollution control equipment, racks, bins, trolleys, sewage treatment plant, and LPG gas plant.

Detailed Analysis:

1. Deletion of Addition for Late Deposit of Employer's Contribution to PF:

The Assessing Officer disallowed the deduction for employer's contribution to PF amounting to Rs. 7,51,539/- because the payments were made beyond the due dates. The AO cited sections 43B(b), 36(1)(va), and 2(24)(x) of the Income Tax Act, 1961. The CIT(A) accepted the assessee's contention that delayed payments due to Sundays and Gazetted Holidays are eligible for deduction. The CIT(A) also acknowledged that payments made within the grace period of five days from the due date are eligible for deduction. The Tribunal upheld the CIT(A)'s decision, noting that the employer's contributions were deposited within the statutory grace period of five days. The Tribunal found that the AO incorrectly applied provisions related to employees' contributions rather than employer's contributions. Therefore, the Tribunal dismissed the Revenue's ground on this issue.

2. Allowance of Depreciation at Different Rates:

a. Depreciation on Cylinders, Valves & Regulators:

The CIT(A) allowed depreciation at 80% for gas cylinders, including valves and regulators, as per clause (x) of sub-clause (viii) of clause (3) of Part A. The Tribunal found no material to rebut the CIT(A)'s findings and upheld the decision.

b. Depreciation on Water Treatment Plant & Water Pollution Control Equipment:

The AO restricted depreciation to 25%, asserting that the rate claimed was applicable only for effluent treatment plants and the assessee was not an infrastructure company under section 80IA. The CIT(A) allowed 80% depreciation, interpreting water treatment plants as effluent treatment plants. The Tribunal found no reason to interfere with the CIT(A)'s findings.

c. Depreciation on Racks, Bins & Trolleys:

The AO allowed 15% depreciation, categorizing them under furniture and fittings. The CIT(A) allowed 25%, considering their use in workshops. The Tribunal upheld the CIT(A)'s decision, noting the consistent historical treatment of these assets as plant & machinery.

d. Depreciation on Sewage Treatment Plant:

The AO restricted depreciation to 25% due to missing bills. The CIT(A) allowed 100%, noting that the deficit bills were available and the AO did not provide a reasonable opportunity for submission. The Tribunal endorsed the CIT(A)'s view.

e. Depreciation on LPG Gas Plant:

The CIT(A) allowed 80% depreciation, noting that the assessee claimed it on the entire LPG gas plant rather than just cylinders, valves, and regulators. The Tribunal supported the CIT(A)'s conclusion, finding no contrary evidence from the Revenue.

Conclusion:

The Tribunal dismissed all grounds raised by the Revenue and upheld the CIT(A)'s decisions on all issues. The appeal filed by the Revenue was dismissed.