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2015 (11) TMI 117 - AT - Income TaxAddition made on account of employees contribution to PF after due date - contravention of the provisions of section 36(i)(va) - Held that - It is an undisputed fact that the assessee has contributed towards PF and ESIC before due date of filing return under the Income Tax Act. It is well settled law that the contributions made to such funds before due date of filing return are admissible as expenditure. The Hon ble Bombay High Court in the case of CIT Vs. Ghatge Patil Transport Ltd. (2014 (10) TMI 402 - BOMBAY HIGH COURT) by placing reliance on the decision of CIT Vs. Alom Extrusions Ltd. reported as (2009 (11) TMI 27 - SUPREME COURT) has laid down the law in this regard. We do not find any merit in the appeal of the Revenue, accordingly, the same is dismissed. - Decided in favour of assessee. Reopening of assessment - amalgamation of company - benefit of set off and carry forward of brought forward business losses and unabsorbed depreciation of the amalgamating companies in the hands of the assessee company denied - Held that - In the present case, the reassessment proceedings u/s. 147 r.w.s. 148 have been initiated by the Assessing Officer merely on the basis of change of opinion which is not permissible under law. At the time of scrutiny assessment all the information was available before the Assessing Officer. The Assessing Officer had an opportunity to examine and raise query. A perusal of the assessment order passed u/s. 143(3) shows that the Assessing Officer was well aware of the fact about the amalgamation of the companies with the assessee company. The Assessing Officer had raised certain queries on the depreciation claimed by the assessee on license to collect toll in respect of amalgamating companies. Thus, it is evident that the Assessing Officer had knowledge about the amalgamation of the companies as well as issues relating thereto. A perusal of the reasons for reopening further strengthen our view wherein the Assessing Officer has categorically stated, On perusal of the material available on record .. the Assessing Officer has reasons to believe that the amalgamating companies does not satisfy the definition of Industrial Undertaking u/s. 72A. From the documents on record, it is writ large that the reassessment proceedings have been initiated on the change of opinion which is impermissible under the Act. Therefore, reopening of assessment is bad in law and subsequent proceedings arising there from are not sustainable, accordingly, are liable to be set aside. - Decided in favour of assessee.
Issues Involved:
1. Legality of reassessment proceedings under Section 147 of the Income Tax Act, 1961. 2. Withdrawal of deduction under Section 80IA(4) without issuing a show cause notice. 3. Denial of set-off of brought forward business losses and unabsorbed depreciation of amalgamating companies. 4. Deletion of addition made on account of employees' contribution to PF after the due date. Issue-wise Detailed Analysis: 1. Legality of Reassessment Proceedings under Section 147: The assessee challenged the reassessment proceedings initiated by the Assessing Officer (AO) on the grounds of change of opinion, arguing that no fresh tangible material was available to justify the reopening. The original assessment was made under Section 143(3), and all relevant information, including the details of amalgamation, was provided during the scrutiny assessment. The Tribunal noted that the reassessment was based on material already available on record and not on any new information. The Tribunal cited several precedents, including CIT Vs. Kelvinator of India Ltd. and Asian Paints Ltd. Vs. DCIT, to emphasize that reassessment on the basis of change of opinion is impermissible. Consequently, the Tribunal held that the reassessment proceedings were bad in law and set them aside. 2. Withdrawal of Deduction under Section 80IA(4) without Show Cause Notice: The assessee contended that the Commissioner of Income Tax (Appeals) [CIT(A)] erred in withdrawing the deduction under Section 80IA(4) without issuing a show cause notice, thereby violating principles of natural justice. The Tribunal did not adjudicate this issue separately as it became academic following the setting aside of the reassessment proceedings. 3. Denial of Set-off of Brought Forward Business Losses and Unabsorbed Depreciation: The assessee argued that the CIT(A) erred in not allowing the set-off of brought forward business losses and unabsorbed depreciation of the amalgamating companies. The AO had disallowed these on the grounds that the amalgamating companies were not "industrial undertakings" as defined under Section 72A. The Tribunal did not need to adjudicate this issue separately due to the setting aside of the reassessment proceedings. 4. Deletion of Addition Made on Account of Employees' Contribution to PF after Due Date: The Revenue challenged the CIT(A)'s decision to delete the addition made for delayed payments of employees' contribution to PF and ESIC. The Tribunal upheld the CIT(A)'s decision, stating that contributions made before the due date of filing the return under the Income Tax Act are admissible as expenditure. The Tribunal relied on the judgments of the Hon'ble Bombay High Court in CIT Vs. Ghatge Patil Transport Ltd. and the Hon'ble Supreme Court in CIT Vs. Alom Extrusions Ltd. to support this conclusion. Conclusion: The Tribunal allowed the appeal of the assessee, setting aside the reassessment proceedings initiated under Section 147. Consequently, the issues related to the withdrawal of deduction under Section 80IA(4) and the set-off of brought forward losses became academic. The Tribunal dismissed the Revenue's appeal regarding the deletion of the addition made for delayed PF contributions, affirming that such contributions made before the due date of filing the return are allowable. Order Pronounced: The order was pronounced on Tuesday, the 06th day of October, 2015.
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