2016 (1) TMI 231 - HC - Income Tax

Addition made on account of late deposit of employees contribution to PF - ITAT deleted the addition - Held that - Issue covered against the revenue by judgment of the Apex Court in Commissioner of Income Tax vs. Alom Extrusions Limited (2009 (11) TMI 27 - SUPREME COURT) - Decided on favour of assessee. Disallowance of depreciation by taking the whole of the building as let out and income was assessed under the head income from house property - CIT(A) and ITAT held that as 10% area was let out and thereby depreciation to this extent was disallowed - Held that - Tribunal while affirming the findings arrived at by the CIT(A) that only 10% area was let out by the assessee to its associated concerns for administrative work whereas the remaining area was being used by it. Thus depreciation only to the extent of 1/10th was disallowed. No error was pointed out by the learned counsel for the revenue in the findings recorded by the CIT(A) as well as the Tribunal. - Decided on favour of assessee in part.

Summary

Issues:
1. Late deposit of employees' contribution to PF.
2. Late deposit of employer's contribution to EPF and FPF.
3. Disallowance of depreciation on let-out building.

Issue 1: Late deposit of employees' contribution to PF
The revenue appealed against the Tribunal's decision confirming the deletion of additions made by the Assessing Officer for late deposit of employees' contribution to Provident Fund. The Tribunal dismissed the appeal, prompting the revenue to file an instant appeal. During the hearing, the revenue conceded that previous judgments were against them. The Division Bench referred to the legislative history of Section 43B of the Income Tax Act, emphasizing that the Finance Act, 2003, omitted the second proviso to Section 43B, which was held to be retrospective by the Supreme Court. Consequently, the Tribunal's decision to allow the claim of the assessee was upheld.

Issue 2: Late deposit of employer's contribution to EPF and FPF
Similar to the first issue, the revenue contested the deletion of additions made by the Assessing Officer for late deposit of employer's contribution to EPF and FPF. The Division Bench, relying on previous judgments and the retrospective nature of the Finance Act, 2003, upheld the Tribunal's decision to allow the claim of the assessee in this regard.

Issue 3: Disallowance of depreciation on let-out building
The Assessing Officer disallowed depreciation on the entire building as let out, leading to the income being assessed under "income from house property." The CIT(A) partially upheld the disallowance, considering only 1/10th of the building as let out for administrative work to associated concerns. The Tribunal affirmed the CIT(A)'s findings, stating that only 10% of the area was let out, and depreciation was disallowed accordingly. The Tribunal found no error in the CIT(A)'s decision, and the appeal was dismissed based on the factual verification and submissions made by the assessee.

In conclusion, the High Court upheld the Tribunal's decision on all three issues, emphasizing the retrospective application of the relevant provisions and the factual verifications conducted by the lower authorities.