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2016 (1) TMI 232 - HC - Income TaxAddition 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.
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 ITAT's decision to delete the addition of employees' contribution to PF, made by the Assessing Officer. The revenue argued that the payments were made beyond due dates and should be treated as income under the Income Tax Act. However, the Tribunal dismissed the appeal. The Division Bench referred to the Alom Extrusions Limited case, where it was held that the Finance Act, 2003, which omitted the second proviso to Section 43B, would apply retrospectively from April 1, 1988. Consequently, the Tribunal was correct in allowing the claim of the assessee regarding payments made for ESI contributions, and the same could not be disallowed under Section 43B. Issue 2: Late deposit of employer's contribution to EPF and FPF Similarly, the revenue contested the deletion of the addition of employer's contribution to EPF and FPF by the CIT(A) and ITAT. The Division Bench, following the Alom Extrusions Limited case, upheld the Tribunal's decision. The Tribunal correctly allowed the claim of the assessee, and the revenue's appeal was dismissed. 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 sister concerns. The Tribunal affirmed the CIT(A)'s findings, stating that only 10% of the area was let out, and depreciation was disallowed to that extent. The revenue's appeal was dismissed as no error was found in the CIT(A) and Tribunal's decisions. The substantial questions of law were answered accordingly, and the appeal was dismissed.
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