2018 (7) TMI 1970 - AT - Income Tax

Deduction u/s 36(1)(va) r.w.s 43B - Delay in depositing the employee's contribution to ESI/PF beyond the prescribed time limit provided - HELD THAT - This issue is now covered by the decision of M/S. STATE BANK OF BIKANER JAIPUR AND JAIPUR VIDYUT VITARAN NIGAM LTD. 2014 (5) TMI 222 - RAJASTHAN HIGH COURT , M/S. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LIMITED, UDAIPUR 2014 (8) TMI 677 - RAJASTHAN HIGH COURT and JAIPUR VIDYUT VITRAN NIGAM LTD AND RAJASTHAN RAJYA VIDYUT UTPADAN NIGAM LTD 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT amount has been deposited on or before the due date of filing the return under Section 139 and admittedly it was deposited on or before the due date then the amount cannot be disallowed under Section 43B of the I.T. Act or under Section 36(1)(va) of the Act - Decided against Revenue. Disallowance of deduction U/s 80IA - assessee did not file the audit report in Form No. 10CCB along with return of income U/s 139(1) - HELD THAT - The assessee filed its revised return of income on 25.03.2013 along with the audit report in Form No. 10 CCB and claimed of deduction U/s 80IA of the Act. The revised return of income was within the period of limitation as provided U/s 139(5) and therefore, it was a valid revised return of income. Once, the assessee filed a valid revised return of income and complied with the conditions as stipulated U/s 80IA of the Act then, the claim of the assessee cannot be denied merely on the ground that the assessee has not claimed deduction in the original return of income and also not filed the tax report in Form No. 10CCB along with return of income filed U/s 139(1) of the Act. See M/S. RAJASTHAN FASTENERS PVT. LTD. 2014 (6) TMI 291 - RAJASTHAN HIGH COURT - Decided against Revenue. Disallowance of depreciation @ 80% on certain part of the windmill - AO has segregated some part of the windmill as civil work and other electric fitting and allowed the depreciation @ 10% and 15% respectively - HELD THAT - The civil construction and electric fittings which are part and parcel of the windmill and have no other used then for the proper functioning of the windmill. Therefore, all the foundations and other fittings which are essential for the proper functioning of the windmill as an integral part of the windmill cannot be segregated from the windmill itself which is an apparatus comparing of all these essential civil structure and other electric fittings. Even otherwise without foundation and civil work the installation of windmill is not possible and therefore, these parts such as civil structure, electric fittings etc. which are essential for installation and functioning of the windmill would be considered as part and parcel of the windmill for the purpose of depreciation U/s 32. See M/S GANGAUR EXPORTS PVT LTD 2017 (5) TMI 1676 - RAJASTHAN HIGH COURT - Decided against Revenue.

Summary

Issues Involved:
1. Addition of ?23,855 for late deposit of employee's contribution to ESI/PF.
2. Applicability of section 43B versus section 36(1)(va) r.w.s. 2(24)(x) for employee's contribution to PF & ESI.
3. Disallowance of deduction under section 80IA due to non-filing of audit report in Form No. 10CCB with the original return.
4. Depreciation rate on Wind Turbine Machine and associated civil and electrical works.

Issue-wise Detailed Analysis:

1. Addition of ?23,855 for late deposit of employee's contribution to ESI/PF:
The Revenue challenged the deletion of the addition made by the AO for late deposit of employee's contribution to ESI/PF. The Tribunal noted that this issue is covered by precedents from the Hon'ble jurisdictional High Court, including CIT vs. State Bank of Bikaner & Jaipur, CIT vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd., and CIT vs. Jaipur Vidyut Vitran Nigam Ltd. It was established that payments made within the time allowed under section 139(1) are allowable. The Tribunal upheld the CIT(A)'s decision, which relied on these precedents and the Hon'ble Supreme Court's ruling in CIT vs. Alom Extrusions Ltd., confirming that contributions paid before filing the return are deductible.

2. Applicability of section 43B versus section 36(1)(va) r.w.s. 2(24)(x) for employee's contribution to PF & ESI:
The Tribunal, supporting the CIT(A)'s order, clarified that employee's contributions deposited before the due date for filing the return under section 139(1) are allowable under section 43B. This interpretation aligns with various judicial decisions, including those from the Hon'ble Supreme Court and Delhi High Court, which treated the deletion of the second proviso to section 43B as retrospective, making such contributions deductible if paid before the return filing deadline.

3. Disallowance of deduction under section 80IA due to non-filing of audit report in Form No. 10CCB with the original return:
The Revenue contested the CIT(A)'s decision to allow the deduction under section 80IA despite the audit report not being filed with the original return. The Tribunal noted that the assessee filed a revised return within the permissible period, including the audit report. Citing the Hon'ble jurisdictional High Court's ruling in CIT vs. Rajasthan Fasteners (P) Ltd., the Tribunal held that the requirement to file the audit report with the original return is directory, not mandatory. Therefore, the deduction claim was valid as the revised return complied with section 80IA requirements.

4. Depreciation rate on Wind Turbine Machine and associated civil and electrical works:
The AO had segregated parts of the windmill (civil work and electrical fittings) and allowed lower depreciation rates (10%-15%) instead of 80%. The CIT(A) allowed the higher rate of 80% for the entire windmill, including civil and electrical components, based on the Tribunal's earlier decision in Vijay Industries vs. ACIT. The Tribunal upheld this decision, referencing the Hon'ble jurisdictional High Court's ruling in Pr. CIT vs. M/s Gangaur Exports Pvt. Ltd., which established that civil structures and electrical fittings integral to the windmill qualify for the higher depreciation rate as they are essential for its operation.

Conclusion:
The Tribunal dismissed the Revenue's appeal, affirming the CIT(A)'s decisions on all contested issues. The Tribunal's analysis was grounded in binding precedents and judicial interpretations, ensuring that contributions to ESI/PF, deductions under section 80IA, and depreciation rates for windmill components were correctly applied according to established legal standards.