2018 (12) TMI 1667 - AT - Income Tax

Employee s contribution to PF ESI beyond the due date for payment - addition u/s 2(24) and u/s 36(1)(va) - HELD THAT - he fact remains that the assessee has paid the employee s contribution to PF ESI within the due date permitted under Income Tax Act before filing the return although it has not paid them within the due dates permitted under the respective Act. In this regard the jurisdictional High Court decision in the case of CIT vs Industrial Security Intelligence Pvt Ltd 2015 (7) TMI 1063 - MADRAS HIGH COURT relied upon. - We do not find any reason to interfere with the order of the CIT(A). The Revenue s appeal for assessment year 2013-14 is dismissed. Disallowance u/s. 14A - HELD THAT - The assessee has declared dividend income and that having accepted the applicability of sec. 14A of the IT Act the assessee has disallowed on its own and added to the total income in this regard in the computation of Total income filed along with the return of income furnished for A.Y 2014-15 - In view of that since the facts and circumstances associated with the issue is not on record this issue is remitted back to the AO for a fresh examination. The Assessing Officer shall decide the issue after affording adequate opportunity to the assessee in accordance with law.

Summary

Issues:
1. Disallowance of employees' contribution to PF & ESI under section 36(1)(va) for assessment years 2013-14 and 2014-15.
2. Disallowance made under section 14A for assessment year 2014-15.

Issue 1: Disallowance of employees' contribution to PF & ESI under section 36(1)(va) for assessment years 2013-14 and 2014-15:

The Revenue appealed against the CIT(A)'s order concerning disallowance of employees' contribution to PF & ESI. The CIT(A) allowed the assessee's appeal based on various High Court decisions. The Revenue contended that the CIT(A) erred in deleting the disallowance, arguing that the employee's contribution should be paid within the due date allowed by the respective Acts. The Revenue emphasized that the employee's contribution is deemed as income of the employer and should be deposited within the stipulated time. The Revenue cited judicial precedents and circulars to support its position. However, the Tribunal, following relevant case law, upheld the CIT(A)'s decision, stating that the contribution was paid before the due date for filing the return, even though it was beyond the due dates under the Acts. The Tribunal dismissed the Revenue's appeal for assessment year 2013-14.

Issue 2: Disallowance made under section 14A for assessment year 2014-15:

Regarding the disallowance made under section 14A for assessment year 2014-15, the Revenue appealed the CIT(A)'s decision. The Revenue argued that the CIT(A) erred in deleting the disallowance under section 14A, emphasizing that the AO correctly computed the disallowance under Rule 8D. The Revenue highlighted that the AO had not specified whether the assessee earned any exempt income or made any disallowance on its own. The Tribunal noted the lack of clarity in the assessment order and remitted the issue back to the AO for further examination. The Tribunal dismissed the Revenue's appeal for assessment year 2014-15 but treated it as allowed for statistical purposes.

In conclusion, the Tribunal upheld the CIT(A)'s decision on the disallowance of employees' contribution to PF & ESI for assessment years 2013-14 and 2014-15. However, the issue of disallowance under section 14A for assessment year 2014-15 was remitted back to the AO for a fresh examination due to insufficient information in the assessment order. The Revenue's appeal for assessment year 2013-14 was dismissed, while the appeal for assessment year 2014-15 was treated as allowed for statistical purposes.