2012 (2) TMI 717 - AT - Income Tax

Summary

Issues Involved:
1. Deletion of addition related to employees' contribution to provident fund and ESI fund.
2. Direction to the Assessing Officer regarding the claim of provisions for doubtful debts.

Summary:

1. Deletion of Addition Related to Employees' Contribution to Provident Fund and ESI Fund:
The Revenue challenged the deletion of additions of Rs. 32,95,032/- and Rs. 4,81,768/- related to employees' contributions to provident fund and ESI fund, respectively. The first appellate authority directed the Assessing Officer to delete these additions on the ground that the payments were made before the due date of filing the return of income as per the provisions of section 43B of the Act. The Revenue relied on the decision from Hon'ble Bombay High Court in Pamwi Tissues Limited, while the assessee relied on the decision from Hon'ble Delhi High Court in CIT vs. AIMIL Limited and others.

The Tribunal considered the rival submissions and noted that as per section 43B read with section 36(1)(va) of the Act, the deduction cannot be disallowed if the actual payment is made before the due date of filing the return. The Tribunal affirmed that the deduction is permissible if the payment is made before the due date of filing the return, even if the contributions are paid beyond the due dates under the respective statutory enactments. The Tribunal found no infirmity in the stand of the learned Commissioner of Income Tax (Appeals) and affirmed the deletion of the additions.

2. Direction to the Assessing Officer Regarding the Claim of Provisions for Doubtful Debts:
The Revenue contested the direction to the Assessing Officer regarding the claim of provisions for doubtful debts of Rs. 1,46,07,788/-. The Revenue argued that the provision was not the actual write-off of bad debts as required u/s 36(1)(vii) of the Act. The Tribunal noted that the assessee had written off the bad debt in its books by debiting the profit and loss account and reducing the corresponding amount from the debtors' account in the balance sheet. The Tribunal referred to the decision from Hon'ble Apex Court in Vijay Bank vs. CIT, which held that it is not necessary to close each individual account of debtors to claim deduction u/s 36(1)(vii) of the Act.

The Tribunal concluded that the assessee is entitled to deduction under section 36(1)(vii) of the Act as there was an actual write-off by the assessee. The Tribunal affirmed the stand of the learned Commissioner of Income Tax (Appeals) and dismissed the appeal of the Revenue.

Final Decision:
The appeal of the Revenue was dismissed. The order was pronounced in the open court in the presence of representatives from both sides on 13.2.2012.