2013 (7) TMI 1190 - AT - Income Tax

Summary

Issues Involved:

1. Disallowance of interest payable to M.P. State Co-op. Bank Maryadit and Mandi Board u/s 43B.
2. Disallowance of employees' contribution to PF and ESIC deposited after the due date.

Summary:

Issue 1: Disallowance of Interest Payable to M.P. State Co-op. Bank Maryadit and Mandi Board u/s 43B

The AO disallowed the interest payable to M.P. State Co-op. Bank Maryadit and Mandi Board, considering it a mistake apparent from the record. The CIT(A) deleted the disallowance, stating that the AO failed to prove that M.P. State Co-op. Bank Maryadit or Mandi Board falls under any clauses of Explanation 4 to section 43B. The Tribunal, however, held that M.P. State Cooperative Bank falls under Explanation 4 to section 43B, making the provisions applicable to the interest payable to it. Thus, the CIT(A) was not justified in holding otherwise. The interest payable to the consortium bank and M.P. State Cooperative Bank, amounting to Rs. 14,60,58,000/- and Rs. 3,93,80,000/- respectively, was rightly added by the AO. However, the interest payable to Mandi Board cannot be disallowed as it does not fall under Explanation 4 to section 43B.

Issue 2: Disallowance of Employees' Contribution to PF and ESIC Deposited After the Due Date

The CIT(A) allowed the assessee's claim for deduction of employees' contribution, citing various court decisions, including CIT vs. Aimil Ltd. (2010) 321 ITR 508 (Del), which held that if the employees' contribution is deposited before the return filing date, the deduction is permissible. The Tribunal agreed with the CIT(A) that employees' contribution, if paid before the last date of filing the return, should be allowed. However, the Tribunal directed the AO to verify the actual date of payment of employees' contribution before allowing the deduction.

Conclusion:

The Tribunal reversed the CIT(A)'s order concerning the interest payable to the consortium bank and M.P. State Cooperative Bank, directing the AO to disallow the interest. The Tribunal upheld the CIT(A)'s decision on employees' contribution, subject to verification of the actual payment date by the AO. The appeal of the revenue was allowed in part.