2016 (5) TMI 459 - AT - Income Tax

Allowance on account of speculation loss - Held that - We are not inclined to interfere with the findings of CIT(A) who has rightly granted relief to the assessee on account of speculation loss Addition on belated payments of Provident Fund - Held that - The assessee did not deposit the amount of contribution with the PF Department / DSI Department within due date under the PF Act and/or ESI Act - There is no amendment in Section section 36(1)(va) of the Income Tax Act and considering section 36(1)(va) of the Income Tax Act as it stands, with respect to any sum received by the assessee from any of his employees to which the provisions of clause (x) of sub-section (24) of section 2 applies, assessee shall not be entitled to deduction of such amount in computing the income referred to in section 28 if such sum is not credited by the assessee to the employees account in the relevant fund or funds on or before the due date as per explanation to section 36(1)(va) of the Act - By deleting Second Proviso to section 43B by Finance Act, 2003, it cannot be said that Section 36(1) (va) is amended and/or explanation below clause (va) of sub-section (1) of section 36 is deleted, which is with respect to employees contribution - See COMMISSIONER OF INCOME TAX II Versus GUJARAT STATE ROAD TRANSPORT CORPORATION (2014 (1) TMI 502 - GUJARAT HIGH COURT)- additions confirmed - Decided in favour of Revenue. Disallowance u/s 40(a)(ia) - Held that - Disallowance by invoking provisions of Section 40(a)(ia) of the Act ignoring the fact that relevant TDS was deposited by the assessee prior to due date of filing of return of income. This is a legal contention raised by the assessee before us. Since the issue was not pressed before the CIT(A), so he did not pass any order on merits on this issue. Therefore, in the interest of justice, we restore this issue to the file of the CIT(A) and direct him to decide this issue after providing due opportunity of hearing to the assessee.

Summary

Issues:
1. Disallowance of speculation loss
2. Relief on belated Provident Fund payments
3. Disallowance of commission expenses

Issue 1: Disallowance of Speculation Loss:
The Revenue appealed against the CIT(A)'s decision to grant relief to the assessee for speculation loss. The Tribunal found that the loss incurred from commodities transactions by the assessee was allowable as a business loss under Section 43(5) of the Act. The Tribunal cited relevant provisions and case laws to support its decision. Relying on precedent and considering the nature of the transactions, the Tribunal upheld the CIT(A)'s decision to grant relief to the assessee regarding the speculation loss.

Issue 2: Relief on Belated Provident Fund Payments:
The Tribunal referred to a decision by the Hon'ble Gujarat High Court regarding belated Provident Fund payments. Following the legal discussion, the Tribunal set aside the CIT(A)'s order and restored that of the Assessing Officer. The Tribunal allowed the Revenue's ground on this issue based on the legal interpretation provided by the High Court judgment.

Issue 3: Disallowance of Commission Expenses:
The Assessing Officer disallowed commission expenses paid by the assessee to a company, considering them non-genuine due to lack of original bills. However, the CIT(A) granted relief to the assessee after considering the nature of the services provided and the documentation available. The Tribunal upheld the CIT(A)'s decision, noting that the payment was for legitimate services rendered, and there was no evidence presented to suggest otherwise. Therefore, the Tribunal dismissed the Revenue's ground related to the disallowance of commission expenses.

In conclusion, the Tribunal partly allowed the Revenue's appeal, upheld the relief granted to the assessee on speculation loss, allowed the cross-objection filed by the assessee for statistical purposes, and provided detailed legal analysis for each issue presented in the case.