2017 (6) TMI 436 - AT - Income Tax

Addition u/s 36(1)(v) - payment to gratuity fund in the revised return - Held that - It is the case of the Assessing Officer that the payment is made to unapproved gratuity fund is not an allowable expenses as per provisions of section 36(1)(v) of the Act. Assessee has not placed any material on record suggesting that the gratuity fund is approved. However, the issue is restored to the file of the Assessing Officer for deciding the issue, afresh after verifying whether the fund has been approved or not and decide the issue in the light of Tribunal s order in assessee s own case pertaining to the A.Y 2011-12. Disallowance on a/c of PF & ESI - Held that - Assessing Officer rejected the claim merely on the basis that the department has preferred Special Leave Petition against the judgment of the Hon ble Rajasthan High Court in the case of Commissioner of Income Tax vs. State Bank of Bikaner & Jaipur 2014 (5) TMI 222 - RAJASTHAN HIGH COURT and Commissioner of Income Tax vs. Jaipur Vidyut Vitran Nigam Ltd. 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT . However, ld. CIT(A) in the appeal following the judgments of Hon ble Jurisdictional High Court allowed the claim of the assessee and deleted the disallowance. We do not see any infirmity in the order of the Ld. CIT(A). Therefore, we uphold the same. The judgment of the Hon ble Jurisdictional High Court which admittedly has not been overruled by the Hon ble Supreme Court. - Decided against revenue

Summary

Issues Involved:
1. Disallowance of the claim of ?4,91,27,253 under Section 36(1)(v) of the Income Tax Act, 1961 for payment to gratuity fund in the revised return.
2. Deletion of the addition of ?37,35,130 for depositing the employees’ contribution to PF & ESI beyond the prescribed time limit.

Issue-wise Detailed Analysis:

1. Disallowance of the Claim of ?4,91,27,253 under Section 36(1)(v) of the Income Tax Act, 1961:
The assessee filed an appeal against the disallowance of its claim for ?4,91,27,253 under Section 36(1)(v) of the Income Tax Act, 1961, for payment to the gratuity fund in the revised return. The assessee argued that the claim was inadvertently not made in the original return but was allowable. The CIT(A) rejected the claim on the basis that the revised return was filed after the permissible date under Section 139(5). The Tribunal noted that the assessee had previously been allowed similar claims in earlier assessment years (2007-08, 2008-09, and 2011-12) based on the Tribunal's decisions and CIT(A)'s orders. The Tribunal restored the issue to the Assessing Officer (AO) to verify whether the gratuity fund was approved and to decide the issue in light of the Tribunal’s order for the assessment year 2011-12.

2. Deletion of the Addition of ?37,35,130 for Depositing the Employees’ Contribution to PF & ESI Beyond the Prescribed Time Limit:
The revenue appealed against the deletion of the addition of ?37,35,130 made by the AO for late deposition of employees' contributions to PF & ESI. The AO had disallowed the claim, arguing that the contributions were deposited beyond the stipulated time as per Section 36(1)(va) read with Section 2(24)(x) of the Income Tax Act, 1961. The AO cited the Gujarat High Court's decision in the case of CIT vs. Gujarat State Road Transport Corporation, which held that such late deposits are not allowable. However, the CIT(A) allowed the claim following the Rajasthan High Court's decisions in the cases of Commissioner of Income Tax vs. State Bank of Bikaner & Jaipur and Commissioner of Income Tax vs. Jaipur Vidyut Vitran Nigam Ltd., which held that contributions made before the due date of filing the return are allowable. The Tribunal upheld the CIT(A)’s order, noting that the Rajasthan High Court's decisions were binding and had not been overruled by the Supreme Court. The Tribunal dismissed the revenue’s appeal, emphasizing that the AO’s action was contrary to the binding precedent.

Conclusion:
The Tribunal allowed the assessee's appeal for statistical purposes, directing the AO to verify the approval status of the gratuity fund and decide accordingly. The revenue's appeal was dismissed, upholding the CIT(A)'s deletion of the addition for late deposition of employees' contributions to PF & ESI. The Tribunal emphasized adherence to binding judicial precedents.