2018 (9) TMI 1305 - AT - Income Tax

Addition of bad debts written off - Held that - As regards the bad debts, the CIT(A) following the decision of ITAT in the case of Shriram Chits (P) Ltd. 2013 (5) TMI 227 - ITAT HYDERABAD on which reliance placed by the assessee, directed the AO to rework the disallowance of bad debts and allow accordingly. We do not find any infirmity in the findings of CIT(A) and hence, upholding the same, we remit the issue to the file of AO with a direction to rework the disallowance and allow the same in accordance with law. Disallowance on account of belated remittance of PF and ESI - the assessee stated before the CIT(A) amounts towards PF & ESI were paid beyond the due dates but paid before the end of FY therefore, directed the AO to verify whether the amounts were paid before the end of FY and if they are paid, the same may be allowed - Held that - It is a settled position of law that if the contributions towards PF & ESI are paid beyond the due date but before filing of the return of income u/s 139(1) of the Act, no disallowance can be made. Therefore, upholding the stand taken by the CIT(A), we remit this issue also to the file of the AO to verify whether the amounts paid before filing of the return of income, if so, disallowance may be deleted.

Summary

Issues Involved:
1. Disallowance of bad debts written off.
2. Disallowance on account of belated remittance of ESI.
3. Pending appeal on identical issue for A.Y. 2011-12.
4. Disallowance made under relevant Acts.

Disallowance of Bad Debts Written Off:
The case involved an appeal by the revenue against the CIT(A)'s order regarding the disallowance of bad debts written off by the assessee company. The CIT(A) directed the AO to rework the disallowance of bad debts based on the details provided by the assessee. The CIT(A) relied on a previous ITAT decision and instructed the AO to allow the bad debts accordingly. The ITAT upheld the CIT(A)'s decision, finding no infirmity in it, and remitted the issue back to the AO to rework the disallowance in compliance with the law.

Disallowance on Account of Belated Remittance of ESI:
Another issue raised was the disallowance on account of belated remittance of ESI. The CIT(A) directed the AO to verify if the amounts were paid before the end of the financial year and if so, to allow them. The ITAT concurred with the CIT(A) and stated that if contributions towards ESI were paid before filing the return of income under section 139(1) of the Income-tax Act, no disallowance could be made. The ITAT upheld the CIT(A)'s decision and remitted the issue back to the AO to verify the payment dates and delete the disallowance if paid before filing the return.

Pending Appeal on Identical Issue for A.Y. 2011-12:
The revenue raised a concern about a pending appeal on an identical issue for the assessment year 2011-12 in the case of another entity. However, this issue was not directly addressed in the judgment, as the focus was on the specific case at hand for the assessment year 2014-15.

Disallowance Made Under Relevant Acts:
The revenue also contested the disallowance made under the relevant Acts, specifically under section 36(1)(va) read with section 2(24)(x). The CIT(A) directed the AO to delete the disallowance if the amounts were paid before the end of the financial year. The ITAT treated the grounds raised by the revenue as allowed for statistical purposes, indicating that the appeal of the revenue was allowed on this ground.

In conclusion, the ITAT's judgment addressed the issues of disallowance of bad debts written off and belated remittance of ESI, upholding the CIT(A)'s decisions and remitting the matters back to the AO for further action. The pending appeal for the assessment year 2011-12 was not directly resolved in this judgment, and the disallowance made under relevant Acts was allowed for statistical purposes.