9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (7) TMI 1006 - AT - Income TaxDelayed employees contribution to EPF - Deposits before the due date of filling ROI - HELD THAT - When the employees share of contribution towards EPF had been deposited by the assessee prior to the due date of filing of his return of income for the year under consideration, therefore, no disallowance of the same was called for in his hands. We find that the aforesaid issue in question is squarely covered by a recent order of the Tribunal in the case of M/s Ind Synergy Limited 2022 (4) TMI 36 - ITAT RAIPUR Accordingly, as the assessee in the case before us had deposited the employees share of contribution of EPF much prior to the due date of filing of his return of income as contemplated in Sec. 139(1) of the Act i.e 30.09.2012, therefore, the same as per the concession provided in Proviso to Sec. 43B(b) would not be liable for any disallowance. - Decided in favour of assessee. Addition on account of service tax that was collected but not paid by treating the same as his business income under Sec. 28 r.w.s 5 of the Act - HELD THAT - As during the year consideration i.e AY 201213 Sec. 145A(a)(ii) only contemplated valuation of purchase and sale of goods and inventory and thus covered cases where the amount of tax, duty, cess or fee was actually paid or incurred by the assessee to bring the goods to the place of its location and condition as on the date of valuation and had no bearing to rendering of services, therefore, no infirmity emerges from the accounting of the contract receipts by the assessee on the basis of exclusion method (i.e net of service-tax), which as observed by us hereinabove had consistently been followed by it since last many years. We, thus, in terms of our aforesaid observations set-aside the order of the CIT(Appeals) who had held that the accounting of the contract receipts by the assessee by adopting the exclusion method (i.e net of service-tax) was not proper. Grievance of the assessee that as he had not claimed any deduction of the amount of service-tax, therefore, there could be no justification for disallowance of the same by triggering the provisions of Sec. 43B - As we have approved the exclusion method (i.e net of service-tax) of accounting of contract receipts by the assessee, therefore, the adjudication of the present issue, i.e, disallowance of the unpaid amount of service-tax would rest on the edifice of our said observation. As observed by us hereinabove the disallowance under Sec. 43B presupposes a claim of deduction by the assessee. However, as in the present case before us, as averred by the ld. AR, and rightly so, now when the assessee had not claimed any deduction for the amount of the service-tax, thus, the failure on his part to deposit the same in the government account within the stipulated time period would not entail or lead to any disallowance of the said amount. We, thus, in terms of our aforesaid observations taking cognizance of the fact that the assessee had not claimed any deduction for the amount of service-tax while determining his taxable income, vacate the disallowance of the same u/s 43B of the Act by the lower authorities. Accordingly, in terms of our aforesaid deliberations we herein set-aside the order of the CIT(Appeals) and vacate the addition/disallowance of the unpaid amount of service-tax so made by the AO. - Decided in favour of assessee.
Issues Involved:
1. Disallowance under Section 36(1)(va) read with Section 2(24)(x) of the Income-tax Act for delayed deposit of employees' EPF contributions. 2. Addition of service tax collected but not paid, treated as business income under Section 28 read with Section 5 of the Income-tax Act. Issue-wise Detailed Analysis: 1. Disallowance under Section 36(1)(va) read with Section 2(24)(x) for delayed deposit of employees' EPF contributions: The assessee challenged the addition of Rs. 7,16,761/- made by the AO for delayed deposit of employees' EPF contributions. The assessee argued that the actual delayed deposit amount was Rs. 6,42,579/-, not Rs. 7,16,761/-, and provided a reconciliation of the delayed deposits. The assessee claimed that the delayed deposits were made before the due date of filing the return of income under Section 139(1) and hence should not be disallowed under Section 43B. The Tribunal found merit in the assessee's argument, noting that the employees' share of EPF contributions was deposited before the due date of filing the return of income. The Tribunal cited various judicial pronouncements, including the Bombay High Court's decision in CIT Vs. Hindustan Organic Chemicals Ltd., which held that both employers' and employees' contributions to PF and ESI are covered under Section 43B. The Tribunal concluded that the amendments made by the Finance Act, 2021, to Section 36(1)(va) and Section 43B are applicable prospectively from AY 2021-22 onwards and do not affect the assessee's case for AY 2012-13. Therefore, the Tribunal set aside the CIT(A)'s order and directed the AO to vacate the disallowance of Rs. 7,16,761/-. 2. Addition of service tax collected but not paid, treated as business income under Section 28 read with Section 5: The assessee also challenged the addition of Rs. 54,65,666/- for service tax collected but not paid, which was treated as business income by the AO. The assessee argued that since it had not claimed any deduction for the service tax amount, no disallowance should be made. The AO and CIT(A) held that the service tax should have been included in the contract receipts and disallowed the unpaid amount under Section 43B. The Tribunal observed that the assessee consistently followed the exclusive method of accounting for contract receipts (net of service tax) and had not claimed any deduction for the service tax. The Tribunal referred to the Bombay High Court's decision in The Commissioner of Income-tax-2 vs. Knight Frank (India) Pvt. Ltd., which held that Section 145A(a)(ii) applies only to goods and not to services. The Tribunal noted that Section 145A was amended by the Finance Act, 2018, to include services, but this amendment is applicable from AY 2017-18 onwards. The Tribunal concluded that the assessee's method of accounting for contract receipts net of service tax was proper and that no disallowance under Section 43B was warranted since the assessee had not claimed any deduction for the service tax. Therefore, the Tribunal set aside the CIT(A)'s order and vacated the addition of Rs. 54,65,666/-. Conclusion: The Tribunal allowed the assessee's appeal, setting aside the CIT(A)'s order and vacating the disallowances of Rs. 7,16,761/- for delayed deposit of employees' EPF contributions and Rs. 54,65,666/- for unpaid service tax. The Tribunal's decision was based on the consistent accounting method followed by the assessee and relevant judicial pronouncements.
|
