2018 (5) TMI 2186 - AT - Income Tax

Delayed employee s contribution to PF ESI beyond the prescribed time limit provided - CIT(A) justification in holding that employee s contribution to PF ESI are governed by the provision of section 43B and not by section 36(1)(va) r.w.s. 2(24)(x) of the I.T. Act. - CIT(A) deleted addition - HELD THAT - We do not think that there is any infirmity in the order of the ld. CIT(A) who, following the decisions of the Hon ble Rajasthan High Court in Jaipur Vidyut Vitran Nigam Ltd 2014 (1) TMI 1085 - RAJASTHAN HIGH COURT has directed the AO to verify the dates of payment of employee s contribution and delete the same, if the payments have been made before the due date of filing of the return of income. In the result, the grounds taken by the Revenue are dismissed. Addition on account of advance received against depreciation deferred - CIT(A) deleted addition - HELD THAT - We find that the facts of the present case are pari-materia to the facts before the Hon ble Supreme Court in National Hydro Electric Power Corporation Ltd. 2010 (1) TMI 281 - SUPREME COURT as well as the subsequent decision of the Coordinate Bench in case of NHPC 2014 (11) TMI 92 - ITAT DELHI and the latter decision has been rendered in the context of taxability of Advance against depreciation under the normal provisions of the Act. CIT(A) has rightly followed the ratio laid down in the said decisions wherein as held it is correct in holding that advance against depreciation cannot be added under the computation of the normal income. . We donot find any infirmity in the order of the ld CIT(A) and the same is hereby confirmed. The ground taken by the Revenue is thus dismissed.

Summary

Issues Involved:
1. Justification for deleting the addition related to the late deposit of employee's contribution to PF and ESI.
2. Applicability of Section 43B versus Section 36(1)(va) r.w.s. 2(24)(x) for employee's contribution to PF and ESI.
3. Justification for deleting the addition of Rs. 1,76,88,00,000/- on account of advance received against depreciation deferred.

Issue-wise Detailed Analysis:

1. Late Deposit of Employee's Contribution to PF and ESI:
The Revenue challenged the deletion of an addition of Rs. 4594/- related to the late deposit of employee's contributions to PF and ESI. The CIT(A) relied on the decisions of the Hon'ble Rajasthan High Court, which held that contributions made before the filing of the income tax return are allowable. The CIT(A) directed the AO to verify the payment dates and delete the addition if payments were made before the due date for filing the return. The Tribunal found no infirmity in the CIT(A)'s order and dismissed the Revenue's grounds, affirming that payments made before the return filing due date are permissible deductions.

2. Applicability of Section 43B vs. Section 36(1)(va) r.w.s. 2(24)(x):
The Revenue contended that employee's contributions to PF and ESI should be governed by Section 36(1)(va) r.w.s. 2(24)(x) rather than Section 43B. The CIT(A), following higher court precedents, concluded that payments made before the income tax return filing due date fall under Section 43B, allowing such deductions. The Tribunal upheld the CIT(A)'s findings, dismissing the Revenue's appeal and confirming that the provisions of Section 43B apply.

3. Advance Against Depreciation Deferred:
The Revenue contested the deletion of an addition of Rs. 1,76,88,00,000/- related to advance against depreciation (AAD) deferred. The AO added this amount to the assessee's income, arguing that AAD is current year revenue and not deferrable to future years. The CIT(A) reversed this, citing the Supreme Court's decision in National Hydro Electric Power Corporation Ltd. vs. CIT, which treated AAD as "income received in advance" and not taxable in the year of receipt. The Tribunal agreed with the CIT(A), emphasizing that AAD is a timing difference meant to adjust future depreciation and is not a reserve or current year income. The Tribunal dismissed the Revenue's appeal, affirming that AAD should not be included in the current year's taxable income under normal provisions.

In conclusion, the Tribunal dismissed the Revenue's appeal on all grounds, upholding the CIT(A)'s decisions based on established legal precedents and interpretations.