2015 (9) TMI 743 - AT - Income Tax

Disallowance of Employees contribution to PF paid beyond due date - CIT(A) deleted the addition - contention of the assessee is that the payments were made in advance and there was no delay in depositing the employees contribution to PF - Held that - Tthe matter needs verification at the end of the AO. The ld.counsel for the assessee has placed on record a chart. The ld.counsel for the assessee has no objection if the matter is restored back to the file of AO for a limited purpose of verification with regard to deposit of employees contribution to PF authorities. In view of the submissions of the authorized representatives of the parties, we hereby set aside the order of the ld. CIT(A) and restore the issue to the file of AO for a limited purpose to verify the payment of the employees contribution. - Decided in favour of revenue for statistical purposes. Exclusion of provisions for gratuity for the computation of book profit u/s.115JB as directed by CIT(A) - Held that - CIT(A) has referred the case of Bharat Earth Movers 2000 (8) TMI 4 - SUPREME Court and certain decisions of the Tribunal and then came to the conclusion that the provision for gratuity was made on acturial valuation; hence, it was not an unascertained liability. In our opinion, there was no fallacy in the said verdict of learned CIT(A) because the assessee has demonstrated that the provision for gratuity was made on the basis of specific calculation and it was not an unascertained liability. In the case of EICHER MOTORS LTD. 2002 (5) TMI 221 - ITAT INDORE it was held by the respected co-ordinate Bench that the provision for gratuity based upon acturial valuation was not an unascertained liability which could be added back while computing the book profit for the purpose of Section 115JB. Respectfully following this decision, no interference is required in the view taken by learned CIT(A). - Decided against revenue.

Summary

Issues involved:
1. Late payment of employees' contribution to PF for AY 2004-05.
2. Treatment of provision for gratuity for the computation of book profit u/s.115JB for AY 2007-08.

Late payment of employees' contribution to PF for AY 2004-05:
The Revenue appealed against the CIT(A)'s deletion of the addition of Rs. 1,19,62,01,051 on account of late payment of employees' contribution to PF. The AO contended that the contribution was belatedly deposited, while the assessee argued that the payments were made in advance. The CIT(A) relied on a previous order and deleted the addition. During the hearing, the parties agreed to verify the payment of employees' contribution. The ITAT set aside the CIT(A)'s order and restored the issue to the AO for verification. If the contribution was paid before the due date, the addition would be deleted. The Revenue's appeal was partly allowed for statistical purposes.

Treatment of provision for gratuity for the computation of book profit u/s.115JB for AY 2007-08:
The Revenue challenged the CIT(A)'s direction to exclude the provision for gratuity of Rs. 29,55,144 for the computation of book profit u/s.115JB. The AO added the provision into the book profit, but the CIT(A) followed a previous decision and canceled the addition. The ITAT upheld the CIT(A)'s decision, citing consistency with a previous case where it was held that the provision for gratuity, based on actuarial valuation, was not an unascertained liability. As there were no changes in the facts, the Revenue's appeal was dismissed.

Judgment:
The ITAT Ahmedabad addressed two main issues in separate appeals for AY 2004-05 and AY 2007-08. For the late payment of employees' contribution to PF, the ITAT ordered verification by the AO to determine if the payments were made before the due date. In the case of the provision for gratuity, the ITAT upheld the CIT(A)'s decision to exclude the provision from the book profit, citing consistency with a previous case. The appeals were partly allowed for statistical purposes and dismissed for AY 2004-05 and AY 2007-08, respectively.