2017 (9) TMI 1399 - AT - Income Tax

Addition u/s 40A - Disallowance of leave salary payment in the shape of staff welfare in violation of rate schedule as per agreement - Held that - We notice that the assessee has submitted the statement of leave salary payment wherein the payee has signed in front of the amount received by him. The payment made to each payee is below 20, 000/- hence it does not attract the provisions of section 40A(3) of the I.T.Act. As the ld Counsel also pointed out before us that the assessee is ready to submit the pay register details of amount paid to payee books of accounts and other more information before the AO therefore this issue should be sent to the file of the AO for fresh examination. Therefore we are of the view that this issue requires a fresh examination on the part of the Assessing Officer therefore we remit the matter back to the file of the Assessing Officer to examine the payment of leave salary and allow the payment as per the provision of the Act. - Decided in favour of assessee for statistical purposes. Disallowance of payment of bonus - Held that - The assessee has demonstrated before us that two months wages were paid as bonus and reimbursed form M/s Jet Airlines India Ltd. The assessee paid bonus through vouchers which had been produced before the Assessing Officer. However the Assessing Officer had denied this fact that no vouchers were produced by the assessee. Therefore we are of the view that this issue requires fresh examination at the end of the Assessing Officer to examine the bonus vouchers and other related documents and information. Therefore we direct the Assessing Officer to examine the bonus vouchers and other related information and adjudicate the issue afresh as per the provisions of the Act. Therefore we allow this ground for statistical purposes. Addition on payment for extra work and tiffin expenses - CIT-A allowed claim - Held that - The assessee has stated that late receipt of said payment from the Airlines is a consistent practice over the year. As per the facts above it seems that the sole reason for making disallowance is the suspicion of the Assessing Officer. The AO neither at the assessment stage nor at the remand report stage proved that the details filed by the assessee were wrong. The bulk of the entire work claim has been reimbursement to the assessee by the Airlines. This is also important to note that for the financial year 2009-10 the assessee has an opening liability of 24, 02, 040/- for payment of extra work to her employees and the assessee has paid 20, 78, 040/- out of the same to the employees during the financial year 2009-10 itself and this payment had not been doubted by the Assessing Officer but the Assessing Officer had disallowed the closing balance of outstanding extra work of 21, 28, 773/- which has no rational. These figures have been discussed by the Ld. CIT(A) also. Therefore we are of the view that the order passed by the Ld. CIT(A) on this issue does not contain any infirmity. Therefore we confirm the order passed by the Ld. CIT(A). Contribution towards ESI and PF paid beyond due date as envisioned in Section 43B - Held that - The above issue is squarely covered by the Jurisdictional High Court Calcutta in the case of M/s Vijay Shree Ltd. in (2011 (9) TMI 30 - CALCUTTA HIGH COURT ). It is jurisdictional High Court of the assessee. Therefore we are of the view that employees share of contribution towards PF and ESI if it is paid before filing of return of income then it would be a sufficient compliance of the Act. Accordingly we dismiss the appeal of the Revenue.

Summary

Issues Involved:
1. Disallowance of leave salary payment categorized under staff welfare.
2. Disallowance of bonus payment.
3. Allowance of payment for extra work and tiffin expenses without concrete evidence.
4. Allowance of employees' contribution towards ESI and PF paid beyond due dates.

Issue-wise Analysis:

1. Disallowance of Leave Salary Payment:
The assessee claimed leave salary payments of ?22,13,975 under staff welfare expenses. The Assessing Officer (AO) disallowed the claim due to lack of documentary evidence and the payments being made in cash through self-made vouchers. The CIT(A) upheld the AO's decision, noting the absence of employment agreements, attendance records, and leave records. The assessee argued that the payments were genuine and supported by payee signatures on a leave salary payment register. The Tribunal remitted the issue back to the AO for fresh examination, allowing the appeal for statistical purposes.

2. Disallowance of Bonus Payment:
The AO disallowed ?11,27,825 claimed as bonus payment, citing insufficient documentation and lack of substantiation. The CIT(A) confirmed the disallowance, noting the absence of a bonus register and vouchers. The assessee contended that the bonus was paid through vouchers and was a regular practice. The Tribunal directed the AO to re-examine the bonus vouchers and related documents, allowing the appeal for statistical purposes.

3. Allowance of Payment for Extra Work and Tiffin Expenses:
The AO disallowed ?21,28,773 claimed for extra work and tiffin expenses due to lack of proper records and the improbability of workers waiting for payment until year-end. The CIT(A) allowed the claim, noting that the extra work charges were verified by the concerned airline and that the assessee's practice of late payment was consistent. The Tribunal upheld the CIT(A)'s decision, finding no infirmity in the allowance of the expenses.

4. Allowance of Employees' Contribution towards ESI and PF:
The AO disallowed ?16,71,976 for employees' contribution towards ESI and PF paid beyond due dates, rejecting the assessee's claim of compliance with Section 43B. The CIT(A) allowed the claim, referencing the jurisdictional High Court's decision in M/s Vijay Shree Ltd. The Tribunal upheld the CIT(A)'s decision, confirming that payment before the filing of the return of income suffices for compliance.

Conclusion:
The Tribunal remitted the issues of leave salary and bonus payment back to the AO for fresh examination, while upholding the CIT(A)'s decisions on extra work and tiffin expenses, and employees' contribution towards ESI and PF. The appeals were allowed for statistical purposes or dismissed as applicable.