2018 (8) TMI 1634 - AT - Income Tax

Addition on account of employees contribution to ESI & PF - Held that - This issue is covered by the decision of the Hon ble Jurisdictional High Court in the case of CIT Vs SBBJ (2014 (5) TMI 222 - RAJASTHAN HIGH COURT). An identical issue was considered and decided by this Tribunal in assessee s own case for the A.Y. 2009-10, 2010-11 and 2012-13 as held where the PF and/or EPF, CPF, GPF etc., if paid after the due date under respective Act but before filing of the return of income u/s 139(1), cannot be disallowed u/s 43B or u/s 36(1)(va) of the IT Act Decided against Revenue. Disallowance made U/s 14A r.w.r. 8D - Held that - When no dividend was received by the assessee during the year under consideration and also no fresh investment was made during the year then no expenditure has been incurred by the assessee during the year under consideration except the interest expenditure if any for the purpose of investment. Since the investment in the sister concerns are old one, therefore, an identical issue was considered and decided by this Tribunal in assessee s own case for the earlier assessment years including the A.Y. 2012-13 and when the disallowance made by the Assessing Officer in the earlier year has been deleted by this Tribunal and the decision of this Tribunal has been confirmed by the Hon ble Jurisdictional High Court then in absence of any fresh investment or dividend received by the assessee during the year under consideration, no disallowance to be made - Decided against Revenue. MAT - adjustment made in the book profit computed U/s 115JB of the Act in respect of share of the assessee in the income of the joint venture - whether the share of profit from AOP/Joint Venture shall be excluded for the computation of book profit U/s 115JB? - CIT-A holding that clause (iic) inserted in Explanation 1 to sec. 115JB by Finance Act, 2015 is remedial and curative in nature - Held that - Once the share in the joint venture which is treated as share in the association of persons is not hit by the second proviso to Section 86 then the same is akin the share from the partnership firm. Thus to bring it to the parity of share in partnership firm, the amendment in Section 115JB of the Act vide Finance Act, 2015 was brought by inserting clause (iic) w.e.f. 1/4/2016. Therefore, the purpose and intention to bring the amendment is to remove the mischief or hardship of the assessee on MAT in respect of the income being share in the association of persons or body of individuals which is otherwise not subject to income tax in accordance with the provisions of Section 86 of the Act. The amendment was brought to remove the hardship and bring the parity of the income being share in the association of persons or body of individuals, which is otherwise not liable to tax as per the provisions of Section 86 of the Act, the same shall have retrospective application. In absence of any contrary precedent brought to our notice and to maintain the rule of consistency, we follow the decision of Mumbai Benches of the Tribunal in the case of M/s Goldgerg Finance Pvt. Ltd. Vs ACIT 2017 (2) TMI 643 - ITAT MUMBAI . Accordingly, we do not find any error or illegality in the order of the ld. CIT(A) qua this issue. Hence, this ground of revenue s appeal stands dismissed.

Summary

Issues Involved:
1. Deletion of addition on account of employees' contribution to ESI & PF.
2. Deletion of disallowance under Section 14A read with Rule 8D.
3. Adjustment of income of the joint venture under Section 115JB.
4. Applicability of clause (iic) inserted in Explanation 1 to Section 115JB by Finance Act, 2015.

Detailed Analysis:

Issue 1: Deletion of addition on account of employees' contribution to ESI & PF
The revenue challenged the deletion of the addition made on account of employees' contribution towards ESI and PF, arguing it was not made within the prescribed time limit. The Tribunal noted that the issue is covered by the decision of the Hon'ble Jurisdictional High Court in CIT Vs SBBJ (2014) 363 ITR 70, which ruled in favor of the assessee. The Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal on this ground.

Issue 2: Deletion of disallowance under Section 14A read with Rule 8D
The revenue contested the deletion of the disallowance of ?44,02,000/- under Section 14A read with Rule 8D. The Tribunal observed that the assessee had made no fresh investments during the year and had sufficient interest-free funds. Additionally, no dividend income was received or accrued. The Tribunal referred to its earlier decisions and the Hon'ble Jurisdictional High Court's rulings, which consistently favored the assessee in similar circumstances. Consequently, the Tribunal upheld the CIT(A)'s order, dismissing the revenue's appeal on this ground.

Issue 3: Adjustment of income of the joint venture under Section 115JB
The revenue argued against the deletion of the adjustment made under Section 115JB concerning the income of the joint venture, asserting that the amendment brought by Finance Act, 2015, was not applicable retrospectively. The Tribunal noted that the CIT(A) had relied on the Mumbai Benches of the Tribunal's decision in M/s Goldgerg Finance Pvt. Ltd. Vs ACIT, which held that the amendment was remedial and curative in nature, thus applicable retrospectively. The Tribunal found no error in the CIT(A)'s order and dismissed the revenue's appeal on this ground.

Issue 4: Applicability of clause (iic) inserted in Explanation 1 to Section 115JB by Finance Act, 2015
The revenue contended that the amendment should not be applied retrospectively. The Tribunal, however, upheld the CIT(A)'s view that the amendment was intended to remove the hardship and bring parity between the share of profit from an AOP and a partnership firm. The Tribunal cited the decision in M/s Goldgerg Finance Pvt. Ltd. Vs ACIT, which supported the retrospective application of the amendment. The Tribunal dismissed the revenue's appeal on this ground as well.

Conclusion:
The Tribunal dismissed the revenue's appeal on all grounds, upholding the CIT(A)'s order in favor of the assessee. The Tribunal's decision was consistent with prior rulings and judicial precedents, ensuring no error or illegality in the CIT(A)'s order.