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2019 (4) TMI 621 - AT - Income TaxDisallowance of payment towards Employee s Contribution u/s 43B - payment not deposited in the relevant fund on or before the due date - HELD THAT - This issue has been settled by the Hon ble jurisdictional High Court in two occasions, viz. in the case of Gujarat State Road Transport Corporation Ltd. 2014 (1) TMI 502 - GUJARAT HIGH COURT and M/s.Checkmate Facility & Electronics Solutions P.Ltd. Vs.DCIT 2018 (10) TMI 994 - GUJARAT HIGH COURT wherein it is held that the employees contribution to the Employees Provident Fund (EPF)/ Employees State Insurance Corporation (ESIC) deposited beyond the due date prescribed under section 36(1)(va) would not be eligible for deduction under section 43B of the Act, even if deposited before the due date of filing the tax. Therefore, there is no merit in this ground of appeal assessee. Addition being expenses incurred on software up-gradation of computers - revenue or capital expenditure - HELD THAT - As decided in assessee s own case assessee has incurred expenditure to the extent of 60.93% of the value of the machinery in the AY 2010-11 and 31.58% in A.Y.2011-12, meaning thereby, by way of this method, almost 92% expenditure were incurred in two years on the value of the plant & machinery. It amounts to replacement. CIT(A) in this background has rightly observed that other companies in similar line were incurred expenditure to the extent of 2% to 6%, whereas the assessee has incurred expenditure at 43%. CIT(A) rightly upheld disallowance of expenditure partly by treating it in the capital field. - Decided against assessee
Issues:
1. Disallowance of Employee's Contribution towards PF fund. 2. Disallowance of expenses on software up-gradation. 3. Disallowance of repairs and maintenance expenses on plant & machinery. Analysis: Issue 1: Disallowance of Employee's Contribution towards PF fund The assessee appealed against the disallowance of payment towards Employee's Contribution to PF fund. The AO disallowed the claim citing section 2(24)(x) r.w.s. 36(1)(va) of the Income Tax Act and a judgment of the High Court. The Tribunal noted that similar issues were settled by the High Court in previous cases, stating that delayed deposits of EPF/ESIC contributions are not eligible for deduction under section 43B. Consequently, the Tribunal rejected the appeal. Issue 2: Disallowance of software up-gradation expenses The assessee did not press this issue for adjudication, leading to its rejection by the Tribunal. Issue 3: Disallowance of repairs and maintenance expenses on plant & machinery The appeal contested the disallowance of expenses towards repairs and maintenance of plant & machinery. The Tribunal referred to previous years' cases where similar disallowances were confirmed. The Tribunal upheld the disallowance, considering the nature of the expenses and the enduring benefits derived from the repairs. It cited relevant provisions of the Income Tax Act and case laws to support its decision. The Tribunal also allowed an alternative contention for granting depreciation on the disallowed amount. The Tribunal, following the precedent set in previous cases, dismissed the appeal, concluding that there was no merit in the grounds raised by the assessee. In conclusion, the Tribunal dismissed the appeal of the assessee based on the detailed analysis and legal considerations presented for each issue raised. The judgment provided a thorough examination of the relevant laws, precedents, and factual circumstances to arrive at its decision.
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