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2020 (4) TMI 232 - HC - Income TaxDisallowance of contribution to Energy Conservation Fund - HELD THAT - Contribution towards fund is connected with the business and is not diversion of Income and allowable u/s.37(1) Contribution towards provident fund - HELD THAT - It is not in dispute that this Court in Commissioner of Income Tax vs. M/s. State Bank of Bikaner and Jaipur 2014 (5) TMI 222 - RAJASTHAN HIGH COURT binds and covers the dispute against the revenue. However, the learned counsel for the revenue informs that the Special leave to Petition filed by the revenue against the aforesaid judgement is pending before the Supreme Court. Even though these questions with respect to interpretation of Section 43B of the Act were answered against the revenue, but they are subject to the final order of the Supreme Court on these questions.
Issues:
1. Deletion of addition of contribution to State Renewal Fund. 2. Deletion of addition for depositing employees' contribution to PF & ESI. 3. Interpretation of employees' contribution to PF and ESI under Section 43B. 4. Disallowance of contribution to Energy Conservation Fund. 5. Disallowance of contribution to Rajasthan Bhawan. Analysis: 1. The first issue pertains to the deletion of the addition of a contribution made to the State Renewal Fund. The ITAT justified the deletion, stating that the contribution was not connected to the business but was considered a diversion of income. The ITAT held that it was not allowable under Section 37(1) of the IT Act. The High Court upheld the ITAT's decision, citing a previous judgment where a similar expense was upheld, indicating that the ITAT's decision was reasonable and did not require interference. 2. The second and third issues involve the deletion of the addition for depositing employees' contribution to PF & ESI and the interpretation of these contributions under Section 43B. The High Court noted that a previous judgment involving a similar dispute binds the current case against the revenue. However, the revenue had filed a Special Leave Petition against the judgment, which was pending before the Supreme Court. The questions regarding the interpretation of Section 43B were answered against the revenue but were subject to the final decision of the Supreme Court. 3. The fourth issue concerns the disallowance of a contribution to the Energy Conservation Fund. The ITAT upheld the deletion of this disallowance, which was made by the Assessing Officer. The High Court supported the ITAT's decision, emphasizing that the contribution was claimed under Section 37(1) of the Income Tax Act. Referring to a previous judgment where a similar expense was upheld, the High Court found the ITAT's decision reasonable and declined to interfere. 4. The fifth issue involves the disallowance of a contribution to Rajasthan Bhawan as a business expenditure. The Hon'ble ITAT had deleted this disallowance, stating that it was not a business expenditure. The High Court disposed of the appeal with the aforementioned observations, implying that the decision of the ITAT in this regard was acceptable. In conclusion, the High Court upheld the decisions of the ITAT on various issues related to the deletion of additions and disallowances of contributions, citing previous judgments and the interpretation of relevant sections of the Income Tax Act. The pending Special Leave Petition before the Supreme Court was noted as a factor affecting the finality of certain decisions.
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