2022 (9) TMI 1180 - AT - Income Tax

Disallowance of delayed contribution towards PF ESI - addition cannot be made u/s 143(1)(a) - HELD THAT - The alleged amount was deposited before the due date of filing return of income u/s 139(1) of the Act. Therefore, in light of the decision of the Coordinate Bench of this Tribunal in the case of Lumino Industries Ltd. 2021 (11) TMI 926 - ITAT KOLKATA - We find that this Tribunal has taken a consistent view that in such cases where there is a delay in deposit of PF ESI as per the due dates prescribed under the relevant Acts covering PF ESI but the assessee finally deposits the amount before the due date of filing return of income u/s 139(1) of the Act then such disallowances are uncalled for - we delete the alleged disallowance made towards contribution towards PF ESI and allow grounds raised by the assessee. Adjustment of profit on sale of motor car - assessee being a private limited company while computing the total income firstly disallowed the depreciation calculated as per the Companies Act and then reduced the income by the depreciation as per the Income Tax Act - Profit on sale of motor car was also reduced. - HELD THAT - On perusal of the depreciation chart find that at serial no. 11 the assessee has shown the asset generator and car under the block of 15% opening Written Down Value there is an addition in the block and the sale consideration of car is reduced and after charging depreciation closing W.D.V. - Since the assessee has reduced the sale consideration of sale of car in the block itself and the block still exists at the close of the year, no separate income was required to be shown for the profit on sale of car. Ld. D/R failed to controvert this fact and only contention made by him is that the matter has already been restored to the file of ld. CIT(A). CIT(A) ought to have examined the facts of the case and should have decided the issue but since ld. CIT(A) failed to do so,set aside the impugned order and delete the adjustment of income of profit on sale of motor car and allow ground no. 3 raised by the assessee.

Summary

Issues Involved:
Appeal against order u/s 250 of the Income Tax Act, 1961 for AY 2018-19 challenging adjustments made u/s 143(1) - Disallowance of contribution towards PF & ESI and profit on sale of motor car.

Analysis:

1. Disallowance of Contribution towards PF & ESI:
The assessee challenged the disallowance of contribution towards PF & ESI made under section 143(1)(a) of the Act. The Tribunal noted that the amount was deposited before the due date of filing the return of income u/s 139(1) of the Act. Citing a consistent view in a previous case, the Tribunal found such disallowances unnecessary. Relying on the decision, the Tribunal deleted the disallowance, granting relief to the assessee.

2. Profit on Sale of Motor Car Adjustment:
Regarding the adjustment of profit on the sale of a motor car, the Tribunal observed discrepancies in the computation of income and depreciation calculations. The Tribunal found that the system processing the return failed to recognize the details in the depreciation chart, leading to the addition of the alleged amount. Upon detailed examination of the depreciation chart, the Tribunal determined that no separate income was required to be shown for the profit on the sale of the car. Despite the matter being restored to the CIT(A), the Tribunal found the CIT(A) failed to properly examine the case. Consequently, the Tribunal set aside the order, deleted the adjustment of income for the profit on the sale of the motor car, and granted relief to the assessee.

3. Other Grounds:
The Tribunal noted that the remaining grounds were either academic or general in nature, requiring no further adjudication. Consequently, the Tribunal allowed the appeal of the assessee, deleting the addition made for the profit on the sale of the motor car and the disallowance of PF & ESI contribution.

In conclusion, the Tribunal granted relief to the assessee by deleting the adjustments made under section 143(1) for profit on the sale of the motor car and the disallowance of contribution towards PF & ESI. The Tribunal's decision was based on a thorough analysis of the facts and legal provisions, ensuring a fair outcome for the assessee in the appeal.