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TMI Blog2013 (11) TMI 279X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned CIT(A) failed to appreciate that cases relied upon by assessee as sited in the appellate order for employer's contribution order, deals with and are applicable to both deposit of employer's as well as employee's contribution to P.F. c) That the learned CIT(A) failed to appreciate that due date as defined under IT Act for the purpose of section 43B as well as 2(24)(X)/36(1)(va) of the Act is one as shown under section 36(1)(va) and its modification as due date for filing of Return u/s 139 of the Act by finance Act 2003 is applicable to both category of P.F contribution. d) That the learned CIT(A) has failed to appreciate that in the interest of equity & natural justice a fair and logical interpretation of the provision of the Act has to made." 3. Ground No. 1 regarding disallowance of claim of referral fee. The assessee company is engaged in the business of insurance activities being an insurance intermediatary as corporate insurance agent. During the previous year relevant to the assessment year under consideration the assessee has declared income from agency commission at Rs. 5.86 crores. In the course of assessment proceedings the AO fou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation and it is also not required to be witnessed as per the provisions of the Contract Act. Further the Ld. Counsel has submitted that even a oral agreement is legally enforceable if the conditions as prescribed under Contract Act i.e. competency of the parties, free consent, consideration, for lawful object and the agreement is for lawful object and not declared as void by the law inforce. Thus, the Ld. Counsel has contended that the reasons for rejecting the agreement are not sustainable as the same are not required as per the provisions of Contract Act. He has referred the service level agreement at page 12 of the paper book and submitted that when parties have acted in terms of said agreement then even if the agreement is not reduced in writing the same is legally enforceable. In support of his contention he has relied upon the decision of Hon'ble Jurisdiction High Court in case of Shankarlal Narayandas Vs The New Mofussil Co. Ltd. (1946) 48 BOMLR 456 and submitted that the Hon'ble High Court has held that even an oral contract is valid and enforceable if it is proved that there is an agreement between the parties. The Ld. Counsel has referred the ledger account, credit note a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the purpose of the assessee's business. 7. We have considered the rival submissions as well as relevant material on record. A regards the validity of agreement we note that the alleged agreement is undated and no description regarding the authority of the persons who have signed the said agreement. Though no stamp duty was paid and also it has not been attested by any witness however, there is no such requirement for enforceability of the agreement between the parties. It is pertinent to note that the enforceability of the agreement is restricted between the parties to the agreement as per the Indian Contract Act. A valid and enforceable agreement must be between the parties who are competent to enter into agreement apart from the satisfaction of the other conditions provided under the Indian Contract Act. The agreement in question though signed by the persons on behalf of the parties however it does not show as how the signing persons are competent and authorised on behalf of the respective party. Even otherwise the assessee has not produced the original agreement as well as other supporting evidence to establish that the agreement was signed by the competent and duly authorised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed that the assessee has not made payment of contribution received from employees and also employer contribution before the due date as defined in the explanation to section 36(1)(va). Accordingly, the AO disallowed both the payments being employees as well as employers contribution by invoking the provisions u/s 43B of the Income Tax Act. On appeal, the CIT(A) has allowed the claim with respect to the employers contribution P.F however confirm the disallowance regarding employees contribution. 11. We have heard the Ld. AR as well as Ld. DR and considered the relevant material on record. The Ld. AR has relied upon the decision of this Tribunal in case of Hindustan Construction Co. Ltd. Vs DCIT 140 ITD 642. On the other hand, the Ld. DR has relied upon the decision of the Tribunal in ITA No. 338/2012 dated 17.5.2013. Though there are decisions of this Tribunal having divergent view on this issue however, in the case of Hindustan Construction Co. Ltd. Vs DCIT (supra) one of us the Judicial Member is a party has taken a view that if the payment is made before the due date for filing the return of income then the same is allowable. The Tribunal has considered the issue in para 6 and 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, the Tribunal was dealing with the employees' contribution to Provident Fund and ESIC which was paid even beyond the grace period. The Assessing Officer had disallowed the payment under section 36(1)(va), holding that the contribution was not covered by section 43B. The Tribunal was of the opinion that the case was covered by the judgment of the Supreme Court in the case of CIT v. Alom Extrusions Ltd.(2009) 319 ITR 306 and accordingly held that the contribution of the employees'; if paid before the due date for filing the return of income as contemplated by the proviso to section 438 is to be allowed as a deduction. In the case of Radhakrishna Food land Pvt. Ltd. v ACIT in ITA No.4211/Mum./20 (assessment year 2003-04), the Tribunal by order dated 11th February 2008, held following the view taken by the Supreme Court in the case of Vinay Cement Ltd (2007)213 CTR 268 that the employees' contribution paid before the due date for filing the return of income is allowable as a deduction. There is thus a series of orders of the Mumbai Benches of the Tribunal on the issue and respectfully following them we delete the disallowance of Rs.14,02,512/-, out of which Rs. 5,62,450/- was paid af ..... X X X X Extracts X X X X X X X X Extracts X X X X
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