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TMI Blog2016 (7) TMI 940X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Income-tax Act, 1961 (in short "the Act") and assessment was made at the total income filed but subsequently notices under Sections 143 (2) and 142 (1) of the Income-tax Act were issued on 14.10.2004. Thereafter, fresh notice under Section 142 (1) of the Act was issued along with detailed questionnaires on 08.08.2005. The representative of the assessee appeared on 18.08.2005 and after repeated adjournments, finally on 27.01.2006 he produced the books of accounts and complete reply of the questionnaire and other details were submitted. The Assessing Officer after considering the fact that the contribution had been made after due date statutorily prescribed disallowed the payment of employer's contribution to EPF to the extent of Rs. 8,32,507/- under Section 43B of the Income-tax Act and also disallowed the employees' contribution to Provident Fund amounting to Rs. 8,32,507/- treating the same as income from other sources as per the provision of sub-section (2) of Section 24 read with Section 36 (1) (va) of the Act. Similarly, the provision of Rs. 7,64,335/- towards gratuity was disallowed and the same was added to the total income in terms of the provisions of Section 40A (7) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing its earlier order dated 20.12.2001 passed in the case of M/s. Sintra Ltd. vs. ACIT, Circle, 1 (3), Patna in I.T.A. No. 497/Pat/196 in which under similar circumstances, it was held that the treatment meted out to the employees' contribution by disallowing the same was also on the basis, i.e., the delay in credit to the appropriate authorities, which was condoned by the appropriate authorities and thus the contention of the Department was found to be without force and it was held that there was no reason to consider the amount as income from other sources of the assessee and the addition was deleted. It is submitted that the present matter is practically on the same footing as the employees' contributions were paid within due date of filing of return and as a matter of fact some of the amounts of employees' contribution was deposited well within the financial year 1.4 2002 to 31.03.2003 itself. It is further submitted by learned counsel that there was no reason to treat/consider the said delayed payment in a different manner from the employer's contribution to the Provident Fund and both should have been dealt with under Section 43B of the Act and there was no justification for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) but not to labour welfare funds. The second proviso was then inserted to allow deduction of contribution to, inter alia, any provident fund if made before the due date as per the Employees Provident Fund Act during the previous year. This again resulted in implementation problems as a result of which the second proviso was deleted and the first proviso was amended bringing about uniformity by equating tax, duty and fee with contribution to labour welfare funds. It was made clear that the benefit of deduction would be applicable, provided the payments are made before the due date for filing of the return. From a perusal of the aforesaid decision, it is evident that it does not specifically refer to the employees' contribution or employer's contribution and both have been treated on the same footing. So far as difficulties in complying with the due date under the EPF Act vis-à-vis the previous year of the Income-tax is concerned, there can be no distinction between the payment of employees or employer's contribution and the same difficulties would be faced for both. In Alom Extrusions' case, the Court has broadly dealt with contribution to be made by the employers to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is. It is sought to be argued by learned counsel for the appellant that the provision on account of gratuity has been made towards approved gratuity fund/scheme issued by the Life Insurance Corporation of India known as Group Gratuity Scheme and that the gratuity being an ascertained liability is to be accounted for every year as per mercantile system of accounting and becomes payable as per the terms of employment either at the time of superannuation or otherwise. It is contended that the gratuity is a contractual obligation of the appellant as an employer and the liability to make payment arises soon after the employment comes to an end. It is further submitted that the provision has been made on actuarial valuation as per the scheme of LIC and the Tribunal is not correct in holding that the decision of the Karnataka High Court in the case of Motor Industries Co. Ltd.vs. Commissioner of Income-tax : (2007) 291 ITR 269 (Karn) is not applicable to the facts of the case, whereas the issues were identical in both the matters and the appellant in that case has also claimed premium paid/payable to LIC under the Group Gratuity LIC Fund. Learned counsel for the Revenue, on the other ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a notice dated 08.08.2005 under Section 142 (1) of the Act but the assessee failed to file any reply till the date of passing of the assessment order. In the absence of such a reply, it is not open to the assessee to claim that the provision had been made towards an approved gratuity fund itself. Before the CIT (Appeals) the stand of the appellant was that the provision for gratuity being an ascertained liability and not a contingent liability is to be allowed for every year and that has been made towards an approved gratuity fund or they were sums which had become payable during the previous year concerned. The Tribunal has clearly recorded that it is not the case of the assessee that it has made the provision for the purpose of payment of gratuity by way of any contribution towards approved gratuity fund or for the purpose of any gratuity that has become payable during the financial year under consideration. In view of the aforesaid factual position, no benefit can be derived by the assessee from the decision of the Karnataka High Court in the case of Motor Industry Co. Ltd. (supra) as the said case admittedly related to an approved gratuity fund and the Tribunal has thus right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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