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TMI Blog2018 (8) TMI 851X X X X Extracts X X X X X X X X Extracts X X X X ..... ARs. For The Revenue : Shri Mudit Nagpal, Sr. DR ORDER PER RAJPAL YADAV, JUDICIAL MEMBER : Assessee is in appeal before the Tribunal against order of the ld.CIT(A)-9, Ahmedabad dated 17.10.2016 passed for the assessment year 2013-14. 2. Though the assessee has raised five grounds of appeal, it has pressed only ground no.2 and 3 for adjudication. Ground no.2 is regarding disallowance of deduction under section 36(1)(va) of the Act towards Provident Fund and Employees State Insurance, while ground no.2 is against upholding of disallowance of ₹ 26, 000/- paid towards legal expenses. 3. Brief facts of the case are that the assessee has filed its return of income on 30.9.2013 declaring total income at ₹ 57, 96, 180/-. The ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iling of return, the same would be allowable as deduction under section 43B of the Act. We find that amount in dispute relates to "employees' contribution" and not "employer's contribution". Section 43B relates to sum payable by the assessee as an employer by way of contribution to any provident fund etc., whereas section 36(1)(va) relates to any sum received by the assessee from any his employees to be credited to the employee's account in the relevant fund or before the due date provided in relevant Act. Therefore, these two sections are distinct and independent to each other and apply in different situations. The claim of the assessee falls within the ambit of section 36(1)(va) and the "due date" defined in the Explanation attached to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion was towards compounding fees levied by the Legal Metrology department, Nagpur, which was compensatory in nature and not penal as alleged by the AO. It was submitted that expenditure cannot be allowed under Explanation to section 37 only when it was incurred for an offence or the acts prohibited by the law. The payment of compounding fees, which was neither an offence nor prohibited by the law, cannot be disallowed. The AO did not accept this submission of the assessee and held that since legal expenses claimed by the assessee has an element of breach of law, therefore, the same was penalty and not allowable under section 37. Aggrieved assessee went in appeal before the ld.First Appellate who also concurred with the finding of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture of compensatory and necessitated by commercial expediency. In the normal incidences of business, certain damages are to be paid by an assessee and the expenses so incurred is an allowable deduction in the ordinary course of the business. The letter of Inspector of Legal Metrology, Nagpur dated 11.7.2012 states that the assessee to make payment of ₹ 20, 000/- to avoid any future litigation. The assessee has settled the issue by paying the sum as compensation/damages for the interest of its business, which according to us, cannot be treated as incurred for infraction of any law and therefore to be disallowed. We are not convinced with the action of the AO in disallowing the impugned claim of the assessee, as there is no finding rec ..... X X X X Extracts X X X X X X X X Extracts X X X X
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