9911796707
TMI Blog2008 (1) TMI 425X X X X Extracts X X X X X X X X Extracts X X X X ..... WDV of all the assets of the appellant." 2.1 The facts as are evident from the orders of the lower authorities are that M/s New Tobacco Co. (NTC) was acquired by the assessee company on lease from the official liquidator in terms of order of Hon'ble Calcutta High Court dt. 23rd Feb., 1994. The said leased unit comprising of Agarpara unit at Kolkata and Biccavolu unit at Andhra Pradesh was acquired by the assessee company vide order of Calcutta High Court dt. 29th June, 1995 through an open bid for a consideration of Rs. 23 crores. However, in terms of subsequent order of Calcutta High Court dt. 24th July, 2001, the said sale transaction stood modified to the effect that Biccavolu unit shall stand sold not to the assessee company but to the workers' union at an agreed consideration of Rs. 3,34,16,244 which stood adjusted against the initial consideration. This was not the case of sale of Biccavolu unit by the assessee to the workers' union but it was a modification of the original sale by official liquidator to the assessee and the Court directed the sale of the said unit to the workers' union in place of the assessee company, to whom the sale was initially agreed. Further, the af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of Biccavolu unit had taken place at a price of Rs. 3,34,16,244 and as such the claim of depreciation allowance in respect of assets of Biccavolu unit made by the assessee was not justified. As regards the apportionment of the sale price, the AO had given ample opportunity to the assessee to furnish the WDV of the assets of the transferred units but the assessee did not respond. As such, the action of the AO in this count cannot be faulted. The appellant cannot claim benefit of its own default and challenge the approach of the AO. This ground of appeal is, accordingly, dismissed." 2.3 The learned counsel for the assessee submitted before us that the proceedings taken by the UBI were finally disposed of by the High Court vide order dt. 19th April, 2006 and sale of Biccavolu unit to the workers' union was sustained. The assessee, accordingly, showed sale of the said unit in its return for asst. yr. 2006-07 offering capital gains as a slump sale. He, therefore, submitted that since the matter was pending in the proceedings taken by the UBI, the WDV can only be reduced or taken into consideration in the asst. yr. 2006-07 when the matter was finally concluded. In the alternate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cavolu unit from the said sum of Rs. 3,34,16,244 and the balance amount would be reduced from the value of the block of assets. 3. Ground No. 2 in the assessee's appeal reads as under: "2. That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in disallowing the claim in respect of write off of advance of Rs. 1,50,000 given in the course of the business in spite of the fact that the same has become irrecoverable." 3.1 It was submitted by the assessee's learned counsel that the assessee, inter alia, is engaged in the business of construction activities. The assessee had entered into an agreement with one Smt. Pawan Devi Chowararia for development of the land owned by her. As per agreement, the cost, charges and expenses for installation of generators would be borne by the assessee and the owners proportionately in consonance with their respective allocation. The assessee gave an advance of Rs. 1,50,000 to the association of flat owners in the normal course of its business. Since the said amount could not be recovered from the association of flat owners, the assessee wrote off the same in its accounts. The AO disallowed the claim of the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the material placed before us. In the present case, the genuineness of the expenditure is not disputed. The only dispute is that the payment made during the year under appeal was related to some earlier year and hence the same is not allowable in the year of payment. Admittedly the payment of Rs. 27,021 was for differential amount of sales-tax as the assessee could not submit sales-tax declaration form to its creditors. Liability to pay the above sum arises only when assessee failed to submit the sales-tax declaration. In view of the above, we hold that the assessee would be entitled to claim such deduction in the year under consideration. We direct accordingly. 5. The 4th ground in this appeal by the assessee reads as under: "4. That on the facts and in the circumstances of the case, the learned CIT(A) was not justified in not allowing expenditure of Rs. 663 incurred on reimbursement of medical expenses for financial year 2000-01." 5.1 During the course of hearing, the assessee's learned counsel did not press the said ground. The same is, therefore, dismissed as not pressed. 6. Ground No. 5 of this assessee's appeal reads as under: "5. That on the facts and in the circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... may not be termed as expenditure of the nature described under s. 36(1)(iv). Therefore, it cannot be said that merely because the contribution was towards a provident fund, it would amount to expenditure in the nature described under s. 36(1)(iv) even if fund was not a recognized one. Therefore, there was no bar in allowing the expenditure of this nature which was not a contribution to a recognized PF under s. 37(1) of the Act. Respectfully following the aforesaid decision of Hon'ble Gujarat High Court, we find substantial force in the assessee's submission that even though the PF contributions were deposited with an unrecognized institution, the same are admissible under s. 37 of the Act as bona fide business expenditure. We, therefore, reverse the order of the CIT(A) on this issue and direct the AO to allow the expenditure of Rs. 3,45,055 under s. 37(1) of the Act. 7. Ground No. 6 of this assessee's appeal reads as under: "6. That on the facts and circumstances of the case, the learned CIT(A) erred in confirming the action of AO in disallowing Rs. 56,95,665 being employees' and employer's contributions to PF, ESI, etc., paid within the previous year under consideration." 7.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r's contribution is concerned, as per proviso to s. 43B, the deduction is permissible if the payment is made on or before the due date for filing of the return as specified under s. 139(1) of the IT Act. But, in respect of the employees' contribution, the deduction would be permissible only if the payment is made before the due date as provided in the respective Act, rule, order or notification governing such fund, i.e., PF, superannuation fund, ESI fund or any other similar fund for the welfare of the employees. We may mention that the payment made within the grace period permissible under the Act, rule, order or notification of the respective fund would be considered to be payment made within the due date as per Explanation to s. 36(1)(va). By providing the grace period, the competent authority governing the relevant fund permits the employers to make the deposits within such extended time as covered by grace period. Therefore, the payment made within the grace period would be considered to be payment made within due date under the respective Act, rule, order or notification within the meaning of Explanation to s. 36(1)(va). 55.2 Coming to the facts of the present case, we find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c. 234D providing for charging of interest in case where excess refund was granted was inserted by the Finance Act, 2003, w.e.f. 1st June, 2003. The assessee's learned counsel contended that the provisions of s. 234D cannot be applied to any assessment year prior to 1st June, 2003. In support of his contention, he placed reliance on the decision of Tribunal, Kolkata, in the cases of (i) Glostar Jute Mills Ltd. (ITA No. 1879/Kol/2006, order dt. 20th April, 2007) and (ii) Kesoram Industries Ltd. (ITA Nos. 719 and 641/Kol/2006, order dt. 9th Feb., 2007). We find that the assessment year involved in this appeal before us is 2002-03, relevant to financial year ending on 31st March, 2002. Therefore, respectfully following the aforesaid decisions of the Tribunal relied upon by the assessee, which has also taken into cognizance by another decision of Tribunal, Kolkata Bench in the case of New Kenilworth Hotel (P) Ltd. and decision of Tribunal, Delhi in the case of Glaxo Smithkline Asia (P) Ltd. vs. Asstt. CIT (2005) 97 TTJ (Del) 108, we hold that the provision of s. 234D, which was inserted by the Finance Act, 2003 w.e.f. 1st June, 2003 cannot be invoked in the case of the assessee for the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: "The amounts paid/payable on account of luxury tax arc covered by the provisions of s. 43B of the IT Act, 1961 and have to be allowed as deduction only on payment basis as prescribed in the IT Act, 1961. The date of accrual of liability is, therefore, not relevant. Similarly, the AO cannot simply presume that the amounts paid by the assessee might have been on account of penalty. The AO should have specifically brought on record evidence, if any, to prove his presumption or finding. In the absence of any positive evidence with regard to the payment of penalty, the figures in the nature of payment stated by the assessee have to be taken as correct particularly in view of the audit report. Accordingly, it is held that the AO was not justified in making addition of Rs. 1,37,03,258. This ground of appeal is allowed." 11.3 We have heard the rival contentions of the parties and perused the material placed before us. In our considered opinion, the finding of the AO that the amount paid by the assessee might have been on account of penalty is based on no material on record, rather it was based on his presumption. On the other hand, the assessee has furnished evidence and explain ..... X X X X Extracts X X X X X X X X Extracts X X X X
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