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2016 (5) TMI 954 - AT - Income TaxAddition u/s 43B - Held that:- The assessee had paid ESIC payment of ₹ 10158/- before filing the return of income. The Hon’ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd. [2009 (11) TMI 27 - SUPREME COURT ] held that the amendments to section 43B brought out by the Finance Act, 2003 with effect from 01/04/2004 are retrospective in nature and would operate from 01/04/1988. Various benches of ITAT and coordinate benches of this Tribunal have followed the above decision and held that the amendment to section 43B brought out by the Finance Act, 2003 is retrospective in nature and justified in deleting the additions made on account of delayed payment of Provident Fund of employees contribution. Since, PF & ESI are same, we respectfully follow the decisions of coordinate benches of this Tribunal and direct the AO to delete the addition made on account of ESI Payment With regard to other issue, the assessee has created a provision for exgratia to the extent of ₹ 15.73 lakhs and paid ₹ 13.62 lakhs before filing of the return. AO has treated the above provision of expenses as statutory due to the employees u/s 43B of the Act, whereas, this is not statutory obligation on the part of the assessee, but, it is a contractual and voluntary expenditure for which assessee has created the provision. Respectfully following the decision of this Tribunal in the case of Novopan Industries Ltd. Vs. DCIT, [2013 (9) TMI 377 - ITAT HYDERABAD ] and others wherein it was held that the exgratia cannot be regarded as bonus and requirement of the provisions of section 37 are fully satisfied. Hence, respectfully following the said decision, we delete the addition made invoking section 43B on exgratia. Disallowance made u/s 40(a)(ia) in respect of fee payable to the advocate - Held that:- M/s Bajaj Hindustan Ltd., who deducted the TDS and remitted the same properly. Therefore, we do not find any default on the part of the assessee and hence, we delete the addition made on this count. Disallowance made u/s 40(a)(ia) towards payment for purchase of printing material - Held that:- There is no doubt that the assessee has procured printing labels to its specification. The payment was made accordingly. In this connection, the Hon’ble P&H High Court in the case of CIT Vs. Markfed Khanna Branch [2008 (2) TMI 260 - PUNJAB AND HARYANA HIGH COURT], held that where assessee purchased printed packing material from manufacturer for the purpose of packing to its finished products and no raw material was supplied by it to manufacturer, for manufacturing of such packing material, transaction was a contract of sale and not as works contract. Held, it was outside the purview of section 194C. In the present case before us also squarely false on the facts of the above judgment. By following the above ratio, we delete the addition made on this count. Reimbursement to C&F agents - Held that:- As clarified in Circular No. 1 of CBDT, the TDS provision will not be charged on service tax as the same was collected on behalf of central govt. Coming to the other issue of re-imbursement of expenditure to the C&F agents, it is pure reimbursement of expenses, without any profit elements, the C&F agents are acting as agents for the principal. Hence, TDS will not be applied on such reimbursements Services of recruitment agencies - TDS liability - Held that:- We are of the view that as per Circular No. 714, dated 03/08/1995, the services of recruitment agencies are in the nature of professional services rendered and hence, it will be charged to TDS u/s 194J. Hence, the assessee is liable to pay TDS on such payments u/s 194J. Accordingly, we sustain the disallowance made by the AO. Payment to professionals - Held that:- As contended by the assessee that out of ₹ 2,46,487/- disallowed by the AO, ₹ 74,900/- is mere reimbursement of expenses. On analyzing the case laws submitted by the AR, we observe that all the cases were relating to reimbursement of expenses relating to payments to sister concerns or to agents. Whereas in the present case, the reimbursement was paid to professionals, who had met some expenditures. We understand that the professional charges are claimed along with the reimbursement of expenditure in the same invoice. The TDS provision will apply in this case on the gross amount as per Circular No. 714, dt. 03/08/1995. We, therefore, sustain the addition made by the AO. Disallowance made in respect of annual and quarterly discounts paid/payable to stockiest u/s 40(a)(ia) - Held that:- The above payments are in the nature of trade discounts and not commission on which provisions of section 194H will apply. Accordingly, the additions made on this count are deleted. Disallowance made u/s 40(a)(ia) for payments made to stockiests - Held that:- The Assessee has already made TDS payments on the similar payments and termed these as commission. It cannot contest that these are incentives to dealers and could not substantiate its claim. We conclude that these are in the nature of commission only. Also, the provision made for ₹ 1,94,000/- will attract TDS as per the provisions of TDS, and TDS has to be remitted as soon as payment is made or credited, whichever is earlier. In the present case, the assessee cannot identify the parties to whom commission payment was to be made. The liability cannot be created without identifying the actual liability as well as identifying the creditor. In our view, the assessee has no option but to reverse it.
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