TMI Blog2010 (11) TMI 766X X X X Extracts X X X X X X X X Extracts X X X X ..... uisite details to the AO of the receipt of sale proceeds and the date of investment - If the AO is satisfied that the said investment had been made within a period of 6 months from the date of the receipt of the sale proceeds, assessee will get the deduction u/s 54EC of the Act. amount paid to the employees on account of voluntary premature retirement -assessee submitted that similar issue in the case of the assessee was considered by the I.T.A.T., Kolkata Bench in the assessee's own case for the assessment year 2001-02 in ITA No.448(Kol)/2005 vide order dated 21.04.06 (copy placed on record) and the Tribunal directed the AO to allow deduction in accordance with the provisions of section 35DDA at 20% instead of the entire amount with a direction to allow the balance of 20% each in four succeeding years. employees' contribution to provident fund after the due date as provided u/s 36(1)(va) of the Act - Held that:- the assessee is not entitled to deduction u/s 36(1)(va) of the employees' contribution to provident fund which was paid after the due date as specified in Explanation to Section 36(1)(va) of the Act as section 43B cannot be pressed into service because section 43B comes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibution to approved institution for scientific research expenditure. AO denied the claim of the assessee on the ground that the deduction u/s 35 could not be allowed until the approval is extended by the prescribed authority. Since the research centre is yet to be approved by the Central Government by Notification in official gazette, AO rejected the claim of deduction of Rs.14,76,223. C.I.T(A) has also confirmed the action of the AO and has held that mere recommendation of CBDT does not amount to extension of approval as required u/s 35(1) of the Act. 4. During the course of hearing before us, the learned A.R. conceded that the above research centre, i.e. ICI, R and T Centre is yet to be notified. In view of the above we do not find any reason to interfere with the order of the C.I.T(A) and hence ground no. 1 taken by the assessee is rejected. 5. In respect of ground no. 2 of the appeal taken by the assessee, the relevant facts are that the assessee claimed deduction against long term capita gain u/s 54EC of the Act on account of sale of assets. The assessee made investments in two parts of Rs.50 crores each. First part of investment was made on 23.01.04 and second part wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... months from the date of the receipt of the sale proceeds, assessee will get the deduction u/s 54EC of the Act. We may state that if the assessee fails to furnish requisite details to the satisfaction of the AO, AO will be at liberty to decide the same as per provisions of law on the basis of the material before him. Hence ground no. 2 of the appeal taken by the assessee is allowed for statistical purposes. ITA No. 1721(Kol)/2008 9. Now we take up the appeal of the revenue. The department has disputed the above order of the C.I.T(A) on the following grounds: "1. That on the facts and in the circumstances of the case ld C.I.T(A)- XII, Kolkata erred in directing the AO to delete the addition of Coal of Business Reorganization which is related to payment towards retirement benefits to employees who accepted premature retirement and that the matter is subjected before the Hon'ble ITAT, Kolkata for earlier assessment year on the same issue. 2. That on the facts and in the circumstances of the case ld. C.I.T(A)-XII, Kolkata erred in directing the AO to allow depreciation of Rs.2,25,75,780/- whereas the AO disallowed the same on the basis of earlier years' view of consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ead of the entire amount with a direction to allow the balance of 20% each in four succeeding years and the department had agreed with the direction of the ITAT and did not dispute the same in further appeal. Learned D.R. has not disputed the above contention of the learned A.R. 13. In view of the above submissions of the learned representatives of the parties and respectfully following the earlier order of the Tribunal dated 21.04.2006 (supra), we modify the orders of the auithorities below and direct that the claim of the assessee be allowed in accordance with the provisions of section 35DDA at 20% of the amount of the expenditure incurred and balance amount be allowed in accordance with the provisions of the Act. Hence ground no. 1 of the appeal of the department is allowed in part. 14. In respect of ground no. 2 of the appeal the AO has stated as under: "The assessee company claimed depreciation amounting to Rs.24,27, 86,408/- in its computation of income. This issue is also covered in earlier year's assessment. Depreciation claimed by the assessee was disallowed in earlier year based on WDV of the block of assets arrived at after adjusting sale consideration of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I.T(A) and accordingly reject ground no. 2 of the appeal taken by the department. 18. In respect of ground no. 3 of the appeal, the AO has stated that the assessee deposited Rs.3,53,727 towards employees' contribution to provident fund after the due date as provided u/s 36(1)(va) of the Act. Therefore, the AO in terms of the provisions of section 2(24)(x) of the Act treated the said amount as income of the assessee. Being aggrieved, the assessee filed appeal before the learned C.I.T(A). 19. The learned C.I.T(A) has deleted the said addition on the ground that the assessee had made payments before due date of filing of return and, therefore, the said payment is allowable as per section 43B of the Act. Hence, department is in further appeal before the Tribunal. 20. During the course of hearing the learned D.R. supported the action of the AO and relied on the decision of Special Bench, ITAT, Kolkata in the case of JCIT vs I.T.C. Ltd. 112 ITD 57 (SB). 21. On the other hand, the learned A.R. supported the order of the learned C.I.T(A) and placed reliance on the decision of the Apex Court in the case of C.I.T vs AIMIL, 321 ITR 508 and in the case of C.I.T vs Alom Extrusio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Vinay Cement Ltd. (supra) deals with the provisions of section 43B of the Act and in respect of employees' contribution to provident fund, the provisions of section 43B does not apply. He further submitted that the decision of the Hon'ble Delhi High Court in the case of AIMIL Ltd. (supra) has also been decided by following the decision of Vinay Cement Ltd. (supra). He further submitted that the only issue decided on those appeals were whether amount paid on account of P.F. after due date are allowable in view of section 43B read with section 36(1)(va) of the Act. He further submitted that it is nowhere decided as to whether belated payment of employees' contribution to provident fund paid is allowable if it is paid after due date but before due date of filing of return. 6. On the other hand, learned A.R. supported the order of the learned C.I.T(A) and also placed reliance on the aforesaid decisions as relied before the learned C.I.T(A). Besides above, the learned A.R. also referred the decision of the Hon'ble Delhi High Court in the case of CIT vs P.M.Electronics Ltd. AIT 2008 - 397 - H.C. 7. We have heard the learned representatives of the parties and have considered the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in this section shall apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return." 8. From the above it emerges that the term "due date" as appearing in section 36(1)(va) read with Explanation specifies the due date as the date by which the assessee is required as an employer to credit an employee's contribution under the employees a/c to the relevant fund. As regards the term "due date" as appearing in section 36(1)(va), the Explanation to section 36(1)(va) specifies the "due date" as the "date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued there-under or under any standing order, award, contract of service or otherwise." The term "due date" as specified in the Explanation to section 36(1)(va) does not refer to the due date fixed f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the deduction is otherwise allowable under the Income-tax Act. There are several provisions in the Income-tax Act, which set out the conditions for the allowability of deductions of those very sums which are referred to in section 43B. Those provisions would be rendered otiose if a view was to be taken that deductions of the aforesaid sums would be allowed as and when they are actually paid irrespective of the fact that they are not otherwise allowable under the Income-tax Act. The plain and unambiguous language used in section 43B makes it absolutely clear that the allowability of deduction of any sum referred to in clauses (a) to (f) upon actual payment is restricted to those deductions only, which are otherwise allowable under the Income-tax Act. Thus the factum of actual payment by itself is not sufficient to successfully claim a deduction u/s 43B, which is otherwise not allowable under the Income-tax Act. In other words, all those deductions, which are otherwise not allowable under the Income-tax Act, cannot be allowed even on actual payment u/s 43B. (iv) The proviso to section 43B carves out an exception and allows deduction in respect of any sum referred to in clauses (a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowable under the Income Tax Act. In fact it has not even the question raised in those decisions as to whether deduction which is not otherwise allowable under the Income Tax Act, could at all be allowed on payment basis u/s 43B. It is well-settled principle that a judgment must be read as a whole and the observations in the judgment have to be construed in the light of the question raised before the Court. It is the judicial principle found upon reading the judgment as a whole in the light of the question raised before the Court which forms precedent and not particular words or phrases. 11. In view of the above we hold that the assessee is not entitled to deduction u/s 36(1)(va) of the employees' contribution to provident fund which was paid after the due date as specified in Explanation to Section 36(1)(va) of the Act as section 43B cannot be pressed into service because section 43B comes into play only when a deduction is otherwise allowable under the Income Tax Act. Hence, we confirm the action of the AO by reversing order of the learned C.I.T(A) and accordingly allow ground no. 1 taken by the department." 23. In view of the above, we reverse the order of the learned C. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is a copy of the approval given by the Reserve Bank of India vide letter dated 13.12.2003. However, the learned A.R. could not establish as to when the exact payment of the said amount of Rs.4,34,48,000 was made. The learned A.R. also could not place on record in respect of the balance amount of provision of Rs.4,30,00,000 which was made in the assessment year under consideration on account of sale of I.E.L. shares. On the other hand, the learned A.R. conceded that the payment of Rs.2 crores out of Rs.8.70 crores towards Gomia Environmental yet to be made till date. Therefore, in this regard, we agree with learned D.R. that assessee could not furnish the requisite evidences towards provision made for the transaction cost of Rs.8.70 crores on sale of I.E.L. shares. 27. In regard to claim of the assessee of Rs.40 lakhs of transaction cost on sale of Polyurethene business, the learned A.R. referred to page 32 of the paper book by which it is observed that the assessee made provision for expenses in respect of sale of above business assets of Rs.36,96,431. However, the learned A.R. could not furnish any details with any supporting evidences that actually the said expenses were inc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
