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2015 (8) TMI 869 - ITAT MUMBAI

2015 (8) TMI 869 - ITAT MUMBAI - TMI - Disallowance of expenses incurred towards feasibility study - CIT(A) deleted the addition - Held that:- Aappeal filed by the Revenue is dismissed on account of low tax effect.

Addition being employee’s contribution deposited after the statutory due date but before the end of the relevant financial year - Held that:- As relying on case of CIT vs. M/s. Hindustan Organics Chemicals Ltd [2014 (7) TMI 477 - BOMBAY HIGH COURT] wherein held that we fail .....

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ns being claimed in the return of income filed for the Assessment Year 2006-07, the amendments to Section 43B which came into force with effect from 1st April 2004 would have clearly applied to the Assessee's case. In this view of the matter also, we find that the ITAT was fully justified in deleting the addition of ₹ 1,82,77,138/- on account of delayed payment of provident fund of employees' contribution. Considering the above settled position of law, we are of the opinion that the order .....

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lub is an allowable expenditure – Decided against revenue.- Decided in favour of assessee. - I.T.A. No. 1218/M/2011, C.O. No.35/M/2015 - Dated:- 12-8-2015 - SHRI D. KARUNAKARA RAO AND AMIT SHUKLA, JJ. For The Assessee : Shri Rakesh Kumar Agrawal, Sr. AR For The Revenue : Shri Girish Dave ORDER PER D. KARUNAKARA RAO, AM: There are two appeals under consideration. Appeal ITA No.1218/M/2011 is filed by the Revenue and the Cross Objection No.35/M/2015 is filed by the assessee against the order of .....

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llowing grounds which read as under: 1. Whether on the facts and circumstances of the case and in law, the CIT (A) erred in deleting the disallowance of ₹ 9,36,700/- being expenses incurred towards feasibility study holding it to be revenue in nature against expenses held by the AO. 1.1. The Ld CIT (A) further erred in overlooking the fact that assessee was merely acting as agent of the principal & the expenses incurred was for a new line of business which did not commence. 3. In this .....

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tructions of the CBDT describing the limit to the tax effect would be applicable to the pending appeals also. (i) CIT vs. Smt. Vijaya Kavekar [(2013) 30 taxmann.com 412], Bombay High Court (ii) CIT vs. Madhukar Inamdar [(2009) 185 Taxman 101], Bombay High Court 4. Ld DR did not controvert to the fact that the tax effect in the present appeal is less than ₹ 4 lakhs. 5. In this view of the situation, appeal filed by the Revenue is dismissed on account of low tax effect. Cross Objection No.35 .....

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the case of CIT vs. Alom Extrusions Ltd (319 ITR 306) (SC) wherein it has been held that no distinction should be made between employers and employee s contribution to provident fund. 3. The Ld CIT (A) erred in directing to allow deduction for entrance fees of ₹ 6,00,000/- on deferred basis over a period of 5 years. 4. The respondent submits that the said expenditure of ₹ 6,00,000/- being revenue in nature ought to have been allowed as deduction entirely in the year in which such exp .....

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the due date, but before the end of the FY. In this regard, Ld Counsel for the assessee submitted that the claim of the assessee is fully allowable in view of the judgment of the Hon ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd [319 ITR 306 (SC)]. He further submitted that no distinction is required to be displaced between the employer s and employee s contribution, and therefore, the claim is fully allowable. To further cement the said proposition, Ld Counsel for the assessee al .....

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d judgment of the Hon ble Bombay High Court in the case of M/s. Hindustan Organics Chemicals Ltd (supra) are relevant in this regard. 5. We find no merit in the aforestated contention. Section 43B of the Income Tax Act 1961 was inserted in the Act with effect from 1st April 1984 by which the mercantile system of accounting with regard to tax, duty and contribution to welfare funds stood discontinued and under section 43B of the Act, it became mandatory for the Assessees to account for the afores .....

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r section 43B on actual payment basis and such deduction would be admissible for that accounting year. This proviso however did not apply to contributions made by the Assessees to the Labour Welfare Funds. In view thereof, by the Finance Act 1988, the second proviso came to be inserted which read as under :- Provided further that no deduction shall, in respect of any sum referred to in clause (b), be allowed unless such sum has actually been paid during the previous year on or before the due dat .....

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ection (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date. 6. On a plain reading of the above provisos, it became ex-facie clear that the Assessees - employers were entitled to deductions only if the contributions to any fund for the welfare of the employees stood credited on or before the due date given in the relevant Act. 7. However, the second proviso once again created further difficulties for the A .....

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on 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 subsection (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. Therefore, the amendments introduced by the Finance Act, 2003 put on par the benefit of deductions of tax, duty, cess a .....

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tive in nature and would operate from 1st April 1988. The ITAT, relying upon the aforesaid judgment of the Supreme Court, has dismissed the Revenue's Appeal and confirmed the order passed by the CIT (Appeals). In this view of the matter and in view of the fact that the Supreme Court has expressly held that the amendments to section 43B that were brought about by the Finance Act, 2003 are retrospective in nature, we find that the ITAT was fully justified in deleting the addition of ₹ 1, .....

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sly the first proviso was also amended bringing about a uniformity in deductions claimed towards tax, duty, cess and fee on the one hand and contribution to the employees' provident fund, superannuation fund and other welfare funds on the other. These deductions being claimed in the return of income filed for the Assessment Year 2006-07, the amendments to Section 43B which came into force with effect from 1st April 2004 would have clearly applied to the Assessee's case. In this view of t .....

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the allowability of the club expenses by way of membership entry fee to the club. In this regard, Revenue Authorities restricted the disallowance to 1/5th of the claim. Aggrieved with the said decision, assessee is in appeal before us wide cross objection no.2. Before us, at the outset, Ld Counsel for the assessee filed an order of the Tribunal in the case of Clariant Chemicals (I) Ltd vs. Addl. CIT [2015] 53 taxmann.com 39 (Mumbai. Trib), dated 19.9.2014 and bringing our attention to para 5 of .....

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