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2016 (1) TMI 367 - ITAT JAIPUR

2016 (1) TMI 367 - ITAT JAIPUR - TMI - Disallowance of late deposition of employee’s PF Contribution - CIT(A) deleted the addition - Held that:- The Hon'ble Delhi High Court in the case CIT Vs. AIMIL Ltd. [2009 (12) TMI 38 - DELHI HIGH COURT ] has held that no disallowance can be made in respect of Employers P.F. Contribution and Employees P.F. Contribution in case such contributions are paid before due date of filing. It is not in dispute before us that the contributions have not been paid befo .....

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e Jaipur Bench is also regularly allowing such claims as held in various cases referred by the ld. AR in ld. CIT(A)’s order. Thus we find no infirmity in the order of the ld. CIT(A) which is sustained on this issue - Decided in favour of assessee. - ITA No. 615/JP/2013 - Dated:- 1-1-2016 - Shri T. R. Meena, AM And Shri Laliet Kumar, JM For the Petitioner : Shri O.P. Bhateja, Addl. CIT -DR For the Respondent : Shri P.C. Parwal , CA ORDER Per T. R. Meena, AM The Revenue has filed an appeal against .....

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of addition of ₹ 6,14,017/- made by the AO by way of disallowance of late deposition of employee s PF contribution wherein brief facts of the case as per AO are that the assessee failed to deposit the amount of employee s contribution towards PF in certain month within the prescribed time limit as per the provisions of the Act. Accordingly, the AO made a disallowance of ₹ 6,14,017/- u/s 36(1)(va) of the I.T. Act. 2.2 The assessee preferred first appeal before the ld. CIT(A) who dele .....

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ourt as under:- (i) CIT vs. State Bank of Bikaner & Jaipur (2014) 363 ITR 70 (Raj.) (ii) CIT vs. Jaipur Vidyut Vitran Nigam Ltd. (2014) 363 ITR 307 (Raj.) (iii) CIT vs. Udapur Dugdh Utpadak Sahakari Sangh Ltd. (2014) 366 ITR 163 (Raj.) The ld. AR of the assessee prayed for dismissing this ground of the Revenue 2.5 We have heard the rival contentions and perused the materials available on record. It is observed that the payment of employee s contribution to PF is made prior to the filing of t .....

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ion shall apply in relation to any sum referred to in clause (a) or clause (c) or clause (d) or clause (e) or clause (f), 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\x7f 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 : Provided further that no dedu .....

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is not allowable in case the same is paid after due date under the Employees Provident Fund even if the same is paid before due date of filing of return of income. By Finance Act, 2003, second proviso was omitted and the first proviso was also amended. The first proviso after amendment reads as under:- " Provided that nothing contained 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 th .....

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nsertion of Second proviso, it was clear that employers were entitled to deduction only if the contribution stands credited on or before due date given in the PF Act. The second proviso created further difficulties and therefore, second proviso was omitted and first proviso was amended. Before Honb'le Apex Court, the Revenue contended that the Parliament has maintained a clear dichotomy between payment of tax, duty, cess or fee on one hand and payment of contributions to the welfare funds on .....

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c. is actually paid. The Parliament took cognizance of the fact that the accounting year of the company did not always tally with the due dates under the PF Act, Municipal Corporation Act and other tax laws. Hence by way of first proviso before Finance Act 2003, an incentive / relaxation was sought to be given in respect of tax, duty, cess or fee by explicitly stating that if such tax, duty, cess or fee is paid before the due date of filing of return. It did not apply to contributions to labour .....

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ex Court has considered the aspect of explanation to Section 36(1)(va) in respect of due date. The Hon'ble Apex Court approved the decision of The Hon'ble Karnataka High Court in the case of CIT Vs. Sabri Enterprises, 298 ITR 141 and it also affirmed the decision of Hon'ble Calcutta High Court. The decision of The Hon'ble Bombay High Court in the case of CIT Vs. Pamwi Tissues Ltd. , 313 ITR 13 was reversed. The Hon'ble Delhi High Court in the case of CIT Vs. AIMIL Ltd. , 321 .....

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use the submissions before us are the same which have been considered by Hon'ble Delhi High Court. 11. Ms. Prem Lata Bansal, ld counsel for the revenue. Thus argued that the second proviso to Section 43B, as it stood at the relevant time, clearly mentioned that deduction in respect of any sum referred to in clause (b) shall not be allowed unless such sum has actually been paid in cash or by issuance of cheque or draft or by any mode on or before the due date, as defined in the Explanation be .....

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#39;ble Delhi High Court has considered the issue after considering Section 36(1)(va) and Section 2(24)(x) of the Act. The Hon'ble Delhi High Court held that contention of the revenue is not acceptable in view of rejection of SLP of the revenue by Hon'ble Apex Court in the case of CIT Vs. Vinay Cement Ltd. , 313 ITR 1. Section 36(1)(va) requires that the sum should be credited by the assessee to the employees account. It nowhere mentioned that the sum should be paid. There is a differenc .....

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ting the AO to allow deduction of ₹ 58,106/- in respect of the deposit of employees contribution. The revenue has relied upon the decision of ITAT Mumbai Bench in the case of DCIT Vs. Gandhar Oil Refinery (I) Ltd., 104 TTJ 630 which is dated 23-03-2006. The ITAT Cochin Bench in the case of Harrison Malayalam Ltd. Vs. ACIT 32 SOT 497 held that payment of employees contribution to PF and labour welfare fund made before due date of filing of return is to be allowed. The ITAT Delhi Bench in th .....

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d 05- 08-2011). It will be useful to reproduce para 4.2 and 4.3 of that decision. 4.2 The above referred issue stands decided against the revenue by the Tribunal in the case of Soma Block Prints (P) Ltd. in ITA No.1173/JP/2010 dated 28th April, 2011 for the assessment year 2007-08. It will be useful to reproduce the para 5.2 from the above decision. 5.2 This issue has been decided against the Revenue by the Tribunal in the case of M/s. Swastik Metal Casting Vs. ACIT (ITA No.964/JP/2010) vide ord .....

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nce Act, 2003 is curative in nature and is retrospective. However, we are concerned with the assessment year 2007- 08. The Hon'ble Apex Court has referred to the explanation given in Section 36(1)(v)(a) of the Act. The issue of employee s contribution covered u/s 43B has been considered by the Hon'ble Karnataka High Court in the case of CIT vs Sabri Enterprises, 298 ITR 141. The Hon'ble Apex Court has upheld the decision of Hon'ble Karnataka High Court in the case of CIT vs Sabri .....

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loyees shares. It is noticed from the audit report that all the payments have been paid before the due date of filing of return and therefore, the ld. CIT(A) was not justified in not deleting the sum of ₹ 150,294/-. The same is deleted. Thus the ld. CIT(A) has rightly deleted the disallowance made by the AO. 4.3 Moreover, the Hon'ble Delhi High Court in the case CIT Vs. AIMIL Ltd. ,321 ITR 508 has held that no disallowance can be made in respect of Employers P.F. Contribution and Emplo .....

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ces of the case and also the legal position, we find no infirmity in the order of the ld. CIT(A) which is sustained on this issue. Thus Ground No. 1 of the Revenue is dismissed. 3.1 The Ground No. 2 of the Revenue is regarding deletion of addition of ₹ 9 ,18,000/- made by the AO by way of disallowance of prior period expenses wherein the AO observed that the assessee is a cooperative society and State Govt. undertaking and it is engaged in trading of oil seeds and manufacturing of edible o .....

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g as under:- I have considered the facts of the case and gone through the submission of the ld. AR . It is seen that in the case of the Govt. organization, expenses are booked only after approval of various authorities. Since the approvals are received during this year, the expenses are current year expenses. Hon'ble ITAT Jaipur Bench is also regularly allowing such claim as held in the various cases referred by the A.R. supra. Considering all these facts and respectfully following the decis .....

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