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2016 (1) TMI 749

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..... case of Merilyn Shipping and Transports v. ACIT (supra), we are inclined to remit the issue for fresh consideration. - Decided in favour of revenue for statistical purposes. Disallowance u/s 43B - addition made in respect of employees contribution to PF and ESI - whether the sum were remitted within the due date of filing the return of income? - CIT(A) deleted the addition - Held that:- Sums were not credited by the respective assessee to the employees’ accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees’ contribution to the employees’ account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. Consequently, all these appeals are allowed and the impugned judgement and orders passed by the CIT(A) in deleting the disallowances made by the AO are hereby quashed and set aside and the disallowances of the respective sums with respect to the Provident Fund / ESI Fund made by the AO is hereby restored. - Decided against assessee - ITA No .....

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..... of such cross-objection, submitted that Hyderabad Bench of this Tribunal in the case of Teja Constructions v. ACIT (2010) 36 DTR 220, had held that rigours of Section 40(a)(ia) could be applied only with regard to claim for deduction under Sections 30 to 38 of the Act. An additional ground has also been taken in the cross objection by which it is stated that Section 40(a)(ia) would apply only on amounts standing payable at the end of relevant previous year and not on the amounts paid during the relevant year. Learned D.R. did not raise any objection to the additional ground. Such additional ground is admitted being a pure question of law. 10. We have considered both the averments of the assessee. Insofar as reliance placed on the decision of Teja Constructions (supra) is concerned, there the books of accounts of the assessee were rejected and estimation of income was done on percentage basis. The main reason why the Tribunal held invocation of Section 40(a)(ia) was not called for, was that it would result in double jeopardy. As per the Tribunal, once the books were rejected, there was no question of further invocation of Section 40(a)(ia) of the Act. It was, in such circumsta .....

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..... ed that the provisions of sec.194C of the Act cannot come into play when the payments have been made to agents of a non-resident company and relied on the order of the Kolkata Bench of the Tribunal in the case of Taj Leather Works v. ACIT (52 SOT 228). To uphold this argument also, there is no details of non-resident companies whether they have any PE business connection in India or not. Without bringing any material on record, the argument of the assessee s counsel cannot be upheld. The Special Bench of the Tribunal, in the case of Merilyn Shipping and Transports v. ACIT (136 ITD 23) (Visakhapatnam), held that when the payments are not outstanding as payable at the end of the close of the year relevant to the assessment year, the provisions of sec.40(a)(ia) cannot be invoked. Considering the judgment of the Special Bench of the Tribunal, in the case of Merilyn Shipping and Transports v. ACIT (supra), we are inclined to remit the issue for fresh consideration. This ground is allowed for statistical purposes. 8. Next ground in the appeal of the Revenue is with regard to deletion of addition made in respect of employees contribution to PF and ESI remitted within the due date of fi .....

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..... 36(1)(va) of the Act and with respect to employees contribution. As stated above, the only controversy before the Hon'ble Supreme Court was with respect to amendment (deletion) of the Second Proviso to section 43(B) of the Income Tax Act, 1961 by the Finance Act, 1963 operates w.e.f. 1/4/2004 or whether it operates retrospectively w.e.f. 1/4/1988. Under the circumstances, the learned tribunal has committed an error in relying upon the decision of the Hon'ble Supreme Court in the case of Alom Extrusions Ltd. (supra) while passing the impugned judgement and order and deleting disallowance of the respective sums being employees contribution to PF Account / ESI Account, which were made by the AO while considering the proviso to section section 36(1) (va) of the Income Tax Act. Thereafter, the issue was decided against the assessee by the the co-ordinate Bench of the Tribunal at Cochin in the case of ACIT v. SFO Technologies P. Ltd. in ITA No.454/Coch/2014 dated 9.1.2015, wherein it was held in para 8 as follows: 8.00. In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clau .....

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