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2016 (6) TMI 969 - ITAT KOLKATA

2016 (6) TMI 969 - ITAT KOLKATA - TMI - Scope of rectification - whether the prior period loss which was claimed and allowed as deduction in the assessment proceedings u/s 143(3) of the Act, could be allowed or not in the present assessment year on payment basis cannot be examined in the proceedings u/s 154 of the Act? - Held that:- In any event the claim of the assessee that there was actual payment of the aforesaid sum during the previous year and the loss in question is allowable as deduction .....

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uld also show that this issue is highly a debatable one and outside the purview of the proceedings u/s 154 of the Act. - Decided against revenue - I.T.A No.2380/Kol/2013 - Dated:- 1-6-2016 - Sri N.V.Vasudevan, JM & Shri M.Balaganesh, AM For The Appellant : S.S.Alam, JCIT, Sr.DR For The Respondent : Shri Manish Tiwari, FCA ORDER Per N.V.Vasudevan, JM This is an appeal by the Revenue against the order dated 22.07.2013 of CIT(A)- Central-II, Kolkata, relating to AY 2005-06. 2. Grounds of appeal .....

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t; 3. That the appellant craves leave to submit additional grounds of appeal, if any, at or before the time of hearing and/or alter, modify, reframe any grounds of appeal at or before the time of hearing." 3. The Assessee is a company. It is engaged in the business of trading in rubber, prophylactics. The assesee filed return of income for A.Y.2005-06 declaring the total loss of ₹ 1,12,03,082/-. The AO completed the assessment u/s 143(3) of the Income Tax Act, 1962 (Act) vide order da .....

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g the income of the assessee. Similarly the AO also was of the view that a sum of ₹ 21,68,000/- which was employee s contribution to PF and ESI had been paid beyond the due date of payment in accordance with law governing payment of PF and ESI and therefore it ought to have be disallowed and deduction of the said sum while computing the total income ought not to have been allowed in view of the provision of section 36(1)(va) of the Act. Sec.36(1)(va) of the Act provides that any sum receiv .....

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d, contract of service or otherwise. 4. The assessee in reply to the show cause notice, firstly submitted that the mistakes sought to be rectified by the AO cannot be construed as a mistake apparent from the record and therefore jurisdiction u/s 154 of the Act cannot be invoked. It was submitted that a mistake apparent from record must be obvious and patent mistake and not something which can be established by a long drawn process of reasoning. A decision on a debatable point of law is not a mis .....

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ment of ₹ 2,23,850/-. The company provided bonus in the F.Y. 2003-04 @ 8.33%. However, such bonus was actually paid in September / October 2004 @ 13%. Accordingly, under accounting principle the payment was booked as prior period item in assessment year 2005-06. Moreover, bonus is allowable on payment basis according to the provisions section 43B(c). 2. As regards leave encashment it was stated that the system of accounting followed at Noida Factory to disburse on retirement of employee wa .....

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t though employee's contribution to PF/ESI was not paid within the due date the same was paid within the due date of filing of return U / s 139. It is submitted that the dispute regarding disallowability u / s 36(1)(va) read with section 43B of the Act has since been set at rest by various IT ATs, High Courts as well as Supreme Court. It has been held that where the assessee has failed to make payment of employee's contribution to PF /ESI within due date as provided in Sec.36(1)(va) of t .....

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The AO also held that employee s contribution was different from employers contribution which covered u/s 43B of the Act and therefore payment of employees contribution within the due date of filing of the return u/s 36(1)(va) of the Act cannot be the basis to allow belated payment of contribution of PF and ESI. Accordingly the total loss determined in the order u/s 143(3) of the Act was reduced by a sum of ₹ 29,54,842/-. 6. On appeal by the assessee the CIT(A) held that the issues sought .....

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f the AO as contained in the order of assessment. The ld. Counsel for the assessee filed before us a copy of the reply given by the assessee to the show cause notice and highlighted the fact that this objection was not considered by AO in the order u/s 154 of the Act. He placed reliance on the order of CIT(A). 9. We have given a very careful consideration to the rival submissions. The question as to whether the prior period loss which was claimed and allowed as deduction in the assessment procee .....

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