TMI Blog2016 (1) TMI 1282X X X X Extracts X X X X X X X X Extracts X X X X ..... ution and ESI beyond the prescribed time limit - Held that:- The assessee had paid ESI and PF before due date of filing of return of income tax. Revenue appeal dismissed. - ITA No. 759/JP/2013 - - - Dated:- 29-1-2016 - SHRI T.R.MEENA, AM and SHRI LALIET KUMAR, JM For The Revenue by : Shri Kailash Mangal (JCIT) For The Assessee : Shri P.C. Parwal (CA) ORDER PER T.R. MEENA, A.M. This is an appeal filed by the revenue against the order dated 25/07/2013 of the learned C.I.T.(A)-II, Jaipur for A.Y. 2008-09. The effective grounds of appeal are reproduced as under:- 1. Whether on the facts and in the circumstances of the case and in law the Ld. CIT (Appeals) has erred in deleting the addition made by the AO by disallowing the claim of ₹ 10,00,000/- made to contribution to State Renewable Fund despite the fact that it was application of income not expenditure incurred for business expediency. 2. Whether on the facts and in circumstances of the case and in law the Ld. CIT (Appeals) has erred in deleting the addition made by the AO by disallowing the claim of contribution made to Gratuity Fund of ₹ 19,52,975/-. 3. Whether on the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a case of application of income by the assessee and not of diversion of income by overriding title. Where a cooperative society transfer's part of the net profit to a reserve fund as a requirement of statute, the question arises, whether such amount could be allowed either as a business expenditure or as income diverted by overriding title. The test in such case is the purpose for which the amount is set apart, the beneficiaries of such reserves and the right of the company over such reserves. The jurisdictional High Court in CIT v. Jodhpur Cooperative Marketing Society [2005] 275 ITR 372 (Raj) came to the conclusion that such reserves under the control of the society were for the ultimate benefit of the society as well as its shareholders, so that such amount could not be excluded from the income of the society. Hence, it is clear that, transfer to education fund does not lead to diversion of income by overriding title; it is merely, an application of income. In view of the forgoing discussion, the transfer of ₹ 10,00,000/- to the State Renewal Fund is not an allowable expenditure. The same is added to the total income of the assessee. 3. Being aggrieved by the order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- I have considered the facts of the case and the submission made. It is seen that the similar disallowance was made in A.Y. 2005-06 and 2006-07 wherein the matter when up to the ITAT Jaipur Bench. The Hon ble ITAT Jaipur Bench in ITA No. 233/JP/2009 for A.Y. 2006-07 and ITA No. 919/JP/2009 for A.Y. 2005-06 has allowed the claim of assessee on the ground that assessee has already applied for the approval and therefore there is no laps on part of the assessee. Respectfully following the same, the disallowance of ₹ 19,52,795/- made by the A.O. on account of gratuity fund is deleted. 8. Now the revenue is in appeal before us. The ld DR has vehemently supported the order of the Assessing Officer. At the outset, the ld AR of the assessee has submitted that the assessee has taken a scheme of group gratuity from LIC for payment of gratuity contribution. The application for approval of gratuity scheme was submitted to the CIT to pursue the matter, the assessee vide letter dated 12/4/1983 requested the Assessing Officer to send the report to the CIT. A deed for variation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee are contrary to the method of accounting regularly followed by the assessee. The assessee company was following the accrual system of accounting. The assessee should have claimed these expenses on the basis of accrual. The ld Assessing Officer relied on the decision of Hon'ble Mardas High Court in the case of Devi Films (P) Ltd. Vs. CIT (1970) 75 ITR 301 wherein trading loss of previous year has not been allowed in subsequent year. The assessee has claimed these expenses on cash basis. It is not open to the assessee to claim prior period expenses on crystallized basis. Accordingly be made disallowance of ₹ 9,34,554/-. 11. Being aggrieved by the order of the Assessing Officer, the assessee carried the matter before the ld CIT(A), who had allowed the appeal by observing as under:- I have considered the facts of the case and the submission made. It is seen that the assessee is a State Government undertaking where there is prescribed rule for making payment of expenditure. The expenses are booked only after they are approved by the appropriate authority. For these reasons, the expenditure pertaining to a particular year may get approved in subsequent years and a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee company failed to deposit the employees ESI contribution amounting to ₹ 2,99,104/- in respect of various units/branches within the prescribed time limit as per provisions of Limitation Act. Accordingly he made addition U/s 36(1)(va) read with Section 2(24)(x) of the Act. In first appeal, the ld CIT(A) had allowed the appeal on the ground that the Hon ble ITAT Jaipur Bench is consistently holding that contribution to PF is deposit prior to date of filing of return then the same is allowable. It is a fact that ESI payment had been made before due date of return in the assessee s case. He relied on the decision of Hon ble ITAT, Jaipur Bench in the case of DCIT Vs Amit Basu ITA No. 765/JP/2011 dated 25/01/2012 and the Hon ble Bench allowed the appeal in favour of the assessee. The ld DR has vehemently supported the order of the Assessing Officer. At the outset, the ld AR of the assessee has relied on the following decisions: (i) CIT Vs SBBJ (2014) 363 ITR 70 (Raj.) (ii) CIT Vs. JVVNL (2014) 363 ITR 307 (Raj) (iii) CIT Vs Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (2014) 366 ITR 163) (Raj) He has submitted that the above judicial pronouncements on allowab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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