TMI Blog2018 (7) TMI 50X X X X Extracts X X X X X X X X Extracts X X X X ..... session of the land in question was not handed over in terms agreed to MOU is evident from the order passed by CIT(A), which has admitted that the possession of the property was handed over sometime in the year 2001. That apart, this fact has also been noted by the Assessing Officer, while completing the assessment for the Assessment Year 2004-2005 Vide order dated 28.12.2006. We respectfully agree with the view of the High Court of Delhi in the case of Kaushalya Devi V. Commissioner of Income-tax [2018 (4) TMI 1137 - DELHI HIGH COURT]. We are required to accept the discretion exercised by the assessee, who has incurred the expenditure and if any inference is made by the Court without reference to the factual matrix or on subjective basis, it will lead to absurd results, which are not called for. Answer question No.3 against the Revenue and in favour of the Assessee. Fair market value for computing the market value on sale of land - capital gain computation - Held that:- Schedule A of the sale deed is in conformity with the submission made by the assessee and also the fact that demolition has not taken place during the relevant previous year, the vacant possession was handed ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... over to the developer within the cut-off date and consequently, the respondent/assessee had paid a sum of ₹ 1.99 crores as liquidated damages to the developer. This expenditure was claimed by the assessee as Revenue Expenditure. However, the same was disallowed by the Assessing Officer. 3.2. The Assessing Officer also disallowed the payments which were to be paid to the assessee towards Provident Fund and Employees State Insurance, on the ground that the relevant remittances were paid after the due date prescribed under the respective statutes viz., the Employees' Provident Funds Miscellaneous Provisions Act, 1952 and the Employees State Insurance Act. Aggrieved over which, the assessee preferred an appeal before the CIT(A). The Appellate Authority/CIT(A)-V, vide its order dated 26.02.2002, allowed the appeal in part holding that disallowance in respect of payment made towards Provident Fund alone was set aside, as it held that such payments were made well before the cut-off date prescribed in the statute, whereas it had disallowed the payments made towards ESI contributions, though it was paid within the extended period provided under the statute. Thus the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quarely covered by the decision of the Hon'ble Supreme Court in Commissioner of Income Tax Vs. Alom Extrustions Ltd., reported in [(2009) 319 ITR 0306], in which the Hon'ble Supreme Court has held that omission of second proviso to s. 43B and the amendment of first proviso by Finance Act, 2003 bringing about uniformity in payment of tax, duty, cess and fee on one hand and contributions to employees welfare funds on the other are curative in nature and thus effective retrospectively w.e.f. 1st April, 1988 i.e., the date of insertion to first proviso . According question No.1 is answered holding that the omission of the second proviso to Section 43B is effective retrospecting w.e.f. 1st April, 1988. 6. The second question is with regard to whether the deductions of payments to provident fund, made belatedly, beyond the time and grace period under the statute will be allowed u/s.43B for the assessment year 1998-99. a) Before we examine the contentions raised by the learned counsel and take a decision on this question of law, it would be appropriate if we take note of the issue raised by the assessee. As pointed out in the preceding paragraph that the Assessing Officer ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mittance is with regard to the employees' contribution or employers' contribution. This according to the learned counsel is material and has to be taken into consideration by this Court. c) Further, by relying upon the decision of the Gujarat High Court in Commissioner of Income-Tax V. Gujarat State Road Transport Corporation reported in [(2014) 366 ITR 170 (Guj)] , it is submitted that deleting the respective disallowances being the employees' contribution to the PF account /ESI account made by the Assessing Officer, as such sums were not credited by the respective assessee to the employees' accounts in the relevant fund or funds on or before the due date, as per the explanation to Section 36(1)(va) of the Act, was not sustainable. d) Referring to the decision of the High Court of Kerala in Commissioner of Income-Tax Vs. Merchem Ltd., reported in [(2015) 378 ITR 443 (Ker)], it is submitted that the Kerala High Court took note of the decision in Alom Extrusions case and pointed out that Section 43B, as it stood prior to the amendment and section 36(1)(va) and the explanation thereto read with section 2(24)(x) are considered together, it is clear that they oper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isallowable. It is submitted that the decision in Pamwi Tissues case was affirmed by the Honble Supreme Court as the Special Leave Petition in SLP 20581 of 2008 was dismissed Vide its order dated 29.08.2008. In this regard, learned counsel produced a copy of the order passed by the Hon ble Supreme Court and also pointed out in paragraph No.19 in Alom Extrusions case, the dismissal of the Special Leave Petition has been noted. 9. Before we proceed to examine as to whether we are required to decide this question by taking note of Section 2(24)(x) which defines income to include any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the provisions of the Employees State Insurance Act, 1948 (or) Section 36(1)(va) which deals with deductions and in particular the explanation under Section 36(1)(va) defines the due date which means the date by which the assessee is required as an employer to credit an employee s contribution to the employee s account in the relevant fund under any Act, rule, order or notification issued thereunder or under any standing order, award, contract of service or otherwise. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing return and following the decision of the Special Bench, the issue was decided against the Revenue. Therefore, the assessee is right in contending that the question of law as framed is factually incorrect and there is no belated remittance of PF contributions. The delay was in respect of contributions to the ESI Corporation and that too there was a delay of five days, which was within the grace period provided under the statute. The Revenue, having not preferred any appeal as regards the findings of the CIT(A), allowing the deduction in respect of PF payments made, it cannot agitate on the said issue in this appeal. Secondly, the question was decided in favour of the assessee by the Tribunal, taking note of two factors viz., (a) the payment was made within the grace period and (b) the payment being made during the financial year. Thus, the question of law as framed does not arise for consideration. Apart from that, even if the Court takes into consideration that the question of law has to be allowed as it is belated payment to ESI Corporation, then also we find that there is no error committed by the Tribunal in taking the decision and allowing the deduction on the ground t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nless there is a demand an award and quantification, the question of payment of liquidated damages does not arise. To support his contention, the learned counsel referred to the decisions of Asuma Cashew Company V. Commissioner of Income-tax reported in [(1990) 182 ITR 0175 (Ker)]; Sundareswaran (N.) V. Commissioner of Income-tax reported in [(1997) 226 ITR 0142 (Ker)] and Commissioner of Income-tax Vs. Seshasayee Industries Ltd., reported in [(2000) 242 ITR 0691 (Mad). It is contended that admittedly there was no demand and no determination of liability took place and therefore the question of law is to be decided in favour of the Revenue. 16. The learned counsel appearing for the assessee submitted that it is incorrect to state that there was no quantification and this aspect of the matter was taken note of by the Tribunal wherein in paragraph No.17 of its order, the Tribunal has extracted Clauses F,G,H and Clause-4 of the Agreement dated 12.11.2001, which is a supplementary agreement, wherein the owner and the developer had mutually agreed that the owner/assesee shall pay a sum of ₹ 421.70 lakhs, made up of ₹ 199 lakhs for the period ending 31.3.98 and the balance ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t possession which was actually done on 16.08.2001, the DEVELOPER had been insisting upon payment of compensation for, interalia, parting with liquidity, escalation in cost of construction and user by the Vendor of the Developer s property sold to them by the OWNER. G) WHEREAS OWNER represented to the DEVELOPER that the delay was occasioned due to the circumstances beyond its control and requested the DEVELOPER to reconsider their request of compensation as it was not seriously considered in all the ramifications at the time of entering into MOU on 1.3.96. H) WHEREAS disputes arose between OWNER AND DEVELOPER in the matter of fixing the measure of compensation and the quantum of compensation AND WHEREAS after considerable amount of plain speaking between the parties hereto and taking a practical and fair view of the entire situation and with a view to avoiding protracted litigation, the OWNER AND DEVELOPER agreed to enter into this subsidiary agreement modifying the terms and conditions relating to the payment of compensation arising out of the delay in delivering the vacant possession, in the manner and to the extent provided here under 4. The Owner and Developer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he same has been recorded in the supplementary MOU, as noted by the Tribunal. That apart, the fact that the possession of the land in question was not handed over in terms agreed to MOU is evident from the order passed by CIT(A), which has admitted that the possession of the property was handed over sometime in the year 2001. That apart, this fact has also been noted by the Assessing Officer, while completing the assessment for the Assessment Year 2004-2005 Vide order dated 28.12.2006. We respectfully agree with the view of the High Court of Delhi in the case of Kaushalya Devi V. Commissioner of Income-tax. We are required to accept the discretion exercised by the assessee, who has incurred the expenditure and if any inference is made by the Court without reference to the factual matrix or on subjective basis, it will lead to absurd results, which are not called for. For the said reasons, we answer question No.3 against the Revenue and in favour of the Assessee. 19. The next question as framed is whether the Tribunal was right in deleting a sum of ₹ 6,16,83,896/- as interest amount disallowed in respect of advances and investments to sister concerns/associates made out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eas for the amounts which were claimed under Sl.No.4,5,6 7, an appeal was filed. On appeal before the Tribunal, the Tribunal considered the factual position and accepted the case of the assessee and allowed the amounts advanced/invested. The Revenue did not prefer any appeal before the Tribunal as against the order passed by CIT(A), which had allowed the advances and investments as claimed by the petitioner and which were disallowed by the Assessing Officer. So far as the claims which were disallowed by the Assessing Officer is concerned, the assessee was able to convince the Tribunal that there was a Board Resolution between two companies and the resolution clearly stated that the respondent-assessee company did not charge interest at the request made by the other companies and the ITAT has recorded a clear factual finding that the availability of funds, free of interest and the assessee is having a capital. That apart, it is also not established that there was a nexus in the disallowance of the interest between the borrowed funds and the interest free funds. Thus, the Revenue cannot rely upon Section 260A(2) of the Act. To advance an argument, the Court should consider the vali ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a sister concern and it was held that it became an imperative as business expediency in view of the undertaking given to the financial institutions by the assessee to meet the working capital of the sister concern for improving any cash losses. Further it is contended that unless there is a nexus between borrowal and investment, the question of accepting interpretation as done by the Revenue arises. In this regard, the learned counsel also referred to the finding recorded by the Assessing Officer itself in paragraph No.3.6 of the Assessment order and paragraph No.8 onwards wherein the Assessing Officer himself has accepted the investments/advances except in respect of four companies, largely on the ground that it was backed only by the resolution of the Board and not by any scheme of BIFR, even otherwise it is pointed out that CIT(A) though granted relief for other investments and advances, ultimately remanded the matter to the Assessing Officer, directing the Assessing Officer that before giving effect to his order, has to obtain certain details and after verification of the details alone, disallowance of interest may be worked out. This observation is contained in 14.4 of the or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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