Deduction Dispute Resolved on Timely Payments & Professional Fees

Issue 1 addressed the disallowance of delayed payments for ESIC & PF out of employees' contribution. The appellant's deduction was initially disallowed by the CIT(A) but was allowed by the Tribunal based on relevant case laws and sections, emphasizing that deductions are permissible if payments are made before the return filing date. Issue 2 involved the addition of professional fees not reflected in the receipts shown by the assessee. The Tribunal remanded the issue to the AO for reconsideration, noting a discrepancy in the appellant's explanation regarding the source of the disputed sum. The appeal was partially allowed, granting the appellant an opportunity to clarify and reconcile the receipt.

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Issues:
1. Disallowance of delayed payments made for ESIC & PF, out of employees contribution.
2. Addition of professional fees not reflected in the receipts shown by the assessee.

Issue 1: Disallowance of Delayed Payments for ESIC & PF:
The appellant, a company engaged in manpower consultancy, appealed against the disallowance of Rs.6,58,824 as delayed payments made for ESIC & PF out of employees' contribution for the assessment year 2007-08. The AO observed that the appellant made contributions beyond due dates for both PF and ESIC. The CIT(A) disallowed the deduction, stating that employees' contribution must be made on or before the due date. The appellant relied on the decision of the Hon'ble Karnataka High Court in CIT vs. M.N. Chari. The Tribunal referred to the judgment in CIT vs. AIMIL Limited by the Hon'ble Delhi High Court, emphasizing that deductions are allowable if payments are made before the return filing date. Citing relevant sections and case laws, the Tribunal held that the deduction claimed by the appellant should be allowed. Ground No.1 was accordingly allowed.

Issue 2: Addition of Professional Fees:
The appellant contested the addition of Rs.45,794 as professional fees not reflected in the receipts shown by the assessee. The AO added the amount despite the appellant's explanation that no such payment was received from Trammell Crow Megharaj Property Consultant Pvt. Ltd. The CIT(A) upheld the AO's decision, stating that the appellant failed to provide evidence to reconcile the figures. However, the Tribunal found that the issue should be remanded to the AO for fresh consideration. The appellant argued that the amount reflected in the receipts was from TCM Property Consultancy Pvt. Ltd., which included the disputed sum. The Tribunal noted that the connection between Trammell Crow Megharaj Property Consultant Pvt. Ltd. and TCM Property Consultancy Pvt. Ltd. was not properly understood by the lower authorities. Therefore, the issue was remanded to the AO for reevaluation, providing the appellant with an opportunity to explain and reconcile the receipt. The appeal was partly allowed.

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