2017 (4) TMI 870 - AT - Income Tax

Tribunal upholds CIT(A) decision, dismissing Revenue's appeal. Precedents cited, orders affirmed.

The Tribunal upheld the CIT(A)'s decision on all grounds, dismissing the Revenue's appeal in its entirety. The Tribunal referred to various precedents and ... Contribution to State Renewal Fund - allowable expenditure - Held that:- We find that the similar issue has been decided in favour of the assessee by the judgment of the Hon’ble Rajasthan High Court rendered in the case of CIT vs. Rajasthan State Seeds Corporation Ltd.[2016 (9) TMI 59 - RAJASTHAN HIGH COURT ] as held any normal expenditure for the welfare and benefit of the employees is allowable expenditure under section 37(1), the Tribunal has come to a finding of fact that it was a legal obligation of the respondent-assessee towards contribution of the said amount to the State Renewal Fund and there being a legal obligation as well in our view the Tribunal has come to a correct conclusion. - Decided in favour of assessee Disallowance of prior period expenses - Held that:- As decided in assessee's own case CIT(A) has given a finding of fact that with respect to the Head Office an amount pertains to reversal of double income booked in F.Y. 2002-03 with respect to maintenance charges. The ld. CIT(A) has given further finding of fact that an amount with respect to the head Officer pertains to wrong entry of interest income in FY 2002-03 & 2003-04 with respect to toll project on capital deployed by the appellant. This finding of fat is not controverted by the ld. D/R by placing any material on record. We are in agreement with the observations of the ld. CIT(A) that reversal of income wrongly declared in earlier years, is allowable. Hence, this ground of the revenue is dismissed - Decided in favour of assessee Disallowance of u/s 80IA - Held that:- As in assessee’s own case in pertaining to the assessment year 2011-12 the assessee has demonstrated that the authorities below have taken incorrect figure of turnover. Another contention of the assessee is that the amount related to Head Office is already apportioned and, therefore, there was no need for apportionment of the same. We find merit in the contention of the ld. Counsel for the assessee. Therefore, the ground raised in the appeal of the revenue is dismissed. Disallowance of expenditure on account of depositing the employee’s contribution beyond the prescribed time limit - Held that:- The issue is no more res integra. The issue has been decided by the Hon’ble Jurisdictional High Court rendered in the case of CIT vs. State Bank of Bikaner & Jaipur (2014 (12) TMI 65 - RAJASTHAN HIGH COURT) and also in the case of CIT vs. Jaipur Vidyut Vitran Nigam Ltd. [2014 (1) TMI 1085 - RAJASTHAN HIGH COURT] Issues Involved:1. Allowability of contribution to the State Renewal Fund.2. Deletion of addition made for prior period expenses.3. Restriction of disallowance of deduction under section 80IA.4. Deletion of addition for late deposit of employee’s contribution to PF.5. Applicability of section 43B versus section 36(1)(va) r.w.s. 2(24)(x) for employee’s contribution to PF & ESI.Issue-wise Detailed Analysis:1. Contribution to State Renewal Fund:The Revenue challenged the allowability of Rs. 20,00,000/- contributed to the State Renewal Fund, arguing it was not an actual expenditure. The Tribunal upheld the CIT(A)’s decision, referencing the Hon’ble Rajasthan High Court’s judgment in CIT vs. Rajasthan State Seeds Corporation Ltd. 386 ITR 267, which favored the assessee. Consequently, the Tribunal affirmed the CIT(A)’s order and dismissed the Revenue’s ground.2. Prior Period Expenses:The Revenue contested the deletion of Rs. 1,97,491/- for prior period expenses. The Tribunal noted that the CIT(A) had accepted the assessee’s explanations regarding the reversal of double income and wrong entries in previous years. The Tribunal referenced its own earlier decision in the assessee’s case (ITA No. 558/JP/2015), which supported the CIT(A)’s findings. Thus, the Tribunal found no reason to interfere and dismissed this ground as well.3. Disallowance of Deduction under Section 80IA:The Revenue objected to the CIT(A)’s restriction of disallowance under section 80IA to Rs. 9.24 lakhs against Rs. 3,84,50,924/-. The Tribunal cited its previous decision for the assessment year 2011-12 (ITA No. 558/JP/2016), where the AO had incorrectly calculated the turnover and wrongly apportioned expenses. The CIT(A) had correctly adjusted the figures and restricted the disallowance. The Tribunal agreed with the CIT(A)’s method and dismissed the Revenue’s ground.4. Late Deposit of Employee’s Contribution to PF:The Revenue challenged the deletion of Rs. 6,04,590/- added for late deposit of employee’s PF contributions. The Tribunal referred to the Hon’ble Jurisdictional High Court’s decisions in CIT vs. State Bank of Bikaner & Jaipur (2014) 99 DTR 131 (Raj.) and CIT vs. Jaipur Vidyut Vitran Nigam Ltd. 98 DTR 105 (Raj.), which supported the assessee’s position. Therefore, the Tribunal dismissed this ground.5. Applicability of Section 43B vs. Section 36(1)(va) r.w.s. 2(24)(x):The Revenue argued that employee’s contributions to PF & ESI should be governed by section 36(1)(va) r.w.s. 2(24)(x) instead of section 43B. The Tribunal, following the jurisdictional High Court’s rulings mentioned above, upheld the CIT(A)’s decision that section 43B applies. Hence, this ground was also dismissed.Conclusion:The Tribunal dismissed the Revenue’s appeal in its entirety, upholding the CIT(A)’s order on all grounds. The Tribunal’s decision was pronounced in the open court on April 10, 2017.