TaxTMI 
TaxTMI 
2018 (3) TMI 1184
X X X X Extracts X X X X
X X X X Extracts X X X X
....ally completed by the Assessing Officer on 18/10/2007 under section 143(3) of the Act. When the disputes reached the Tribunal, the ITAT restored certain matters to the file of the Assessing Officer and consequently the assessment under section 143(3) read with section 253 of the Act was passed by the Assessing Officer on 30/09/2011. Thereafter, on 22/05/2013, the Assessing Officer passed a rectification order under section 154 of the Act to make the following disallowances, which were omitted to be disallowed in the original assessment order. a) Employees contribution to provident fund pertaining to the period April 2004 to August 2004 Rs. 1,15,41,061/- b) Employees contribution to provident fund pertaining to A.Y. 2004-05 claimed by the assessee in the Assessment Year 2005-06 on payment basis Rs. 3,26,58,925/- The Assessing Officer noticed that the employees‟ contribution to Provident Fund pertaining to the period from April 2004 to August 2004 amounting to Rs. 115.41 lakhs was paid beyond the due date prescribed under the respective heads, even though it was paid before the completion of relevant financial year. Accordingly, he took a view that the above said amou....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... him payment of employer‟s contribution of PF was extendable to the employees contribution also. Accordingly the ld. CIT(A), by following the said decisions has deleted the addition in both the years under consideration. For the sake of convenience, we extract below the order passed by the ld. CIT(A) on this issued in Assessment Year 2005-06. "4.3 I have considered the submissions made. As per the information stated in the audit report, the employees contribution relating to period April 2003 to March 2004 amounting to Rs. 3,26,58,925/- was deposited into the PF account on 21.10.2004, much after the due date prescribed under the PF Act and after the due date for filing of the return of income for the said year. It is also noted that the employees contribution for the period April 2004 to August 2004 amounting to Rs.1,15,41,061/- was deposited into PF account on 21.10.2004, much after the due date prescribed under the PF Act but before the due date of filing of the return of income for the said year. In this regard it is relevant to refer to the following judicial pronouncements. In the case of Essae Teraoka (P) Ltd. Vs. DCIT 43 Taxmann 33, the Hon'ble Karnataka High Cou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....riod April 2004 to August 2004, would be allowable as deduction as they were paid before the due date for filing the income tax return. Accordingly, the Assessing Officer is directed to allow deduction of an amount of Rs.1,15,41,061/-. 8. An identical reasoning was given by the ld. CIT(A) in Assessment Year 2010-11 also for deleting the addition of Rs. 69.36 lakhs made by the Assessing Officer. 9. Ld. Departmental Representative placed reliance on the circular issued by the Board, wherein it was stated that the decision rendered by the Hon'ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd. (319 ITR 306) was applicable only to employer‟s contribution of PF and not to employees‟ contribution. Ld.Departmental Representative also placed reliance on the decision rendered by the Hon'ble Kerala High Court in the case of CIT vs.Merchem Ltd. (2015) 378 ITR 443 and also the decision rendered by the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation (Tax Appeal Nos. 1711 & 2577/2009 & others, dated 26/12/2013), wherein it was held that the time limit prescribed under section 43B of the Act would apply to employees&#....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lowance of Rs. 3,26,58,925/- relating to Employees Contribution of Provident Fund. 13. We have noticed earlier that the above said amount was related to the FY 2003-04, i.e., for assessment year 2004-05. The assessee did not pay the same during that year and accordingly, it appears that the same was disallowed in that year. Subsequently, the assessee paid the above said amount on 21-10-2004 and accordingly claimed the deduction of the above said amount in AY 2005-06 on payment basis. The AO rejected the claim of the assessee in the order passed u/s 154 of the Act and the Ld CIT(A) also confirmed the same. 14. The Ld A.R submitted that even though the provisions of sec. 36(1)(va) governs the deduction of employees contribution to Provident Fund, yet the provisions of sec.43B should also be applied to employees‟ contribution also. The Ld A.R contended that the distinction between employees contribution and Employers contribution made out by the Act has been diluted by Hon‟ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd (2009)(319 ITR 0306). He submitted that the Hon‟ble Apex Court has discussed about the object of inserting these provisions, in paragr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....red by various Tribunals and High Courts. Accordingly he submitted that the mandate provided by sec. 43B of the Act to allow deduction on payment basis should also be extended to employees‟ contribution also and accordingly contended that the impugned claim of Rs. 326.58 lakhs made by the assessee should be allowed in AY 2005-06 on payment basis. 18. In the alternative, the Ld A.R submitted that the impugned deduction should have been allowed in AY 2004-05 itself. He submitted that the due date for filing return of income for assessment year 2004-05 u/s 139(1) of the Act was extended, inter alia, for Corporate assessees to 31-10-2004. He submitted that the assessee has paid the above said amount of Rs. 326.58 lakhs on 21.10.2004, i.e., before the due date for filing return of income for AY 2004-05 u/s 139(1) of the Act. Accordingly he submitted that, without prejudice his original contentions, the above said amount should be allowed in AY 2004-05. Accordingly he prayed that a suitable direction may be given to the AO, if the Tribunal is not convinced with his original arguments. 19. The Ld D.R, on the contrary, submitted that the time limit for making payment of employees c....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rovisions of sec. 43B would apply to the employees‟ contribution. The provisions of sec. 43B were applied only to the extent of time limit prescribed for making payment in the proviso to sec.43B of the Act, i.e., the application was limited to the proviso to sec. 43B(1) of the Act only. Accordingly we are unable to agree with the contentions of the assessee and accordingly hold that the amount of Rs. 326.58 lakhs is not allowable as deduction in AY 2005-06 on payment basis. 22. We notice that the Ld CIT(A) has expressed the view that the above said payment was not made into PF account before the due date of filing the return for the subject year. The Ld CIT(A) has further observed that various decisions have liberally interpreted the provisions of and have laid down the principle that the employees‟ contribution paid before the due date for filing return of income is allowable as deduction. Since the employees‟ contribution is income of the assessee u/s 2(24(x) of the Act, the Ld CIT(A) held that the same is allowable as deduction only if it is paid before the due date for filing return of income. Accordingly the Ld CIT(A) has rejected the claim of the assessee. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nts/goods was vested with the supplier and also that even shifting of equipment from one location to another after initial installation was the responsibility of supplier. Accordingly the AO took the view that the ownership on the assets did not pass on the assessee company and accordingly held that the assessee is not entitled to claim depreciation thereon. 27. The Ld CIT(A) also confirmed the same and hence the assessee has filed this appeal before the Tribunal. 28. The Ld A.R submitted that the assessee has purchased the EDP equipments under Finance lease only and it has wrongly claimed the lease payments as deduction. He submitted that the lessee is entitled to claim depreciation under Finance lease. He submitted that there will be usually three parties in case of lease agreements, viz., the lessor, the lessee and the supplier of equipments. In that case, the lease agreement shall be entered between the lessor and lessee. However, in the instant case, the supplier of equipments and the lessor are one and the same person, viz., M/s HCL Infosystems Ltd. He submitted that the intention of supplier of equipments will also be to sell the equipments. Accordingly he submitted that M....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is prima fade not entertainable. 5.3.1 A copy of lease agreement entered between BHEL and HCL Info systems Ltd. dated 27.10.2009 was produced and it was claimed that similar contract was entered into by the assessee. Assuming, it was so, the perusal of the terms of the said agreement would clearly show that the assessee was only a lessee over the Agreement, the lessor had the obligation to insure the assets over the lease period and only- after the expiry, of the lease period the lessee gets a right to acquire the leased assets. The lessee also has right to terminate the agreement if the lessor fails to perform the services or deliver the equipments within the agreed time. Thus as per the terms of the agreement, the lessee has only right to use the assets without any ownership rights over the assets. The claim of exclusive possession is not legally tenable as the lessor continues to own and have legal possession over the assets. Thus even as per the terms of the agreement, the assessee cannot be construed as owner of the assets and would not be entitled for depredation over the said assets. 5.3.2 It was also pleaded that the claim 0' depreciation was not made in the retu....