TaxTMI 
TaxTMI 
TaxTMI 
2017 (6) TMI 1356
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....ntribution to ESI remitted beyond the due date prescribed under the relevant P.F Act. iii. The Ld.CIT(A) has erred in upholding the order of Ld.AO, who had disallowed the professional consultancy charges paid to M/s. Manohar Chowdhry & Associates and to M/s. SAP BPO Services Pvt. Ltd. for Rs. 1,21,648/- & Rs. 1,57,404/- respectively due to short deduction of tax at source invoking the provisions of Section 40(a)(ia) of the Act. iv. The Ld.CIT(A) has erred in upholding the order of Ld.AO, who had excluded the gain on foreign exchange fluctuations from export turnover while computing deduction U/s.10B of the Act. v. The Ld.CIT(A) has erred in upholding the order of Ld.AO, who had disallowed the excess claim of depreciation amounting to Rs. 13,45,141/-. 3. With respect to ground No.v, supra, viz., depreciation, the Ld.AR did not press the ground; accordingly the ground is dismissed as not pressed. 4. The brief facts of the case are that the assessee is a private limited company engaged in the business of manufacturing doors & frames and other products having both domestic and export sales, filed its return of income for the assessment year 2007-08 on 29.10.2007, admitting 'Nil....
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.... supplied) Thus, the due date for filing of the return of income has nothing to do with the due date under section 36(1)(va). No change has been brought about under this clause. The Assessing Officer nowhere mentions that the disallowance has been made under section 43B. In fact, the Assessing Officer has rightly denied the deduction as per clause (va) of sub-section 1 of section 36. The disallowance made u/s 36(1)(va) is in order and is confirmed. The appellant fails on this ground." 5.1 Before us, the Ld.AR submitted that though there was violation of Section 36(1)(va) of the Act by the assessee, he had remitted the amount within the due date of filing of the Income Tax Return. Therefore it was argued that by virtue of the provisions of Section 43 of the Act, the belated remittance should be allowed as deduction. The Ld.DR on the other hand relied on the orders of the Revenue authorities. 5.2 I have heard the rival submissions and carefully perused the materials available on record. We do not find any merit in the submission of the assessee on this issue. Section 36(1)(va) of the Act specifically provides that if the assessee remits the employee's contribution to Provident Fu....
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..... It is pertinent to mention that though employee's & employer's contribution to P.F are remitted by the employer, they are separate and distinct for which independent provisions have been cast under the Act. Employee's contribution to P.F., is nothing but appropriation of a portion of the salary which is legitimately due to the employee and remitted by the employer in the Government treasury on behalf of the employee in accordance with the provisions of the relevant P.F., Act. Hence it is crystal clear from Section 36(1)(va) of the Act that with respect to remittance of employee's contribution to recognized Provident Fund, deduction will be allowable to the assessee only if the same is remitted within the due date mentioned in the relevant P.F. Act and with respect to employer's contribution to recognized Provident Fund, Section 43B of the Act makes it clear that deduction will be allowable if the remittance is made with in the due date of filing the return of income. For the above stated reasons I do not find any infirmity in the order of the Ld. Revenue Authorities. Accordingly, I confirm the Order of the Revenue Authorities on this issue. 6. Ground No.ii: Belated remittan....
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....er is earlier. It is a basic accounting principle that credit to an account precedes actual payment. Therefore, only the payable will attract 'the provisions of 40(a)(ia) and not the paid amount, has no meaning. That would definitely not the intention of the legislature. This view is supported by the decisions in the following cases, (i) CIT v. Crescent Export Syndicate, 216 taxman 2S8 (Cal.HC) (ii) CIT v. Sekanderkhan N Tanvar (ITA No.90S of 2012) (Guj.HC) On the other hand, the case of Merilyn Shipping & Transports v. Addl.CIT (136 ITD 23) (Vizag.) (SB) the decision of the ITAT Vizag. (SB) was stayed by the High Court of Andhra Pradesh. There is a difference between the word 'paid' and 'payable'. The legislature has used the word 'payable' very carefully in sec. 40(a)(ia). As no tax can be deducted after the amount is actually paid, the legislature has used the word 'payable' and not the word 'paid'. The amount of tax is required to be deducted before the payment and not after the payment, as it is not possible to deduct after the payment has been made. Deduction can be made till the amount is in the hands of the payer and not whe....
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....the Act with respect to interest income:- On perusing the Profit & Loss account, it was revealed that the assessee had disclosed interest income of Rs. 20,48,746/-. The Ld.AO opined that the interest income cannot be treated as income eligible for deduction U/s.10B of the Act. Therefore, he excluded the interest income while computing deduction U/s.10B of the Act. On appeal, the Ld.CIT(A) confirmed the order of the Ld.AO, by observing as under:- "4.3. Re-working of deduction u/s.10B: The next ground of appeals relates to the re-computation of deduction u/s.1OB by the Assessing Officer. On this ground, tile relevant portion of the assessment order is as under: 4. Deduction u/ s 10B 4.1. Export Turnover: The export realization details furnished by the assessee shows that the realized value includes Gain arising out of Foreign exchange fluctuation. In the business of export the assessee raises bills against the customer. The rates mentioned in the bill raised is recorded in the books of accounts of the assessee. At the same time he debits the account of the foreign buyer. At the year end also if the sale proceeds are not received by the assessee the foreign buyer is s....
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....gh Court in the case of C1T vs Pentasoft Technologies Ltd and also the decisions of the Jurisdictional Bench of the Income Tax Appellate Tribunalin the case of M/s.Changepond Technologies vs the ACIT & in the case of M/s. MPS Ltd vs the ACIT (copies of decisions enclosed) wherein the court has held that when the fluctuation in foreign. exchange rate was solely attributable to the export business of the assessee and the higher rupee value earned by virtue of such exports carried out by the assessee, the benefit of such deduction would also be extended to such gains. The decision of the Mumbai Bench of the Income Tax Appellate Tribunal in the case of M/ s Renaissance Jewellery P Ltd vs the ITO, the decision of the Ahmedabad Bench of the Income Tax: Appellate Tribunal in the case of the DCIT vs Harsha Engineers P Ltd. & decision of the Delhi Bench of the Income Tax Appellate Tribunal in the case of the ACIT vs M/ s Headstrong Services India P Ltd (copies of decisions enclosed) while following the decision of the Madras High Court earlier referred to have affirmed the arguments of the Appellant. The Calcutta High Court in the case, reported in 330 ITR 57 (copy of decision enclosed) w....