By Jagadish D. Shah, Jagdish T. Punjabi
Chartered Accountants
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(Full texts
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3. Pik Pen Private Ltd. v. ITO
ITAT ‘C’ Bench, Mumbai
Before P. M. Jagtap (AM) and
R. S. Padvekar (JM)
ITA No. 6847/Mum./2008
A.Y. : 2005-06. Decided on : 28-1-2010
Counsel for assessee/revenue : K. Shivaram/ Chandra
Ramakrishnan
S. 36(1)(va), S. 43B, S. 37(1) — Delayed payment of employees
contribution to PF/ESIC beyond the grace period but before due date of filing
return of income is allowable. Unrecoverable advances made for purchase of
capital asset are allowable as revenue expenditure u/s.37(1).
Per R. S. Padvekar :
Facts I :
The assessee made payment of employees contribution to PF/ESIC
for the month of February, beyond the grace period but before due date of filing
return of income. The Assessing Officer (AO) disallowed the payment of Rs.43,721
u/s.36(1)(va) as he was of the opinion that the employees’ contribution to PF/ESIC
even if made before filing of the return of income is not covered u/s.43B of the
Act.
Aggrieved, the assessee preferred an appeal to the CIT(A) who
confirmed the action of the AO.
Facts II :
The assessee had debited a sum of Rs.2,96,135 which
represented advances made for purchase of machinery, but since the machinery was
not supplied the unrecovered amount of advances was written off and treated as
revenue expenditure allowable u/s. 37(1) of the Act. The Assessing Officer (AO)
was of the view that since the advances were made for purchase of capital asset,
un-recovered amount of advances represented a capital loss and was not
allowable. He disallowed the sum of Rs.2,96,135.
Aggrieved, the assessee preferred an appeal to the CIT(A) who
confirmed the action of the AO.
Aggrieved, the assessee preferred an appeal to the Tribunal.
Held I :
In the case of Alom Extrusion Ltd. 319 ITR 306 (SC) it has
been held that the omission of the second proviso to S. 43B of the Act by the
Finance Act, 2003 operated retrospectively w.e.f. 1-4-1988. In the said case
also, the issue was concerning the contribution payable by the employer to the
PF/Superannuation Fund or any other fund for the welfare of the employees. The
Court held that the contribution paid before due date of filing return of income
is allowable. Consequently, the Tribunal held that the issue is covered in
favour of the assessee and the deduction is allowable.
Held II :
The Tribunal following the principles laid down by the
Rajasthan High Court in the case of CIT v. Anjanikumar Co. Ltd., (259 ITR 114)
decided the issue in favour of the assessee and deleted the addition by treating
the write-off as revenue expenditure u/s.37(1) of the Act, as admittedly, no
capital asset came into existence. This ground was decided in favour of the
assessee.
