Income Tax Appellate Tribunal - Delhi
Northern India Tiles Corporation, New ... vs Assessee on 3 March, 2010
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH `F': NEW DELHI
BEFORE SHRI C.L.SETHI, JM & SHRI K.G. BANSAL, AM
I.T. A. No.2554/Del of 2010
Assessment Year: 2001-02
Northern India Tiles Corporation, Income-tax Officer ,
12/13, Tilak Nagar Indl. Area, vs Ward 26(2), New Delhi.
New Delhi.
Appellant Respondent
Appellant by: Smt. Lalita Krishnamurty,CA
Respondent by: Smt. Pratima Kaushik, Sr. DR
ORDER
PER C.L. SETHI, JM:
In this appeal filed by the assessee against the order dated 3.3.2010 of the learned CIT(A) pertaining to Asstt. Year 2001-02. The following additions sustained by the CIT(A) have been disputed:
(i) Disallowance of Rs.57,737/- in respect of depreciation on motor car to the extent of 1/5th of total claim;
(ii) Disallowance of Rs.1,45,023/- in respect of contribution towards EPF in the month of June, August, November, 2000 to March, 2001.
(iii) The assessee has also taken a ground challenging the validity of assessment proceedings initiated u/s 147 of the Act.
2. We have heard both the parties and have carefully perused the orders of the authorities below.
2
3. In this case, the AO reopened the assessment by issuing a notice u/s 148 dated 6.2.2006. In the re-assessment, the AO had disallowed a sum of Rs.57,737/-, being 1/5th of depreciation on car for personal use. The AO stated that the disallowance was not made in the regular assessment made u/s 143(3) on 29.3.2004. The AO, therefore, made this addition in the re- assessment initiated u/s 147 of the Act. The assessee submitted before the AO that the ad hoc disallowance on account of depreciation of motorcar is not permissible in the absence of any material or evidence to show and establish that the car was not used for the purpose of business. The assessee's objection was not accepted by the AO by observing that assessee should have challenged this fact against the original assessment order, and even otherwise, the assessee has not produced any material evidence that the car was used only for office purposes. The AO further stated that assessee should have produced car diary in support of the claim.
4. On an appeal, the learned CIT(A) confirmed the AO's action by taking a view that the disallowance made by the AO was in accordance with the provisions of law, and does not require any interference.
5. After considering the totality of the facts and circumstances of the case, we are of the considered view that such an ad hoc disallowance of depreciation is not justified. It is not in dispute that this vehicle was used for 3 the purpose of business as AO himself has allowed 4/5th of the depreciation admissible during the year. The AO has not pointed out any instance of personal use of the car by the partners. We, therefore, delete the ad hoc disallowance of depreciation to the extent of 1/5th of the total claim. Thus, this issue is decided in favour of the assessee.
6. Another addition made by the AO is on account of late payment of employees' provident fund for the month of June, August, November, 2000 to March, 2001 amounting to Rs.1,45,023/-. The assessee pointed out before the AO that all these payments have been made within the accounting year in so far as payment for the month of June, August, November, 2000 to February, 2001 are concerned. The assessee further pointed out that the payment due for the month of June, 2001 has been made before the due date of the filing of the return of income in the case of the assessee. However, the AO disallowed the same by observing that the payment should have been made before the due date of the payment. On an appeal, learned CIT(A) has confirmed the addition by observing that the omission of Second proviso to Section 43B of the Act w.e.f. 1.4.2004 would not exonerate the assessee from the default committed in making the payment of dues after the due date prior to the amendment. In other words, the CIT(A) was of the view that the omission of second proviso to Section 43B would be applicable only after 1st 4 April, 2004 and not prior to that. This view of the CIT(A) is no more in consonance with the view taken by the Hon'ble Supreme Court in the case of CIT vs Vinay Cements (2007) 213 CTR (SC) 268 holding that the omission of Second proviso to Section 43B is to be read as retrospective and declaratory in nature.
7. An identical view has been taken by the jurisdictional Delhi High Court in the case of CIT vs Dharmender Sharma (2008) 297 ITR 320 (Del) and CIT vs P.M. Electronics Ltd. (2009) 177 Taxman 1 (Del). Therefore, the payment made within the accounting year and before the due date of filing the return of income even for the year prior to 1st April, 2004 shall stand allowed within the meaning of Section 43B of the Act. In other words, contribution towards provident fund would qualify for deduction even if paid after due date prescribed under Provident Fund Act during the accounting year itself or before the due date of filing of return of income applicable to the assessee's case u/s 139(1) of the Act. We, therefore, delete the disallowance of Rs.1,45,023/- on account of contribution to the provident fund account. The AO shall modify the assessment order accordingly.
8. In the light of our decision allowing the assessee's appeal on merit by deleting the disallowances made by the AO on the aforesaid two counts, the issue with regard to the validity of assessment proceedings initiated u/s 147 5 of the Act has become merely academic at this stage. Therefore, this issue about validity of assessment u/s 147 of the Act is not decided upon as was agreed to by the learned counsel for the assessee.
9. In the result, the appeal filed by the assessee is allowed.
10. This decision was pronounced in the Open Court on 13th August, 2010.
(K.G. BANSAL) (C.L. SETHI)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 13th August, 2010
Vijay
Copy to:
1. Appellant.
2. Respondent.
3. CIT
4. CIT(A)-XXIV, New Delhi
5. DR Assistant Registrar