Abilities India Pistons & Rings Ltd, New Delhi V. ITO, New Delhi

ITA 1914/DEL/2009

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 8459 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-07-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 20-07-2009
• Assessment Year: 2003-2004
• Appeal Filed On: 08-05-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MANISH GUPTA
• Assessee Lawyers: R C KAPOOR
• Keywords: Depreciation; Business expenditure
• Section: 43B; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH B: NEW DELHI BEFORE SHRI VIMAL GANDHI, PRESIDENT AND SHRI DEEPAK R. SHAH, ACCOUNTANT MEMBER I.T.A.NO.1914/DEL/2009 ASSESSMENT YEAR : 2003-04 ABILITIES INDIA PISTONS & RINGS LTD., INCOME-TAX OFFICER, PLOT NO.3, F-301, 3 RD FLOOR, VS. WARD 1(1), NEW DELHI. ASHISH COMPLEX LOCAL SHOPPING CENTRE, NEW RAJDHANI ENCLAVE, NEW DELHI. PAN: AAACA3001G (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI R.C. KAPOOR, CA. RESPONDENT BY : SHRI MANISH GUPTA, DR. O R D E R PER DEEPAK R. SHAH, ACCOUNTANT MEMBER. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME-TAX (APPEALS)-IV, NEW DELHI, DATED 13.03.2009 IN AN APPEAL AGAINST ASSESSMENT FRAMED UNDER SECTION 1 43(3) OF THE INCOME-TAX ACT, 1961 (THE ACT). 2. THE FIRST ISSUE IN APPEAL IS AGAINST DISALLOWANC E OF A SUM OF RS.9,86,410/- BEING EMPLOYEES CONTRIBUTION TO PROVI DENT FUND. 3. THE ASSESSING OFFICER NOTED THAT THE EMPLOYEES C ONTRIBUTION RECOVERED BY THE ASSESSEE TOWARDS PROVIDENT FUND WA S NOT PAID WITHIN THE 2 DUE DATE PRESCRIBED UNDER SECTION 36(1)(VA) OF THE ACT AND HENCE THE SAME IS NOT ALLOWABLE. BEFORE THE LEARNED CIT(A) IT WAS CO NTENDED THAT THE AMOUNT IS PAID BEFORE THE DUE DATE PRESCRIBED FOR FILING T HE RETURN UNDER SECTION 139(1) OF THE ACT AND HENCE THE SAME IS ALLOWABLE. THE LEARNED CIT(A) HELD THAT THIS PROVISION CONTAINED IN SECTION 43B WILL A PPLY ONLY IN RESPECT OF EMPLOYERS CONTRIBUTION TOWARDS PROVIDENT FUND AND NOT EMPLOYEES CONTRIBUTION RECOVERED BY THE ASSESSEE FROM EMPLOYE ES AND PAYABLE TO THE PROVIDENT FUND AUTHORITIES. ACCORDINGLY, THE SUM O F RS.9,86,410/- WAS DISALLOWED. 4. WE FIND THAT RECENTLY HONBLE DELHI HIGH COURT I N CASE OF DHARMENDRA SHARMA 213 CTR 609, VIDE ORDER DATED 28 TH JANUARY 2008 HELD THAT TRIBUNAL WAS RIGHT IN DELETING THE DISALLOWANC E OF PAYMENTS TOWARDS PF AND ESI AS THE SAME WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN. WHILE SO HOLDING HONBLE DELHI HIGH COURT RELIED ON THE V ERDICT OF HONBLE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD., 213 CTR 268, WHEREIN SLP FILED BY THE DEPARTMENT WAS DISMISSED BY OBSERV ING THAT EVEN PRIOR TO AMENDMENT OF SECTION 43B BY THE FINANCE ACT 2003, N O DISALLOWANCE CAN BE MADE IF SUCH PAYMENT IS MADE BEFORE LAST DATE OF FI LING THE RETURN OF INCOME. HOWEVER, NO CONTRARY DECISION OF ANY HIGH COURT WAS BROUGHT TO OUR NOTICE BY THE LEARNED DR. 3 SINCE THE CASE FALLS UNDER THE JURISDICTION OF HON BLE DELHI HIGH COURT, THE AMOUNT PAID BY THE ASSESSEE IN RESPECT O F EMPLOYEES CONTRIBUTION TO PROVIDENT FUND PAID BEFORE THE DUE DATE FOR FILI NG RETURN OF INCOME IS ALLOWABLE IN THE YEAR OF DEDUCTION AND NOT IN THE Y EAR OF ACTUAL PAYMENT THEREOF. WE ALSO FIND THAT AT LEAST ON TWO OCCASIO NS PART OF THE SUM WAS PAID WITHIN THE FINANCIAL YEAR ITSELF. THEREFORE, THE S AID SUM COULD NOT HAVE BEEN DISALLOWED. WE, THEREFORE, DELETE THE DISALLOWANCE OF RS.9,86,410/-. 5. NEXT ISSUE IN APPEAL IS AGAINST DISALLOWANCE OF THE FOLLOWING EXPENSES:- I) CAR DEPRECIATION RS. 3,870/- II) CAR EXPENSES RS.30,953/- III) TELEPHONE RS.33,760/- 6. WE FIND THAT THE EXPENSES ARE DISALLOWED BY THE ASSESSING OFFICER ON ACCOUNT OF POSSIBLE PERSONAL USER BY THE DIRECTORS OF THE CAR AND TELEPHONE. IT IS CONTENDED BY THE ASSESSEE THAT SIMILAR EXPEND ITURES WERE ALWAYS HELD ALLOWABLE IN THE PAST AS ALSO IN THE SUBSEQUENT YEA RS. THE DIRECTORS POSSESSED THEIR PERSONAL CARS AND EXPENSES IN RESPE CT OF WHICH ARE NOT CLAIMED. SIMILARLY THE TELEPHONE INSTALLED AT THE RESIDENCE OF THE DIRECTOR IS NOT CLAIMED AS BUSINESS EXPENSES. IT IS ALSO CONTEN DED THAT THE ASSESSEE BEING A PUBLIC LIMITED COMPANY CANNOT HAVE ANY PERSONAL E LEMENT AND EVEN IF THE 4 DIRECTORS HAVE USED FOR THEIR PERSONAL PURPOSES, SO FAR AS THE ASSESSEE IS CONCERNED, IT IS BUSINESS EXPENDITURE ALLOWABLE AS SUCH. 7. THE LEARNED DR ON THE OTHER HAND, SUBMITTED THAT THE EXPENSES FOR THE PERSONAL USE BY THE DIRECTORS OF THE CAR AND TELEPH ONE CANNOT BE RULED OUT AND HENCE TO THAT EXTENT THE EXPENSES CANNOT BE SAI D TO BE WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. RELIANCE WAS PLACED ON THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF JCI T VS. ITC LTD., 112 ITD 57. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE A SSESSEE IS A PUBLIC LIMIT COMPANY AND HENCE CANNOT HAVE ANY PERSONAL US E BY ITSELF. THE COMPANY FUNCTIONS THROUGH THE DIRECTORS AND HENCE E VEN IF THE DIRECTORS USE THE CAR AND TELEPHONE FOR THEIR PERSONAL PURPOSES, THE SAME WILL AMOUNT TO A PERQUISITE TO THE DIRECTOR BUT CANNOT BE CONSIDERED AS NON-BUSINESS PURPOSES SO FAR AS THE ASSESSEE IS CONCERNED. SIMILAR VIEW HAS BEEN HELD BY THE HONBLE GUJARAT HIGH COURT IN THE CASE OF SAYAJI IR ON & ENGG. CO. VS. CIT, 253 ITR 749 AND IN THE CASE OF DINESH MILLS LTD. VS . CIT, 254 ITR 673. IN THE DECISION OF ITC LTD. (SUPRA) RELIED UPON BY THE LEARNED DR, THE AD HOC DISALLOWANCE OUT OF TRAVELLING EXPENSES AND IN RESP ECT OF REPAIRS TO THE RESIDENTIAL ACCOMMODATION PROVIDED BY THE ASSESSEE COMPANY TO ITS DIRECTOR WAS HELD TO BE ADMISSIBLE DEDUCTION AND NO PART THE REOF WAS HELD 5 DISALLOWABLE. THEREFORE, THE CASE RELIED UPON BY T HE LEARNED DR DOES NOT ASSIST THE CASE OF THE REVENUE. IN VIEW OF THE DEC ISION OF HONBLE GUJARAT HIGH COURT THE ESTIMATED DISALLOWANCE FOR THE PROBA BLE PERSONAL USE OF CAR AND TELEPHONE BY THE DIRECTORS CANNOT BE UPHELD. 9. IN THE RESULT, THE APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 31 ST JULY, 2009. SD/- SD/- (VIMAL GANDHI) (DEEPAK R. SHAH) PRESIDENT ACCOUNTANT MEMBER DATED: 31 ST JULY 2009. COPY OF THE ORDER FORWARDED TO:- 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR BY ORDER *MG DEPUTY REGISTRAR, ITAT.