Stylo Graphics Pvt. Ltd., Kolkata V. DCIT, Cen. Cir. -3(2), Kolkata

ITA 213/KOL/2022

AI Insights

Stylo Graphics Pvt. Ltd. appealed against the order of the CIT(A)-21, Kolkata, which had partly allowed their appeal against the order of the DCIT, Central Circle-3(2), Kolkata. The main issues in the appeal included the disallowance of club expenses, the addition under section 43B for unpaid bonuses, disallowances related to delayed payments of PF, ESI contributions, professional tax, and trainee expenses. The Tribunal examined each issue in light of the submissions and the remand report from the AO, leading to the decisions mentioned in the outcome.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 124624 (ITAT-KOLKATA)
• Duration Of Justice: 10 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-03-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 08-03-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 01-05-2022
• Other Referred Cases: Chekmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC)
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RANU BISWAS
• Assessee Lawyers: MIRAJ D. SHAH
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH KOLKATA BEFORE SHRI RAJPAL YADAV, VICE PRESIDENT AND SHRI GIRISH AGRAWAL, ACCOUNTANT MEMBER ITA No.213/Kol/2022 Assessment Year: 2013-14 Stylo Graphics Pvt. Ltd. C/o SDP & Associates 46C, Chowringhee Road, Flat 14G, Kolkata-700071. (PAN: AAECS1107K) Vs. Deputy Commissioner of Income-tax, Central Circle- 3(2), Kolkata. (Appellant) (Respondent) Present for: Appellant by : Shri Miraj D. Shah, AR Respondent by : Smt. Ranu Biswas, Addl. CIT, DR Date of Hearing : 09.03.2023 Date of Pronouncement : 30.03.2023 O R D E R PER GIRISH AGRAWAL, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of Ld. CIT(A)-21, Kolkata vide order No. ITBA/APL/S/250/2021-22/1040368861(1) dated 04.03.2022 against the order of Ld. DCIT, Central Circle-3(2), Kolkata passed u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the “Act”), dated 31.03.2016. 2. Brief facts of the case are that assessee filed its return of income on 29.10.2013 reporting total income at Rs.44,95,470/-. Ld. AO completed the assessment by making certain disallowance and additions against which assessee went in appeal before the Ld. CIT(A) who partly allowed the appeal of the assessee. The additions/disallowances for which the assessee is in appeal before the Tribunal are tabulated as under: Ground No. Issue Amount 1. Disallowance of Club Expense incurred for Rs. 63,849/- 2 ITA No.213/Kol/2022 Stylo Graphics Pvt. Ltd. AY 2013-14 business purpose 2. Addition u/s. 43B for provision for payment of Bonus payable to its employees Rs.2,04,196/- 3. Disallowance u/s. 36(1)(va) for alleged delayed payment of PF & ESI contribution and Professional Tax deductions Rs.17,47,694/- 4. Disallowance of alleged earlier year taxes Rs. 1,47,555/- 5. Disallowance of stipend/remuneration paid during the year to newly recruited employees / staff pending absorption/ confirmation Rs.25,92,220/- 3. In the course of first appellate proceeding, Ld. CIT(A) had called for remand report from the ld. AO which is placed in the paper book at page 1 to 4. In the course of hearing before us, Ld. Counsel for the assessee referred to the observations made by the Ld. AO in the remand report. Submissions made by the Ld. Counsel for the above tabulated additions/disallowances are dealt in seriatim. 4. Assessee had claimed deduction towards donations and subscriptions amounting to Rs.2,71,744/- which included an amount of Rs.1,19,292/- towards club expenses. Ld. AO sought details in respect of club expenses of Rs.1,19,292/-. There were certain payments under the head club expenses for which no receipts were provided, details of which are tabulated as below: Sl. No. Name of the Entity Payment made to the entity during the FY:2012-13 1. Vasundhara Academy Rs. 17,000/- 2. Vasundhara Institute Rs. 11,000/- 3. Madhuban Rs. 4,500/- 3 ITA No.213/Kol/2022 Stylo Graphics Pvt. Ltd. AY 2013-14 4. Sangit Kalamandir Rs. 27,978/- 5. Misc. Club Expenses Rs. 3,371/- Total Rs. 63,849/- 4.1. In respect of these expenses which have been claimed under the head club subscription, it was noted by the Ld. AO and ld. CIT(A) including the observations in the remand report that there is no clarity as to whether these expenses are incurred towards membership/subscription or incurred for availing materials supplied or services provided on personal account. Also, it was not discernible as to how the object of incurring the said expenditure was to promote the business of the assessee. Accordingly, an amount of Rs.63,849/- was disallowed. 4.2. Before us, ld. Counsel did not lay any corroborative evidence to substantive the claim that these are expenses towards club subscription/membership fees. Accordingly, we do not find any reason to interfere with the finding given by the Ld. CIT(A) in this respect. Ground no. 1 taken in this respect is dismissed. 5. In respect of disallowance of unpaid bonus of Rs.2,04,196/-, Ld. AO has noted in the remand report that assessee has paid the bonus of Rs.1,94,757/- before the due date of filing of return. Assessee had filed its return on 29.10.2013. Except for an amount of Rs.9,439/- the balance amount of Rs.1,94,757/- was paid by the assessee before the filing of the return, details of which are tabulated in the 4 ITA No.213/Kol/2022 Stylo Graphics Pvt. Ltd. AY 2013-14 remand report. Accordingly, ground taken by the assessee in this respect is partly allowed. 6. Ground no. 3 is in respect of disallowance towards delay in deposit of contribution of employees’ share of ESI, PF, superannuation fund. The issue is squarely covered against the assessee by the decision of Hon’ble Supreme Court in the case of Hon’ble Supreme Court in Chekmate Services Pvt. Ltd. Vs. CIT (2022) 143 taxmann.com 178 (SC) wherein it has been held that “deduction u/s 36(1)(va) in respect of delayed deposit of amount collected towards employees’ contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Income-tax Act,1961.” Accordingly, this ground of appeal is dismissed. 7. Ground no. 4 is in respect of addition towards earlier years’ taxes which comprises of Rs.51,355/- towards PF old dues and Rs.96,200/- towards old tax dues of Central Sales Tax case for AY 2009-10. Both these amounts were paid by the assessee during the FY 2012-13 relevant to AY 2013-14. 7.1. In respect of deposit of old PF dues amounting to Rs.51,355/-, it is not discernible from the material on record whether it relates to contribution by the employees or of the employer. Accordingly, we find it proper to remit this issue for the limited purpose of verification by the Ld. AO to ascertain the nature of contribution as to whether it is of the employees or by the employer. Based upon the verification, 5 ITA No.213/Kol/2022 Stylo Graphics Pvt. Ltd. AY 2013-14 ld. AO may consider the claim of the assessee and allow it in accordance with the provisions of law. 7.2. In respect of the deposit of Rs.96,200/- towards old tax dues for Central Sales Tax case for AY 2009-10, assessee had only submitted a copy of ledger maintained by the assessee in its books of account and the copy of bank statement containing the narration for the said payment. However, from these documents, it cannot be established that the payment is on account of sales tax dues. Accordingly, in this respect also, we find it proper to remit the matter for limited purpose of verification, before the AO. Ld. AO may verify the necessary documents in respect of deposit of this old tax dues and consider the allowance of the claim in accordance with the provisions of law. For both the issues, assessee should be given reasonable opportunity of being heard to submit relevant documents to substantiate its claim. Accordingly, this ground of appeal is allowed for statistical purposes. 8. Ground no. 5 is in respect of disallowance of trainee expenses. Ld. AO had disallowed this claim of the assessee by observing that supporting documentary evidences were not produced in the course of assessment proceedings. Necessary documents were placed on record before the ld. CIT(A) in respect of which a remand report was called for from the Ld. AO. In the remand report, Ld. AO has examined the documents submitted by the assessee and did not dispute on the claim of the assessee made towards trainee expenses amounting to Rs.22,95,220/-. The observations 6 ITA No.213/Kol/2022 Stylo Graphics Pvt. Ltd. AY 2013-14 made by the Ld. AO in the remand report are reproduced for ease of reference: “6. Disallo wance of trainee expenses of Rs.25,92,220/- on non- submission of supporting documents: As directed, a letter was sent through online on 01.04.2021 requesting the assessee to submit suppor ting documen ts to verif y the trainee expenses of Rs.25,92,220/- as claimed by the assessee. In response, the assessee submitte d various documents in support of its claim. From the documents submitted by the assessee, the claim of trainee expenses of Rs.25,92,220/- has been verif ied. The assessee submitte d the list trainees, amount trainee expenses made during the FY 2012-13, date of paymen t, period of training along with bills and vouchers in support of its claim. From the documen ts it is seen that the assessee made total trainee expenses amounting to Rs.25,92,220/-.” 8.1. Considering the observations of the ld. AO in the remand report wherein all the necessary details have been examined and nothing adverse is pointed out in respect of this claim, we allow the claim of the assessee in this respect. 9. In the result, appeal of the assessee is partly allowed. Order pronounced in the open court on 30th March, 2023. Sd/- Sd/- (Rajpal Yadav) (Girish Agrawal) Vice President Accountant Member Dated: 30th March, 2023 JD, Sr. P.S. Copy to: 1. The Appellant: 2. The Respondent: 3. CIT(A)-21, Kolkata 4. CIT, Kolkata 5. DR, ITAT, Kolkata Bench, Kolkata //True Copy// By Order Assistant Registrar ITAT, Kolkata Benches, Kolkata