The ACIT-Circle-3, Baroda V. M/s. Chhganbhai C. Patel & Bros, Anand

ITA 2674/AHD/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 6614 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-05-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-05-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 29-09-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BHAVNESH KULSHRESTHA
• Keywords: Capital asset; Depreciation
• Section: 43B; 32; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH AHMEDABAD (BEFORE S/SHRI BHAVNESH SAINI, JM AND A. K. GARODIA , AM) ITA NO.2674/AHD/2009 A. Y.: 2005-06 THE A. C. I. T., CENTRAL CENRCLE-2, 6 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA VS M/S. CHHAGANBHAI C. PATEL & CO.,(NOW NAGINBHAI C. PATEL & BROS.) VALSAD ROAD, BORSAD, ANAND PA NO. AABFC 6442 R (APPELLANT) (RESPONDENT) DEPARTMENT BY SHRI BHAVNESH KULSHRESTHA, SR. DR ASSESSEE BY MS. URVASHI SHODHAN, AR O R D E R PER BHAVNESH SAINI: THIS APPEAL BY REVENUE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A) IV, AHMEDA BAD DATED 17 TH MARCH, 2009 FOR ASSESSMENT YEAR 2005-06. 2. ON GROUND NO.1 THE REVENUE HAS CHALLENGED THE OR DER OF THE LEARNED CIT(A) IN ALLOWING DEPRECIATION ON INTANGIB LE ASSETS BY IGNORING THE FACTS OF THE CASE THAT FAMILY SETTLEME NT AGREEMENT BETWEEN THE FAMILY MEMBERS OF SURESH TOBACCO FOUND DURING THE COURSE OF SEARCH, NO WHERE DETAILS WITH ANY CONTEN TS RELATED TO DISCONTINUATION OF BUSINESS OF TOBACCO IN FURTHER A ND THERE WAS NO RE- VALUATION THAT WAS DONE FOR THE ASSETS AND NO NEW A SSETS HAS COME INTO EXISTENCE. IT W AS PLEADED BEFORE THE LEARNED CIT(A) THAT THE AO ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 2 WAS NOT JUSTIFIED IN HOLDING THE COST OF ACQUISITIO N OF BUSINESS OF RS.50 LACS BY THE ASSESSEE WAS NOT TOWARDS THE COS T OF ACQUISITION OF ANY NEW CAPITAL ASSETS, THEREFORE, THE ASSESSEE IS NOT ENTITLED FOR ANY DEPRECIATION. THE LEARNED CIT(A) HOWEVER, NOTED THAT THE ISSUE UNDER CONSIDERATION HAS ALREADY BEEN DECIDED IN FAV OUR OF THE ASSESSEE IN ASSESSMENT YEAR 2003-04 AND 2004-05 AND DEPRECIATION HAS BEEN ALLOWED. THE LEARNED CIT(A) FOLLOWING HIS APPELLATE ORDERS IN THE PRECEDING ASSESSMENT YEARS ALLOWED THE APPEA L OF THE ASSESSEE. 3. THE LEARNED COUNSEL FOR THE ASSESSEE AT THE OUT SET SUBMITTED THAT ITAT AHMEDABAD D BENCH DECIDED THE GROUP APP EALS ON THE IDENTICAL ISSUE INCLUDING THE DEPARTMENTAL APPEALS OF THE SAME ASSESSEE FOR PRECEDING ASSESSMENT YEARS 2003-04 AND 2004-05 IN ITA NOS.1669 AND 1700/AHD/2007 ETC. VIDE ORDER DATE D 31-08-2010, THE DEPARTMENTAL APPEALS HAVE BEEN DISMISSED. COPY OF THE ORDER IS FILED ON RECORD AND GIVEN TO THE LEARNED DR WHO HAS SUBMITTED THAT THE ISSUE IS COVERED BY THE EARLIER DECISION OF THE TRIBUNAL IN THE CASE OF THE SAME ASSESSEE. 4. ON CONSIDERATION OF THE ABOVE FACTS, WE ARE OF T HE VIEW THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE O RDER OF THE TRIBUNAL DATED 31-08-2010 IN THE CASE OF THE SAME ASSESSEE F OR PRECEDING ASSESSMENT YEARS 2003-04 AND 2004-05 WHEREBY THE DE PARTMENTAL APPEALS HAVE BEEN DISMISSED. THE FINDINGS OF THE TR IBUNAL IN PARA 9 TO PARA 16 OF THE ORDER ARE REPRODUCED AS UNDER: ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 3 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND THE MATERIALS AVAILABLE ON RECORD. SECTION 32 (1) READS AS UNDER: 32(1) - IN RESPECT OF DEPRECIATION OF (I) BUILDINGS, MACHINERY, PLANT OR FURNITURE, BEING TANGIBLE ASSETS: (II) KNOW-HOW, PATENTS, COPY RIGHTS, TRADE MARKS, LICENSES, FRANCHISES OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE BEING INTANGIBL E ASSETS ACQUIRED ON OR AFTER FIRST DAY OF APRIL, 199 8, OWNED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSE OF BUSINESS OR PROFESSION, THE FOLLOWING DEDUCTIONS SHALL BE ALLOWED: --- THE EXPLANATION (3) TO THE ABOVE PROVISION PROVIDES THAT FOR THE PURPOSE OF THIS SUB-SECTION THE EXPRESSION ASSETS AND BLOCK OF ASSETS SHALL MEAN (A) -------------- ------- (B) INTANGIBLE ASSETS, BEING KNOW-HOW, PATENTS, COPY RI GHTS, TRADE MARKS, LICENSES, FRANCHISE OR ANY OTHER BUSIN ESS OR COMMERCIAL RIGHTS OF SIMILAR NATURE. 10. THE PART B TO APPENDIX I OF THE IT RULES PROVID ES DEPRECIATION ALLOWANCE FOR INTANGIBLE ASSETS I.E. K NOW- HOW, PATENTS, COPY RIGHTS, TRADE MARKS, LICENSES, F RANCHISE OR ANY OTHER BUSINESS OR COMMERCIAL RIGHTS OF SIMIL AR NATURE AT THE RATE OF 25% OF THE WRITTEN DOWN VALUE . 11. WE MAY NOTE THAT THE A O HAS SPECIFICALLY NOTED IN THE ASSESSMENT ORDER THAT DIVISION OF THE PROPERTIE S AND BUSINESS HAD TAKEN PLACE AS PER TERMS OF THE FAMILY SETTLEMENT AGREEMENT. DURING THE COURSE OF ARGUMENT S BEFORE THE TRIBUNAL, LEARNED COUNSEL FOR THE ASSESS EE WAS DIRECTED TO FILE BIFURCATION OF VALUATION OF TH E PROPERTIES FOR WHICH RS.209 LACS HAD BEEN PAID BY O NE GROUP TO THE OTHER GROUP. IT WAS ALSO DIRECTED TO C LARIFY WHETHER IT INCLUDES THE AMOUNT PAID IN RESPECT OF PROHIBITION CLAUSE MENTIONED IN THE DISSOLUTION/RET IREMENT DEED. LEARNED COUNSEL FOR THE ASSESSEE FILED THE CH ART TO ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 4 SHOW THE BIFURCATION OF PAYMENT OF RS.209 LACS AND STATED THAT VALUATION IS MADE WITH MUTUAL UNDERSTANDING OF PARTIES AND AS PER FAMILY SETTLEMENT DEED FOUND IN SEARCH, THE RELEVANT PORTION IS REPRODUCED AS UNDER: SURESH TOBACCO GROUP MODE AND METHOD OF PAYMENT OF RS.209 LACS WAS ALREA DY EXPLAINED TO THE A. O. BY A LETTER DATED 2 ND FEBRUARY 2006 (COPY ANNEXED ) SR. NO . NAME OF THE FIRM PAYMENT TOWARDS AMOUNT (RS.) 01 . NATUBHAI C. PATEL & CO., FORMERLY KNOWN BANALAKSHMI INDUSTRIES (SEE ATTACHED LIST ITEMS 1 -2) BUSINESS ACQUISITION 30,00,000 02 (NOT RELEVANT TO THE APPEALS) - - 03 SURESH TOBACCO CO., (SEE THE ATTACHED LIST ITEMS 7-9 BUSINESS ACQUISITION 58,80,000 04 NAGINBHAI C. PATEL & BROS. FORMERLY KNOWN AS CHHAGANBHAI CHHOTABHAI PATEL & BROS. (SEE THE ATTACHED LIST ITEMS 5-6) BUSINESS ACQUISITION 50,00,000 5 TO 10 (NOT RELEVANT TO THE APPEALS) - - 11 TOTAL ( C) = (A + B) 2,09,08,40 7 NOTE: NONE OF THE FIXED ASSETS OF BUSINESSES ACQUIR ED AS ABOVE ARE RE-VALUED AT THE TIME OF ACQUISITION. THE ASSESSMENT ORDERS IN ALL THE APPEALS OF THE THR EE ASSESSEES SHOW THAT ASSESSEE MADE A CLAIM OF DEPRECIATION ON THE AMOUNT AS PER FACTS STATED ABOV E. 12. IT IS NOT IN DISPUTE THAT FAMILY SETTLEMENT AGR EEMENT DATED 24-12-2002 EXECUTED BETWEEN THE GROUPS WAS FOUND DURING THE COURSE OF SEARCH ACCORDING TO IT T HE DISPUTES BETWEEN GROUPS WERE SETTLED AND BUSINESS W ERE ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 5 DISSOLVED. PROPERTIES WERE SETTLED BY THE GROUPS DE TAILS OF SAME ARE MENTIONED IN THE SAME DEED DISTRIBUTING TH E PARTNERSHIP BUSINESS OF JOINT FAMILY AND PROPERTIES OF JOINT FAMILIES. THE DETAILS OF DISSOLUTION OF FIRMS ARE M ENTIONED AND IT IS ALSO MENTIONED THAT DETAILED SEPARATE DEE D OF EACH FIRM REGARDING HAVING RETIRED FROM THE PARTNER SHIP FIRM HAS BEEN EXECUTED OR TO BE EXECUTED WHERE RESPECTIVE PARTIES WOULD SIGN THE SAME. THE PROPERT IES AND BUSINESS DISTRIBUTED HAVE BEEN MENTIONED AND IT IS ALSO MENTIONED THAT THE FAMILY MEMBERS OF SECOND PA RT TO THIS AGREEMENT WILL HAVE TO PAY RS.209 LACS AS PART OF THIS UNDERSTANDING TO THE FAMILY MEMBERS OF THE FIRST PA RT I.E. CHHAGANBHAI CHHOTABHAI PATEL GROUP WHO ACCORDING TO A O GOT TWO PROPERTIES AND BUSINESS OF COLD STORAGE IN ORDER TO BRING THE PERMANENT END TO THE DISPUTE. IT WOULD THEREFORE, SHOW THAT THROUGH THE FAMILY SETTLEMENT AGREEMENT IN QUESTION, THE DISSOLUTION DEED OF FIRM S WERE EXECUTED OR TO BE EXECUTED. THEREFORE, THE DISSOLUT ION DEEDS OF THE RESPECTIVE FIRMS SHALL BE PART AND PAR CEL OF THE FAMILY SETTLEMENT AGREEMENT DATED 24-12-2002 . PB-1 IS ONE OF THE DEEDS OF RETIREMENT FROM THE ASS ESSEE FIRM WHICH PROVIDES THAT THE RETIRING PARTNER SHALL NOT USE THE TRADE MARKS AND THAT THEY SHALL NOT CARRY ON AN Y BUSINESS IN THE NAME OF THE ASSESSEE AND THEY SHALL ALSO NOT CARRY OUT SIMILAR BUSINESS AND SHALL NOT USE TH E TRADE MARK OF THE ASSESSEE. THE A O, THEREFORE, DID NOT APPRECIATE THIS FACT THAT DISSOLUTION DEEDS ARE THE PART OF THE FAMILY SETTLEMENT AGREEMENT. THEREFORE, THE DISSOLUTION DEEDS BEING PART OF THE SETTLEMENT AGRE EMENT PROVIDES FOR DISCONTINUATION BUSINESS BY THE RETIRI NG PARTNERS IN FUTURE. HONBLE MADRAS HIGH COURT IN TH E CASE OF CHELPARK CO. LTD. (SUPRA) CONSIDERED THE FACT TH AT BY MAKING PAYMENT BY THE ASSESSEE, IT HAD ACQUIRED AN ENDURING RIGHT OR ADVANTAGE TO CARRY ON ITS BUSINES S FREE FROM POTENTIAL AND POSITIVELY DETRIMENTAL COMPETITI ON FROM THE PARTNERSHIP FOR SO LONG AS THE ASSESSEE CARRIED ON ITS BUSINESS OF MANUFACTURE AND SALE OF INK. THUS, ON A DUE CONSIDERATION OF THE TERMS OF THE AGREEMENT, THE DE ED OF DISSOLUTION AND FACTS OF THE CASE, IT WAS HELD THAT THE ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 6 AMOUNT PAID BY THE ASSESSEE WAS IN THE NATURE OF CA PITAL EXPENDITURE. ITAT PUNE BENCH IN THE CASE OF MODULA R INFOTECH PVT. LTD. VS DCIT (SUPRA) HELD AS UNDER: SEC. 32 PRESCRIBES THE ENTITLEMENT OF DEPRECIATION W. E. F. 1 ST APRIL, 1998 IN RESPECT OF CERTAIN INTANGIBLE ASSETS SUCH AS KNOW-HOW, PATENTS, COPYRIGHTS, TRADE MARKS, LICENSES OR ANY OTHER COMMERCIAL RIGHTS OF SIMILAR NATURE ACQUIRED. THIS SECTION HAS MADE IT CLEAR THAT IF SUCH INTANGIBLE ASSET IS ACQUIRED WHOLLY OR PARTLY BY THE ASSESSEE AND USED FOR THE PURPOSES OF BUSINESS THEN IT IS ENTITLED FO R THE DEDUCTION OF DEPRECIATION. EXPLANATION 3 TO S. 32 FURTHER ELABORATES THAT THE EXPRESSIONS ASSETS AN D BLOCK OF ASSETS MEANS TANGIBLE ASSETS AS WELL AS INTANGIBLE ASSETS. THEREFORE, AS FAR AS THE APPLICABILITY OF THIS SECTION IS CONCERNED ONE CANN OT RAISE ANY DISPUTE. THE REVENUE HAS ALSO NOT ADJUDICATED THE APPLICABILITY OF S. 32 HOWEVER THE DISPUTE WAS THAT THERE WAS NO SUCH ASSET TO BE TERMED AS IPR IN THE HANDS OF THE ERSTWHILE FIRM. TAKING THE SHELTER OF S. 43(6) THE VEHEMENT CONTENTION OF THE ASSESSEE COMPANY IS THAT AS FAR AS THE ASSET IN QUESTION IS CONCERNED A CONSIDERATION WAS DETERMINED AND THE IMPUGNED INTANGIBLE ASSET WAS ACQUIRED IN THE PREVIOUS YEAR. ONCE AN ACTUAL COST WAS INCURRED BY THE ASSESSEE THERE FORE, THERE WAS NO REASON NOT TO CLAIM THE DEPRECIATION BEING PRESCRIBED UNDER S. 32 (II). THE RE IS FORCE IN THIS PLANK OF ARGUMENT. IT MAY NOT BE O UT OF PLACE TO MENTION THAT EVEN THE STATUTE HAS PRESCRIBED THE DEFINITION OF ACTUAL COST AS PER S . 43(1) WHICH MEANS, THE ACTUAL COST IF ANY, AS HAS BEEN MET DIRECTLY. NEVERTHELESS EXPLN. 3 TO THE SECTION PRESCRIBES AN AUTHORITY TO THE A O TO HAVE SATISFACTION ABOUT THE COST OF THE ASSET AND IN CAS E HE IS SATISFIED HA THE MAIN PURPOSE OF THE TRANSFER OF SUCH AN ASSET IS TO REDUCE THE LIABILITY OF INCOME TAX BY CLAIMING HIGHER DEPRECIATION ON HE ENHANCED ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 7 THEN THE ACTUAL TO THE ASSESSEE SHALL BE SUCH AN AMOUNT AS THE A O DETERMINED HAVING REGARD TO ALL THE CIRCUMSTANCES OF THE CASE BUT WITH A RIDER THAT A PREVIOUS APPROVAL OF THE JT. CIT IS ESSENTIALLY REQUIRED. IN THE PRESENT CASE THE ARGUMENT OF THE AUTHORISED REPRESENTATIVE IS THAT NO SUCH SATISFACTION HAS BEEN RECORDED BY THE A O AND EVEN IT IS NOT IN THE KNOWLEDGE OF THE ASSESSEE THAT WHETHER SUCH AN APPROVAL AS PRESCRIBED WAS OBTAINED BY THE A O. THERE WAS NO FALLACY IN THE VERDICT OF CIT (A) WHO HAS CONSIDERED THE FACTUAL MATRIX OF THE CASE IN DETAIL AND THEREAFTER ARRIVED AT A RIGHT CONCLUSION THAT THE ASSESSEE WAS ENTITLED F OR CLAIM OF DEPRECIATION ON THE AMOUNT OF IPR VALUE. SEASON RUBBERS LTD. VS. DY. CIT (1998) 62 TTJ (COACH) 192 AND BOMBAY HOUSEHOLD & INDUSTRIAL PLASTIC MFG. CO. (P) LTD. VS. ITO (1982) 1 ITD 152 (BOM) FOLLOWED. THE ASSESSEE THEREFORE, ACQUIRED EXCLUSIVE TRADE MA RK RIGHTS, ENTIRE BUSINESS AND COMMERCIAL RIGHTS IN RE SPECT OF BUSINESS OF THE ASSESSEE OUT OF SETTLEMENT AGREEMEN TS BETWEEN TWO GROUPS AND PAID PRICE FOR ACQUIRING INTANGIBLE ASSETS. SINCE IN THIS CASE ACTUAL COST W AS INCURRED BY THE ASSESSEE FOR ACQUIRING INTANGIBLE A SSET AS PER SECTION 32 (1) (II) OF THE IT ACT AND USED THE SAME FOR THE PURPOSE OF BUSINESS, THEREFORE, THERE WAS NO RE ASON NOT TO CLAIM DEPRECIATION BEING PRESCRIBED U/S 32 ( II) OF THE IT ACT BEING INTANGIBLE ASSET ACQUIRED BY THE ASSES SEE BY TAKING OVER THE BUSINESS OF THE FIRM WITH TRADE MAR K, BUSINESS, AND OTHER COMMERCIAL RIGHTS OF THE SIMILA R NATURE. THE A O REJECTED THE CLAIM MERELY ON THE RE ASON THAT NO SUCH CONDITION THAT SHRI CHHAGANBHAI PATEL GROUP SHALL NOT CARRY OUT THE BUSINESS OF TOBACCO IN FUTU RE IS MENTIONED IN THE FAMILY SETTLEMENT AGREEMENT AND TH AT NO CAPITAL ASSET CAME INTO EXISTENCE. BOTH THE ABOVE OBJECTIONS OF THE A O HAVE BEEN DEALT WITH ABOVE, A S DISSOLUTION DEED WAS PART OF THE FAMILY SETTLEMENT AGREEMENT AND THAT THE INTANGIBLE ASSET IS ACQUIRED AS ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 8 PER SECTION 32 (II) READ WITH EXPLANATION (3) TO TH IS SECTION. ACCORDING TO SECTION 36 (2) OF THE LAW OF PARTNERSH IP, A PARTNER MAY MAKE AN AGREEMENT THAT HE WILL NOT CARR Y ON ANY BUSINESS SIMILAR TO THAT OF THE FIRM IN WHICH H E WAS A PARTNER PROVIDED SUCH A RESTRICTION IMPOSED IS REAS ONABLE. IN THIS CASE, WHERE ENTIRE DISPUTE WAS SETTLED BY T HE PARTIES AND REASONABLE CONDITIONS HAVE BEEN IMPOSED NOT TO CARRY OUT SIMILAR BUSINESS OR USE THE TRADE MARK , SUCH WOULD BE REASONABLE CONDITION IN THE MATTER. CONSID ERING THE ABOVE DISCUSSIONS, IT IS CLEAR THAT THE ASSESSE E ACQUIRED INTANGIBLE ASSETS WITHIN THE MEANING OF SE CTION 32(II) OF THE IT ACT AND ON THE SAME DEPRECIATION I S ALLOWABLE UNDER PART B TO APPENDIX I OF THE IT RULE S. THEREFORE, IN PRINCIPLE, WE CONFIRM THE FINDING OF THE LEARNED CIT (A) IN HOLDING THAT DEPRECIATION IS ALL OWABLE TO THE ASSESSEE ON INTANGIBLE ASSET, IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 13. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISS ED. ITA NO.2322/AHD/ 2007 AND 2606/AHD/2009 M/S. SURESH TOBACCO CO. 14. IN BOTH THE APPEALS OF THE REVENUE SIMILAR GROU NDS HAVE BEEN RAISED. BY FOLLOWING THE ORDER IN ITA NO.2321/AHD/2007, BOTH THE APPEALS OF THE REVENUE A RE DISMISSED. ITA NO.1699 AND 1700/AHD/2007 M/S. CHHAGANBHAI C. PATEL & CO. (NOW NAGINBHAI C. PATEL & BROS.) AND ITA NO.1697 AND 1698/AHD/2007 M/S. BANLAXMI INDUSTRIES ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 9 15. IN ALL THE ABOVE DEPARTMENTAL APPEALS, THE GROU NDS OF APPEALS AND FACTS ARE SAME. LEARNED REPRESENTATI VES OF BOTH THE PARTIES SUBMITTED THAT THE ORDER IN THE CASE OF M/S. SURESH TOBACCO CO. (SUPRA) MAY BE FOLLOWED. WE FIND THAT LEARNED REPRESENTATIVES OF BOTH THE PARTI ES RIGHTLY STATED THAT GROUNDS OF APPEALS ARE SAME IN ALL THE APPEALS AS WELL THE FACTS. BY FOLLOWING THE ORDER IN THE CA SE OF M/S. SURESH TOBACCO CO. (SUPRA) THE APPEALS OF THE REVEN UE ARE DISMISSED. 16. IN THE RESULT, ALL THE DEPARTMENTAL APPEALS ARE DISMISSED. 5. CONSIDERING THE ABOVE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. SAME IS ACCORDINGLY DISMI SSED. 6. ON GROUND NO.2, THE REVENUE CHALLENGED THE ORDE R OF THE LEARNED CIT(A) IN ALLOWING EMPLOYEES CONTRIBUTION TOWARDS P.F. WHICH WAS PAID AFTER THE STIPULATED PERIOD AS PER S ECTION 36(1) (VA) OF THE IT ACT. THE LEARNED CIT(A) ON PERUSAL OF THE AS SESSMENT ORDER NOTED THAT ALL THE CONTRIBUTIONS HAVE BEEN PAID BEF ORE THE DUE DATE OF FILING OF THE RETURN OF INCOME. THE LEARNED CIT(A) FURTHER NOTED THAT THE AOS CONTENTION THAT MONTHLY CONTRIBUTIONS HAVE NOT BEEN DEPOSITED WITHIN THE PERIOD PROVIDED UNDER THE P. F. ACT IS NOT APPLICABLE AFTER THE AMENDMENT OF SECTION 43 B OF T HE IT ACT WITH EFFECT FROM 1-4-2005 I.E. FROM ASSESSMENT YEAR 2005 -06. THE LEARNED CIT(A) ALSO NOTED THAT AFTER AMENDMENT OF SECTION 4 3B OF THE IT ACT, IF THE EMPLOYEES AND EMPLOYERS CONTRIBUTION TO P. F. IS NOT DEPOSITED WITHIN THE PERIOD PROVIDED UNDER THE P. F. ACT BUT THE SAME IS DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETU RN, THEN THAT CONTRIBUTION AMOUNT IS NOT DISALLOWABLE UNDER THE I T ACT. THE LEARNED ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 10 CIT(A), THEREFORE, NOTED THAT SINCE IN THIS CASE TH E AMOUNTS ARE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, THEREF ORE, DISALLOWANCE WAS DELETED. 7. ON CONSIDERATION OF THE RIVAL SUBMISSIONS WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL OF THE REVENUE. THE SECOND PROVISO TO SECTION 43B OF THE IT ACT HAS BEEN OMITTED FROM THE STATUTE WITH EFFECT FROM 01 ST APRIL, 2004. IT IS NOT IN DISPUTE BEFORE US THAT CONTRIBUTIONS TOWARDS P.F. HAVE BEEN PAID BEFORE TH E DUE DATE OF FILING OF THE RETURN U/S 139 OF THE IT ACT. IN THE LIGHT OF THE VIEW TAKEN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS P. M. ELECTRONICS 220 CTR 635 AND THE DECISION OF THE HON BLE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD. 213 CTR 268, WE ARE OF THE VIEW THAT SINCE THE EMPLOYEES CONTRIBUTIONS TOWARD S P.F. HAVE BEEN MADE BY THE ASSESSEE WITHIN THE DUE DATE OF FILING OF THE RETURN UNDER CONSIDERATION, THERE IS NO GROUND TO DISALLOW THE S AME. DEPARTMENTAL APPEAL HAS NO MERIT AND IS ACCORDINGLY DISMISSED. 8. IN THE RESULT, THE DEPARTMENTAL APPEAL IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 13-05-2011 SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER DATE : 13-05-2011 LAKSHMIKANT/- ITA NO.2674/AHD/2009 ACIT, CIRCLE-3, BARODA VS M/S. CHHAGANBHAI C PATEL & BROS. (NOW NAGINBHAI C. PATEL & BROS.) 11 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD