DCIT, Jaipur V. SHRI AMIT BASU, Jaipur

ITA 765/JPR/2011

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 7559 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-01-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VINOD JOHRI
• Keywords: Question of law; Bad and doubtful debts
• Section: 43B; 28; 139

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JAIPUR BENCH B JAIPUR (BEFORE SHRI R.K.GUPTA AND SHRI N.L.KALRA) ITA NO.765/ JP/2011 ASSESSMENT YEAR 2008-09 PAN: ABFPB 2314 J THE DCIT VS. SHRI AMIT BASU CIRCLE- 2 PROP. M/S. GLOBAL VISION CO. JAIPUR 21/59, BHRIGU PATH, MANSAROVAR, JAIPUR (APPELLANT ) (RESPONDENT) DEPARTMENT BY : SHRI VINOD JOHRI & SHRI SUNIL M ATHUR ASSESSEE BY : SHRI P.C. PARWAL DATE OF HEARING: 11-01-2012 DATE OF PRONOUNCEMENT: 25-01-2012 ORDER PER N.L. KALRA, AM:- THE REVENUE HAS FILED AN APPEAL AGAINST THE ORDER OF THE LD. CIT(A)-I, JAIPUR DATED 07-06-2011 FOR THE ASSESSMENT YEAR 2008-09. 2.1 THE FIRST GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DIRECTING TO ALLOW DEDUCTION U/S 10BA OF RS. 30,82,768/-. 2.2 THE LD CIT(A) HAS DIRECTED THE AO TO ALLOW DEDU CTION U/S 10BA OF THE ACT AFTER OBSERVING AS UNDER:- 4.2 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AN D SUBMISSION OF AR. ON PERUSAL OF THE STATEMENTS TAKE N BY THE AO AT THE TIME OF ORDER PASSED BY HER, IT IS SEEN THAT SIMILA R STATEMENTS HAD BEEN RECORDED IN THE PAST BY THE AO AND THE MATTER HAD B EEN AGITATED BEFORE THE HONBLE ITAT ON SAME/SIMILAR GROUNDS. IT IS SEEN TH AT THE FACTS OF THE CASE REMAIN THE SAME DURING THIS YEAR AND A CATEGORICAL FINDING OF THE HONBLE 2 ITAT, JAIPUR BENCH HAS BEEN GIVEN IN FAVOR OF THE A SSESSEE ON THE SAME FACTS FOR ADMITTING THE CLAIM OF THE ASSESSEE FOR E XEMPTION U/S. 10BA VIDE THEIR ORDERS ITA NO. 198/JP/2008 FOR A.Y. 2004-05 A ND ITA NO. 1660/JP/2009 FOR A.Y. 2006-07. PURSUANT TO THESE FI NDINGS ON THE SAME FACTS OF THE HONBLE ITAT, JAIPUR BENCH THE IMPUGNE D ADDITION OF RS. 30,82,768/- ON ACCOUNT OF DISALLOWANCE OF EXEMPTION U/S 10BA IS DIRECTED TO BE DELETED. 2.3 WE HAVE HEARD BOTH THE PARTIES. THE LD CIT(A) H AS DIRECTED THE AO TO ALLOW DEDUCTION ON ACCOUNT OF THE ORDER OF THE TRIBUNAL IN THE CASE OF THE ASSESSEE FOR THE ASSESSMENT YEAR 2004-05 AND 2006-07. WE FIND NO INF IRMITY IN THE ORDER OF THE LD CIT(A) VIDE WHICH HE HAS FOLLOWED THE ORDER OF THE TRIBUNA L. FOLLOWING OUR FINDINGS FOR THE EARLIER ASSESSMENT YEARS, WE HOLD THAT THE LD CIT(A ) WAS JUSTIFIED IN DIRECTING THE AO TO ALLOW DEDUCTION U/S 10BA. THUS THE FIRST GROUND OF APPEAL OF THE REVENUE IS DISMISSED. 3.1 THE SECOND GRIEVANCE OF THE REVENUE IS THAT TH E LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 58,106/- MADE BY THE AO ON ACCO UNT OF DELAY IN DEPOSIT OF EMPLOYEES CONTRIBUTION TO PF AS THE SAME IS NOT AL LOWABLE DEDUCTION WITHIN THE MEANING OF SECTION 36(1) READ WITH SECTION 2(24)(X) OF THE ACT, 1961 3.2 BEFORE US, THE LD DR HAS FILED THE FOLLOWING SU BMISSIONS. (A) THERE IS A SPECIFIC PROVISION IN SECTION 36(1)( VA) OF INCOME TAX ACT 1961 FOR ALLOWING DEDUCTION IN RESPE CT OF ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES ( O N ACCOUNT OF PF / ESI, SUPERANNUATION FUND ETC. ) AND TO WHIC H PROVISIONS OF SECTION 2(24)(X) OF INCOME TAX ACT 1961 APPLY, I F SUCH SUM 3 IS CREDITED TO THE EMPLOYEES ACCOUNT IN THE RELEVA NT FUND ON OR BEFORE DUE DATE. AS PER THE EXPLANATION UNDER THIS SECTION, THE DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEES CONTRIBUTION TO TH E EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER ANY A CT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER AN Y STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE. THIS MEANS THAT THE EMPLOYEES CONTRIBUTION TO PF / ESI ETC. IS TO BE ALLOWED UNDER SECTION 36(1)(VA) IF AN D ONLY IF SUCH CONTRIBUTION IS CREDITED BY THE ASSESSEE (EMPLOYER) TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ( I.E. PROV IDENT FUND, ESI ETC. ) WITHIN THE DUE DATE PRESCRIBED UNDER THE PROVISION OF SUCH FUND. THE PAYMENT OF EMPLOYEES CONTRIBUTION I NTO THE RELEVANT FUND HAS NO RELATION WITH THE DUE DATE OF FILING OF INCOME TAX RETURN REFERRED IN SECTION 43-B OF INCOM E TAX ACT 1961. (B) ALLOWABILITY OF SUCH DEDUCTION IN RESPECT OF EM PLOYEES CONTRIBUTION WITHIN THE PURVIEW OF SECTION 36(1)(VA ) OF INCOME TAX ACT 1961 WAS NEVER PROVIDED BY SECTION 43-B AND IT WAS NEVER A PART OF SECTION 43-B OF INCOME TAX ACT 1961 . HOWEVER, DEDUCTION OF EMPLOYERS CONTRIBUTION TOWARDS PF/ESI /OTHER WELFARE FUNDS WAS PROVIDED BY SECTION 43-B(B). (C) ALLOWABILITY OF DEDUCTION BY WAY OF EMPLOYERS CONTRIBUTION IS NOT SEPARATELY GOVERNED BY ANY DIRE CT OR NON- OBSTANTE PROVISION OF INCOME TAX ACT 1961 EXCEPT SE CTION 43- B(B) OF INCOME TAX ACT 1961. 4 (D) PROVISION OF SECTION 43-B(B) AND 36(1)(VA) OF INCOME TAX ACT 1961 ARE MUTUALLY EXCLUSIVE AND INDEPENDENT . PROVISIONS OF SECTION 36(1)(VA) ARE MORE STRINGENT AND UNCOMPROMISING WITH REFERENCE TO THE DUE DATE AS PR OVIDED IN THE RELEVANT FUNDS SUCH AS PROVIDENT FUND, ESI ETC. (E) THERE IS A DECISION OF HONBLE KARNATAKA HIGH C OURT IN THE CASE OF CIT VS SABARI ENTERPRISES 298 ITR 141 I N FAVOUR OF THE ASSESSEE ON THE SIMILAR ISSUE. HOWEVER, IN THIS DECISION, THE SUBSTANTIAL QUESTION OF LAW WAS RAISED AS UNDER :- WHETHER THE TRIBUNAL WAS CORRECT IN HOLDING THAT CONTRIBUTIONS MADE BY THE ASSESSEE TO PF AND ESI AR E ALLOWABLE DEDUCTION EVEN THOUGH IT IS MADE BEYOND T HE STIPULATED PERIOD UNDER MANDATORY PROVISION OF SECT ION 36(1)(VA) AND SECTION 43-B OF THE ACT AND THE SAME WAS PAID BY THE ASSESSEE ON OR BEFORE DUE DATE FOR FURNISHING R ETURN OF INCOME AS PER SECTION 139(1) OF THE ACT ? THUS IT IS AMPLY CLEAR THAT THE QUESTION OF LAW RAI SED BEFORE HONBLE HIGH COURT ITSELF ATTRACTED ADJUDI CATION WITH REFERENCE TO SECTION 43-B OF INCOME TAX ACT 1961. I T IS HUMBLY SUBMITTED THAT CORRECT PROPOSITION OF LAW WAS NOT B ROUGHT TO THE KNOWLEDGE OF HONBLE HIGH COURT. IT IS SUBMITTED TH AT THE SPECIFIC ISSUE OF ALLOWABILITY OF EMPLOYEES CONTRI BUTION WITHIN THE AMBIT OF SECTION 36(1)(VA) EXCLUSIVELY WAS NOT ADJUDICATED. THEREFORE, THE DECISION OF HONBLE KARNATAKA HIGH C OURT IS NOT APPLICABLE IN THE CASE OF SHRI AMIT BASU. (D) THERE IS ANOTHER DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS AIMIL LIMITED & ORS 321 ITR 508 IN 5 FAVOUR OF THE ASSESSEE ON THE SIMILAR ISSUE. THE S UBSTANTIAL QUESTION OF LAW WAS RAISED AS UNDER :- WHETHER TRIBUNAL WAS CORRECT IN LAW IN DELETING TH E ADDITION RELATING TO EMPLOYEES CONTRIBUTION TOWARD S PF AND ESI MADE BY AO UNDER SECTION 36(1)(VA) OF INCOME TA X ACT 1961 ? IN THIS CASE, THE QUESTION OF LAW WAS SPECIFIC BUT LD COUNSEL OF THE DEPARTMENT HERSELF ARGUED ON PROVISI ONS OF SECTION 43-B(B) AND NOT THE CLEAR CUT SPECIFIC PROV ISIONS OF SECTION 36(1)(VA). THEREFORE, CORRECT POSITION OF L AW COULD NOT BE INTERPRETED BY HONBLE HIGH COURT. WITH DUE RES PECT TO HONBLE HIGH COURT, IT IS HUMBLY SUBMITTED THAT THE DECISION IS NOT BASED ON PROPER INTERPRETATION OF LAW. (E) THE ATTENTION OF HONBLE INCOME TAX APPELLATE TRIBUNAL JAIPUR IS INVITED TO THE DECISION OF HONBLE INCO ME TAX APPELLATE TRIBUNAL, MUMBAI I BENCH IN THE CASE OF DCIT VS GANDHAR OIL REFINERY (I) LIMITED WHICH HAS SPECIFIC ALLY AND EXCLUSIVELY INTERPRETED THE PROVISIONS OF SECTION 3 6(1)(VA) AND HELD THAT SECTION 43-B DID NOT APPLY TO THE EMPLOYE ES CONTRIBUTION. THE COPY OF THE DECISION IS ENCLOSED. 3.3 ON THE OTHER HAND, THE LD.AR HAS RELIED UPON TH E ORDER OF THE TRIBUNAL IN THE CASE OF ASSESSEE FOR THE ASSESSMENT YEAR 2007-08. 3.4 WE HAVE HEARD BOTH THE PARTIES. BEFORE AMENDMEN T U/S 43B OF THE ACT BY THE FINANCE ACT, 2003, THERE WERE TWO PROVISOS TO SECTI ON 43B OF THE ACT 6 ' PROVIDED THAT NOTHING CONTAINED IN THIS SECTION S HALL APPLY IN RELATION TO ANY SUM REFERRED TO IN CLAUSE (A) OR CLAUSE (C) OR CLAUSE (D) OR CLAUSE (E) OR CLAUSE (F), WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR B EFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB\X7F SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LI ABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYM ENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN : PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPEC T OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH SUM HAS ACTUA LLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB -SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALISED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' 3.5 THE EMPLOYERS MADE A REPRESENTATION TO THE GOVT . THAT CONTRIBUTION TO WELFARE FUND IS NOT ALLOWABLE IN CASE THE SAME IS PAID AFTE R DUE DATE UNDER THE EMPLOYEES PROVIDENT FUND EVEN IF THE SAME IS PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME. BY FINANCE ACT, 2003, SECOND PROVISO WAS OMITTED AND T HE FIRST PROVISO WAS ALSO AMENDED. THE FIRST PROVISO AFTER AMENDMENT READS AS UNDER:- ' PROVIDED THAT NOTHING CONTAINED IN THIS SECTION S HALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE A SSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB\X7F SECTION (1) OF SECTION 139 IN RESPECT OF TH E PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORE SAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WIT H SUCH RETURN.' 3.6 THE HONB'LE APEX COURT IN THE OF ALOM EXTURSIO N LTD. 319 ITR 306 HAS CONSIDERED THE PROVISIONS OF SECTION 2(24) (X) AS W ELL AS 36(1)(VA) OF THE ACT. THE HONB'LE APEX COURT NOTICED THAT ON THE BASIS OF THE PROVISIONS OF SECTION 43B BEFORE INSERTION OF SECOND PROVISO, IT WAS CLEAR THAT EMPL OYERS WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STANDS CREDITED ON OR BEFORE DUE D ATE GIVEN IN THE PF ACT. THE SECOND 7 PROVISO CREATED FURTHER DIFFICULTIES AND THEREFORE, SECOND PROVISO WAS OMITTED AND FIRST PROVISO WAS AMENDED. BEFORE HONB'LE APEX COURT, THE REVENUE CONTENDED THAT THE PARLIAMENT HAS MAINTAINED A CLEAR DICHOTOMY BETWEEN PAYMENT OF TAX, DUTY, CESS OR FEE ON ONE HAND AND PAYMENT OF CONTRIBUTIONS TO THE WEL FARE FUNDS ON THE OTHER. SUCH DISTINCTION WAS CONSCIOUSLY KEPT UPTO APRIL, 2004. IT WAS FURTHER ARGUED THAT THE AMENDMENT MADE BY FINANCE ACT 203 CANNOT BE CONSIDE RED AS CURATIVE. THIS APPROACH OF THE DEPARTMENT WAS NOT ACCEPTED. SECTION 43B WAS IN TRODUCED WITH THE OBJECT TO DISALLOW DEDUCTION CLAIMED MERELY BY MAKING A BOOK ENTRY BAS ED ON MERCANTILE SYSTEM OF ACCOUNTING. SECTION 43B MADE IT MANDATORY FOR THE D EPARTMENT TO GRANT DEDUCTION IN COMPUTING THE INCOME U/S 28 IN THE YEAR IN WHICH TA X, DUTY, CESS ETC. IS ACTUALLY PAID. THE PARLIAMENT TOOK COGNIZANCE OF THE FACT THAT THE ACC OUNTING YEAR OF THE COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UNDER THE PF ACT, MUNICIPAL CORPORATION ACT AND OTHER TAX LAWS. HENCE BY WAY OF FIRST PROVISO BEFORE FINA NCE ACT 2003, AN INCENTIVE / RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TA X, DUTY, CESS OR FEE BY EXPLICITLY STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DUE DATE OF FILING OF RETURN. IT DID NOT APPLY TO CONTRIBUTIONS TO LABOUR WELFARE FUNDS. THE REASONS APPEARS TO BE THAT THE EMPLOYER(S) SHOULD NOT SIT ON THE COLLECTED CONTRIB UTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFARE LEGISLATIONS BY DELAYING THE PAYMENT OF CONTRIBUTIONS TO THE WELFARE FUNDS. THE SECOND PROV ISO RESULTED IN IMPLEMENTATION PROBLEMS AND THEREFORE, THE SECOND PROVISO WAS OMIT TED AND THE UNIFORMITY WAS GIVEN IN THE FIRST PROVISO BY EQUATING TAX, DUTY CESS AND FE E WITH CONTRIBUTIONS TO WELFARE FUNDS. THUS THE HON'BLE APEX COURT HAS CONSIDERED THE ASPE CT OF EXPLANATION TO SECTION 36(1)(VA) IN RESPECT OF DUE DATE. THE HON'BLE APEX COURT APPROVED THE DECISION OF THE 8 HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS . SABRI ENTERPRISES, 298 ITR 141 AND IT ALSO AFFIRMED THE DECISION OF HON'BLE CALCUTTA HIGH COURT. THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. PAMWI TISSUES LTD. , 313 ITR 13 WAS REVERSED. THE HON'BLE DELHI HIGH COURT IN THE C ASE OF CIT VS. AIMIL LTD. , 321 ITR 508 HAD AN OCCASION TO CONSIDER AS TO WHETHER T HE TRIBUNAL WAS CORRECT IN LAW IN DELETING THE ADDITION RELATING TO THE EMPLOYEES CON TRIBUTION TOWARDS PF AND ESI MADE BY THE AO U/S 36(1)(V) OF THE ACT. THE HON'BLE DELHI H IGH COURT HAS MENTIONED THAT THE TRIBUNAL HAS TAKEN CONTRARY VIEW AND UPHELD THE ADD ITION MADE BY THE AO. BEFORE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AIM IL LTD. (SUPRA) , THE COUNSEL OF THE REVENUE SUBMITTED AS UNDER. WE ARE REPRODUCING THE SUBMISSIONS BECAUSE THE SUBMISSIONS BEFORE US ARE THE SAME WHICH HAVE BEEN CONSIDERED BY HON'BLE DELHI HIGH COURT. 11. MS. PREM LATA BANSAL, LD COUNSEL FOR THE REVE NUE. THUS ARGUED THAT THE SECOND PROVISO TO SECTION 43B, AS IT STOOD AT THE RELEVANT TIME, CLEARLY MENTIONED THAT DEDUCTION IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B) SHALL NOT BE ALLO WED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUANCE O F CHEQUE OR DRAFT OR BY ANY MODE ON OR BEFORE THE DUE DATE, AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36. THUS, THE ASSESSEE WOULD EARN THE ENTITLEMENT ONLY IF THE ACTUAL CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE ACT. AS PER THE SAID EXPLANATION DUE DATE MEANS THE DATE BY WHI CH THE ASSESSEE IS REQUIRED, AS AN EMPLOYER, TO CREDIT THE EMPLOYEE S CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT, RULES, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER AN Y STANDING ORDER AWARD CONTRACT OF SERVICE OR OTHERWISE. 9 3.7 THE HON'BLE DELHI HIGH COURT HAS CONSIDERED TH E ISSUE AFTER CONSIDERING SECTION 36(1)(VA) AND SECTION 2(24)(X) OF THE ACT. THE HON' BLE DELHI HIGH COURT HELD THAT CONTENTION OF THE REVENUE IS NOT ACCEPTABLE IN VIEW OF REJECTION OF SLP OF THE REVENUE BY HON'BLE APEX COURT IN THE CASE OF CIT VS. VINAY CEM ENT LTD. , 313 ITR 1. SECTION 36(1)(VA) REQUIRES THAT THE SUM SHOULD BE CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT. IT NOWHERE MENTIONED THAT THE SUM SHOULD B E PAID. THERE IS A DIFFERENCE BETWEEN THE WORD CREDITED AND PAID. THE SECOND PROVISO TO SECTION 43B BEFORE AMENDMENT BY FINANCE ACT 2003 REQUIRED THAT THE ASSESSEES SUM IS TO BE PAID BEFORE DUE DATE. HENCE, WHEN SECOND PROVISO STANDS OMITTED THEN THE REQUIRE MENT OF PAYMENT IS NOT RELATED TO THE DUE DATE BUT RELATES TO DATE OF FILING OF RETURN AS PER THE AMENDED FIRST PROVISO TO SC 43B BY FINANCE ACT, 2003. WE THEREFORE, ARE NOT INCLINE D TO ACCEPT THE CONTENTION OF THE REVENUE THAT THE LD. CIT(A) WAS NOT JUSTIFIED IN DI RECTING THE AO TO ALLOW DEDUCTION OF RS. 58,106/- IN RESPECT OF THE DEPOSIT OF EMPLOYEE S CONTRIBUTION. THE REVENUE HAS RELIED UPON THE DECISION OF ITAT MUMBAI BENCH IN THE CASE OF DCIT VS. GANDHAR OIL REFINERY (I) LTD., 104 TTJ 630 WHICH IS DATED 23-03-2006. TH E ITAT COCHIN BENCH IN THE CASE OF HARRISON MALAYALAM LTD. VS. ACIT 32 SOT 497 HELD TH AT PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND LABOUR WELFARE FUND MADE BEF ORE DUE DATE OF FILING OF RETURN IS TO BE ALLOWED. THE ITAT DELHI BENCH IN THE CASE OF AC IT VS. JINDAL SAW PIPES LTD. 118 TTJ 228 HAS ALSO HELD THAT EMPLOYERS CONTRIBUTION T O PF AFTER DUE DATE BUT BEFORE DUE DATE OF FILING OF RETURN CANNOT BE DISALLOWED. 3.8 THE ITAT JAIPUR TRIBUNAL VIDE ITS ORDER DATED 0 4-11-2011 IN THE CASE OF THE ASSESSEE FOR THE IMMEDIATELY PRECEDING YEAR HAS DEC IDED THE ISSUE IN FAVOUR OF THE ASSESSEE AFTER OBSERVING AS UNDER:- 10 3.2 THIS ISSUE HAS BEEN DECIDED BY THE TRIBUNAL I N THE CASE OF ITO VS INSTRUMENTATION LTD., KOTA (ITA NO. 331/JP/ 2011 DATED 05-08-2011). IT WILL BE USEFUL TO REPROD UCE PARA 4.2 AND 4.3 OF THAT DECISION. 4.2 THE ABOVE REFERRED ISSUE STANDS DECIDED AGAINST THE REVENUE BY THE TRIBUNAL IN THE CASE OF SOMA BLOCK PRINTS (P) LTD. IN ITA NO.1173/JP/2010 DATED 28 TH APRIL, 2011 FOR THE ASSESSMENT YEAR 2007-08. IT WIL L BE USEFUL TO REPRODUCE THE PARA 5.2 FROM THE ABOVE DEC ISION. 5.2 THIS ISSUE HAS BEEN DECIDED AGAINST THE REVENUE BY THE TRIBUNAL IN THE CASE OF M/S. SWASTIK METAL CASTING VS. ACIT (ITA NO.964/JP/2010) VIDE ORDER D ATED 20-04-2011. IT WILL BE USEFUL TO REPRODUCE PARA 3.2 AND 3.3 OF THE ABOVE REFERRED ORDER 3.2 THE LD. CIT(A) HELD THAT THE EMPLOYEES CONTRIBUTION TO PF AND ESI IS NOT TO BE ALLOWED AS THE SAME HAS NOT BEEN PAID WITHIN THE STIPULATED TIME AS PRO VIDED IN RESPECTIVE ACT OF PF AND ESI. THE LD. CIT(A) CONFIR MED THE ACTION OF THE AO. 3.3 WE HAVE HEARD BOTH THE PARTIES. HON'BLE APEX COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LT D., 319 ITR 306 HAS HELD THAT THE PROVISO INTRODUCED BY THE FINANCE ACT, 2003 IS CURATIVE IN NATURE AND IS RETROSPECTIVE. HOWEVER, WE ARE CONCERNED WITH THE ASSESSMENT YEAR 2007-08. THE HON'BLE APEX COURT HAS REFERRED TO THE EXPLANATION GIVEN IN SECTION 36(1)( V)(A) OF 11 THE ACT. THE ISSUE OF EMPLOYEES CONTRIBUTION COVE RED U/S 43B HAS BEEN CONSIDERED BY THE HON'BLE KARNATAKA HI GH COURT IN THE CASE OF CIT VS SABRI ENTERPRISES, 298 ITR 141. THE HON'BLE APEX COURT HAS UPHELD THE DECISION OF H ON'BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SABRI ENTERPRISES (SUPRA) WHILE DECIDING THE APPEAL IN TH E CASE OF CIT VS ALOM EXTRUSIONS LTD. (SUPRA). THE HON'BLE AP EX COURT HAS DISMISSED THE SLP IN THE CASE OF CIT VS V INAY CEMENT 313 ITR 1 (ST.). WHILE DISMISSING THE SLP, T HE HON'BLE APEX COURT HAS REFERRED TO DECISION OF HON' BLE GAUHATI HIGH COURT IN THE CASE OF CIT VS GEORGE WILLIAMSON (ASSAM) LTD., 284 ITR 619. IN THE CASE B EFORE HON'BLE GAUHATI HIGH COURT, THE ISSUE WAS IN RESPEC T OF CONTRIBUTION OF PF AND ESI RELATING TO EMPLOYEES SH ARES. IT IS NOTICED FROM THE AUDIT REPORT THAT ALL THE PAYME NTS HAVE BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN A ND THEREFORE, THE LD. CIT(A) WAS NOT JUSTIFIED IN NOT DELETING THE SUM OF RS. 150,294/-. THE SAME IS DELETED. THUS THE LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE MADE BY THE AO. 4.3 MOREOVER, THE HON'BLE DELHI HIGH COURT IN THE CASE CIT VS. AIMIL LTD. ,321 ITR 508 HAS HELD T HAT NO DISALLOWANCE CAN BE MADE IN RESPECT OF EMPLOYE RS P.F. CONTRIBUTION AND EMPLOYEES P.F. CONTRIBUTION I N CASE SUCH CONTRIBUTIONS ARE PAID BEFORE DUE DATE OF FILING. IT IS NOT IN DISPUTE BEFORE US THAT THE CONTRIBUTIO NS HAVE NOT BEEN PAID BEFORE DUE DATE OF FILING OF THE RETU RN. WE THEREFORE, HOLD THAT THE LD. CIT(A) WAS JUSTIFIED I N 12 DELETING THE EMPLOYERS P.F. CONTRIBUTION AND EMPLOY EES P.F. CONTRIBUTION. 3.9 LOOKING TO THE ABOVE DISCUSSION, WE HOLD THAT T HE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION OF RS. 58,106/-. 4.1 THE THIRD GRIEVANCE OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS. 55,51,721/- MADE BY THE AO ON ACCOU NT OF DISALLOWANCE OF BAD DEBT U/S 36(1)(VII) OF THE ACT. 4.2 THE AO NOTICED THAT THE ASSESSEE HAS CLAIMED BA D DEBT OF RS. 55,51,721/- IN RESPECT OF THE AMOUNTS DUE FROM TWO PARTIES. THE AS SESSEE HAS PARTIALLY WRITTEN OFF THE BAD DEBT IN THE NAME OF THE DEBTOR PARTIES. THE ACC OUNT HAS NOT BEEN CLOSED. ACCORDING TO THE AO, IT WAS NECESSARY FOR THE ASSESSEE TO HAVE C LOSED THE ACCOUNT OF THE CUSTOMERS FOR CLAIMING BAD DEBT. 4.3 THE LD CIT(A) HAS DELETED THE ADDITION AFTER OB SERVING AS UNDER:- 7.3 I HAVE CAREFULLY PERUSED THE ORDER OF THE AO AND THE SUBMISSION OF THE AR. FROM THE ORDER OF THE AO (PAG ES NO. 28 & 29), IT IS CLEAR THAT THE BED DEBTS OF RS. 33,14,07 4/-WERE WRITTEN OFF IN THE CASE OF M/S. GULF ANTIQUES FOR A.Y. 2007-08 AND THE BALANCE OF RS. 11,28,104/- WAS CARRIED FORWARD TO IN THE NE XT F.Y. SIMILARLY IN THE CASE OF MS/ PALACE FINE IMPORTED FURNITURE, IT IS CLEAR THAT IN THE F.Y 2007-08 RS. 22,37,647/- HAD BEEN WRITTEN OF F AS BED DEBTS AND BALANCE OF RS. 18,95,706/- WAS CARRIED FORWARD NEXT YEAR. THUS AS PER SECTION 36(1)(VII), THE ASSESSEE HAD WRITTEN OFF BAD DEBTS IN HIS BOOKS OF ACCOUNTS. THE SECTION DOES NOT ENTAIL THE ASSESSEE TO STOP DOING BUSINESS WITH THE PARTY WHICH HAS NOT PA ID ALL ITS DUES OR HAS WRUNG A DISCOUNT FROM THE ASSESSEE BY NOT MA KING THE 13 REQUISITE PAYMENTS. FROM THE CORRESPONDENCE OF THE ASSESSEE WITH THESE PARTIES SUBMITTED BEFORE ME, IT IS SEEN THAT PART OF THE DUES REQUIRED TO BE PAID BY THESE PARTIES TO THE ASSESSE E WERE NOT HONORED BY THEM. IN FACT, THE AR HAS ALSO FILED COR RESPONDENCE OF THE BANKS OF THE ASSESSEE ASKING THE PARTIES TO SEN D THE MONEY OWED TO THE ASSESSEE. FINALLY WHEN THIS MONEY WAS N OT FORTHCOMING THE ASSESSEE WROTE OFF THESE AMOUNTS IN IT BOOKS. SEC. U/S. 36(1)(VII) DOES NOT REQUIRE THAT THE ASSESSEE STOP BUSINESS TRANSACTIONS WITH THE PARTIES WHO HAD EARLIER NOT B EEN ABLE TO MEET ALL THEIR DUES. IN VIEW OF THESE FACTS I DO NOT CON CUR WITH THE FINDING OF THE AO THAT THE ASSESSEE HAD WRITTEN OFF CERTAIN AMOUNTS FROM HIS BOOKS AS BAD DEBTS TO REDUCE ITS PROFITS. THE DECISION OF HONBLE S.C. IN THE CASE OF TRF LTD. VS. CIT 323 IT R 397 (SC) IS CLEARLY APPLICABLE ON THE FACTS OF THE CASE OF THE ASSESSEE. THEREFORE, CLAIM OF BAD DEBTS DISALLOWED BY THE AO U/S 37(1)(2) OF RS. 55,51,721/- IS DIRECTED TO BE DELETED. 4.4 WE HAVE HEARD BOTH THE PARTIES. THE ISSUE BEFOR E US STANDS COVERED BY THE DECISION OF HONB'LE APEX COURT IN THE OF TRF LTD. VS CIT, 323 ITR 397. THE SECTION ITSELF MENTIONS THAT THE ASSESSEE CAN CLAIM DEDUCTI ON ON ACCOUNT OF WRITING OFF ANY BAD DEBT OR PART THEREOF. HENCE, IT WAS NOT NECESSARY FOR THE ASSESSEE TO HAVE WRITTEN OFF THE ENTIRE DEBT. THE BUSINESS DECISION IS TO BE TAKEN B Y THE ASSESSEE AND THE ONUS WAS ON THE REVENUE TO HAVE ESTABLISHED THAT WRITING OFF OF PAR T OF THE DEBT WAS NOT TRUE. THE ONUS WAS ON THE REVENUE TO HAVE COLLECTED THE MATERIAL T O SUGGEST THAT WRITING OFF OF BAD DEBT WAS FOR THE PURPOSE OF EVADING THE TAX. WE THEREFOR E, FEEL THAT THE LD CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION. 14 5. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. THE ORDER IS PRONOUNCED IN THE OPEN COURT ON 25-01 -2012. SD/- SD/- (R.K. GUPTA) (N.L. KALRA) JUDICIAL MEMBER ACCOUNTANT MEMBER JAIPUR DATED; 25/01/2012 *MISHRA COPY FORWARDED TO :- 1. THE DCIT, CIRCLE- 2,,JAIPUR 2. SHRI AMIT BASU, JAIPUR 3 THE LD. CIT BY ORDER 4. THE LD. CIT(A) 5 THE LD.DR 6 THE GUARD FILE (ITA NO.765/JP /11) A.R, ITAT, JAIPUR