GUNNEBO INDIA LTD ( FORMELRY KNOWN AS STEELAGE INDUSTRIES LTD), MUMBAI V. DCIT 7(2), MUMBAI

ITA 7913/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8733 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2012
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 25-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 16-11-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: JIGER SAIYA
• Keywords: Bad and doubtful debts
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI G BENCH MUMBAI BENCHES, MUMBAI BEFORE SHRI I P BANSAL, JM & SHRI RAJENDRA SINGH, AM ITA NO. 7913/ MUM/2010 (ASST YEAR 2006-07) GUNNEBO INDIA LTD (FORMERLY KNOWN AS STEELAGE INDUSTRIES LTD) UNIT NO.102 1 ST FLOOR AKRUTI SMC NEXT TO MSRTC DEPT LBS MARG, KHOPAT THANE(W) MUMBAI 601 VS THE DY COMMR OF INCOME TAX 7(2), MUMBAI (APPELLANT) (RESPONDENT) PAN NO. AAACS7236D ASSESSEE BY SH JIGER SAIYA REVENUE BY SH AMAR DEEP DT.OF HEARING 25 TH OCT 2012 DT OF PRONOUNCEMENT 25 TH OCT 2012 PER I P BANSAL, JM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER PASSED BY THE COMMISSIONER OF INCOME TAX(APPEALS) DATED 12.6.201 0 FOR THE AY 2006-07. 2 THE GROUNDS OF APPEAL READ AS UNDER: 1 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS LEGALLY ERRED IN CONFIRMING DISALLOWANCE OF BAD DEBTS WRITE OFF AMOUNTING TO ` .1,46,48,092 UNDER SECTION 36(1)(VII)/37(1) OF THE I NCOME TAX ACT, 1961 (ACT). 2 ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LE ARNED CIT(A) HAS LEGALLY ERRED IN DISALLOWING EMPLOYEES CONTRIBUTION AMOUNTIN G TO ` 20,80,605 & ` 1,86,202 RELATABLE TO DELAY IN PAYMENT OF PF & ESIC RESPECTIVELY UNDER SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT. 3 IT WAS SUBMITTED BY THE LD AR OF THE ASSESSEE THE ISSUE RAISED IN THIS APPEAL ARE COVERED IN FAVOUR OF THE ASSESSEE BY THE ORDER OF THE TRIBUNAL IN EARLIER YEAR, GUNNEBO INDIA LTD ITA NO. 7913/M/2010 . 2 COPY OF SUCH ORDER DATED 10.8.2012 IN 8439/MUM/20 10 IN RESPECT OF ASSESSMENT YEAR 2005-06 FILED BEFORE US AND A COPY OF WHICH WA S GIVEN TO THE LD DR. 4 SO FAR AS IT RELATES TO GROUND NO.1, THE SUBMISSI ON OF THE ASSESSEE IS THAT THE DEBTS WRITTEN OFF WERE OUT OF SALES AND WERE FOR VA RIOUS BUSINESS REASONS. IT WAS SUBMITTED THAT THE KEY CONDITION AS PER LAW FOR ALL OWABILITY OF SUCH DEBTS IS THAT IT SHOULD BE WRITTEN OFF IN ORDER TO CLAIM DEDUCTION. IT WAS SUBMITTED THAT THE LOWER AUTHORITIES HAVE NOT DOUBTED THE GENUINENESS IN WRI TING OFF OF THESE DEBTS AND THE REASON FOR MAKING THE DISALLOWANCE IS ONLY THAT THE DEBTS WRITTEN OFF ARE FROM WELL ESTABLISHED COMPANIES; THEREFORE THEY ARE NOT ALLOW ABLE. HE HAS RELIED UPON THE FOLLOWING DECISIONS, APART FROM THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2005-06: I) TRF LTD VS CIT 230 CTR 14 (SC) II) DIT VS OMAN INTERNATIONAL BANK 313 ITR 128(BOM) 5 SO FAR AS IT RELATES TO GROUND NO.2, IT IS THE S UBMISSION OF THE ASSESSEE THAT SECTION 43B(B) PROVIDES FOR ALLOWANCE OF ANY CONTRI BUTION MADE BY THE EMPLOYER TO PROVIDENT FUND OR ANY OTHER FUND FOR WELFARE OF EMP LOYEES IN THE YEAR IN WHICH PAYMENT IS MADE. HE HAS SUBMITTED THAT THOUGH, THE ASSESSEE HAS MADE DEPOSIT OF SUCH CONTRIBUTION BEYOND THE DUE DATE PRESCRIBED UN DER THE RESPECTIVE ACT; BUT THE SAME HAS BEEN PAID WITHIN THE YEAR. THEREFORE, HE HAS SUBMITTED THAT THE CLAIM OF THE ASSESSEE IS ALLOWABLE ON THE BASIS OF THE FO LLOWING DECISIONS, WHICH INCLUDES THE DECISION OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2005-06: I) CIT ALOM ENTRUSIONS LTD 319 ITR 306(SC) II) PIK PEN PVTD LTD VS ITO (MUM) 6847/MUM/2008 III) GUNNEBO INDIA LTD (ITA NO.8439/M/2010)(DECISI ON IN ASSESSEES OWN CASE) GUNNEBO INDIA LTD ITA NO. 7913/M/2010 . 3 5.1 ON THE OTHER HAND, THE LD DR HAS PLACED RELIANC E ON THE ORDERS OF THE ASSESSING OFFICER AND THE LD COMMISSIONER OF INCOME TAX(APPEALS). 6 WE HAVE HEARD BOTH THE PARTIES AND AFTER CONSIDER ING THE SUBMISSIONS OF BOTH THE PARTIES, WE FIND THAT SO FAR IT RELATES TO GROU ND N O.1, THE SAME HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY THE TRIBUNAL FOR THE A Y 2005-06 FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE OF TRF LTD RE PORTED IN 232 ITR 397 WITH THE FOLLOWING OBSERVATIONS: 2.2 WE HAVE PERUSED THE RECORDS AND CONSIDERED THE MATTER CAREFULLY. IN VIEW OF THE JUDGMENT OF THE HONBLE SU PREME COURT IN THE CASE OF TRF (SUPRA), THE ASSESSEE IS NO LONGER REQUIRE D TO ESTABLISH THAT THE DEBT HAD ACTUALLY BECOME BAD FOR CLAIMING THE DE DUCTION ON ACCOUNT OF BAD DEBTS AFTER THE A.Y. 1989-90. THEREFO RE, THE ONLY CONDITIONS WHICH ARE REQUIRED TO BE FULFILLED RE THA T THE DEBT SHOULD HAVE BEEN TAKEN INTO ACCOUNT IN THE COMPUTATION OF THE INCOME OF EARLIER YEARS AND SHOULD HAVE BEEN ACTUALLY WRITTEN OFF BY THE ASSESSEE IN THE BOOKS OF ACCOUNTS ABOUT WHICH THERE IS NO DIS PUTE RAISED BY THE LOWER AUTHORITIES. THEREFORE, THE CLAIM OF THE ASSESSEE HAS TO BE ALLOWED. WE, ACCORDINGLY SET ASIDE THE ORDER OF THE C IT(A) AND ALLOW THE CLAIM OF THE ASSESSEE. 7 SO FAR AS IT RELATES TO GROUND NO.2 ALSO IS COVER ED IN FAVOUR OF THE ASSESSEE WITH THE FOLLOWING OBSERVATIONS OF THE TRIBUNAL: 4. THE THIRD DISPUTE IS REGARDING THE ADDITION OF E MPLOYEES CONTRIBUTION TO PF AND ESIC AMOUNTING TO ` 87,96,9L5/- AND ` 8,43,66L/- UNDER THE PROVISIONS OF SECTION 36(1)(VA) R.W.S. 2(24 )(X) OF THE ACT. THE AO DISALLOWED THE CLAIM AS THE PAYMENT HAD BEEN MAD E BY THE ASSESSEE AFTER HE DUE DATE AS PRESCRIBED UNDER THE RELEVANT PROVISIONS WHICH IS 15TH DAY OF THE FOLLOWING MONTH. IN THE AP PEAL, THE CIT(A) HAS CONFIRMED THE DISALLOWANCE AGGRIEVED BY WHICH THE A SSESSEE IS IN APPEAL BEFORE THE TRIBUNAL. 4.1 WE HAVE HEARD BOTH THE PARITIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE DISPUTE IS REGARDI NG THE DISALLOWANCE EMPLOYEES CONTRIBUTION TO PF AND ESIC ON THE GROUND THAT THE SAME HAD NOT BEEN PAID BY THE ASSESSEE BEF ORE THE DUE DATE IN VIEW OF THE AMENDMENTS TO SECTION 43B W E F A Y 2004-05, THE CONTRIBUTION TO PF AND ESIC ETC ARE ALLOWABLE AS DED UCTION IN CASE THE PAYMENT HAS BEEN MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF ALOM GUNNEBO INDIA LTD ITA NO. 7913/M/2010 . 4 EXTRUSIONS LTD. (319 ITR 306). THE HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. AIMIL LTD. AND OTHERS (321 ITR 508) FOLL OWING THE JUDGMENT OF HONBLE SUPREME COURT IN THE EASE OF VINAY CEMENTS ( 213 CTR 268) HAVE HELD THAT THE EMPLOYEES CONTRIBUTION TO PF AN D ESIC WOULD ALSO BE COVERED BY THE PROVISION OF SECTION 43B. FOLLOWI NG THE SAID JUDGMENT, THE VARIOUS BENCHES OF THE TRIBUNAL HAVE B EEN ALLOWING THE CLAIM IN RELATION TO EMPLOYEES CONTRIBUTION ALSO IF THE PAYMENT HAS BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. WE, THEREFORE, ALLOW IHE CLAIM OF THE ASSESSEE SUBJECT T O THE VERIFICATION BY THE A.O. THAT THE PAYMENT HAD BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AFTER ALLOWING THE OPPORTU NITY OF HEARING TO THE ASSESSEE. 8 ACCORDINGLY, FOLLOWING THE DECISION OF THE TRIBUN AL IN EARLIER YEAR, WE DELETE BOTH THE ADDITIONS AND ALLOW THE APPEAL OF THE ASSE SSEE FOR THE YEAR UNDER CONSIDERATION. 9 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE I S ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 25 TH DAY OF OCT 2012 SD/- SD/- ( RAJENDRA SINGH ) ACCOUNTANT MEMBER ( I P BANSAL ) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 25 TH , OCT 2012 RAJ* COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR, ITAT, MUMBAI