M/S.VISWADEVI CASHEW EXPORTS V. INCOME TAX OFFICER AND ANOTHER

WP(C)/30965/2009

AI Insights

The case involves M/S. Viswadevi Cashew Exports, who challenged the orders of the Income Tax Officer and the Commissioner of Income Tax, which disallowed certain deductions claimed under the Employees State Insurance Act and the Labour Welfare Fund for the assessment year 2000-2001. The primary contention was regarding the disallowance of Rs.34,180, which included contributions made under the Employees State Insurance Act. The court found that the employers' contributions should be allowed as deductions, referencing a retrospective amendment to Section 43B of the Income Tax Act by the Finance Act, 2003, and a Supreme Court decision in Commissioner of Income Tax v. Solar Export.

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 755686 (HC-KERALA)
• Appeal Type: Others
• Pronouncement Date: 19-12-2014
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax v. Solar Export [(2012) 210 Taxman 520]
• Laws Referred To: Income Tax Act, Employees State Insurance Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: JOSE JOSEPH
• Assessee Lawyers: HARISANKAR MENON; MEERA MENON; MAHESH MENON
• Keywords: Assessment year 2000-2001; Deduction; Employees' State Insurance; Income Tax; Labour Welfare Fund
• Section: 147; 43B; 264

Judgement Text

"IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HONOURABLE MR. JUSTICE A.K.JAYASANKARAN NAMBIAR FRIDAY, THE 19TH DAY OF DECEMBER 2014/28TH AGRAHAYANA, 1936 WP(C).NO. 30965 OF 2009 (M) ---------------------------- PETITIONER(S): --------------- M/S.VISWADEVI CASHEW EXPORTS ANNOOR, KOTTARAKKARA, KOLLAM DISTRICT RERPESENTED BY V.SHAJI, PARTNER. BY ADVS.SRI.HARISANKAR V MENON SRI.HARISANKAR V. MENON SMT.MEERA V.MENON SRI.MAHESH V.MENON RESPONDENT(S): -------------- 1. INCOME TAX OFFICER WARD IV, KOLLAM RANGE, KOLLAM. 2. COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM. BY ADV. SRI.JOSE JOSEPH, SC, FOR INCOME TAX THIS WRIT PETITION (CIVIL) HAVING BEEN FINALLY HEARD ON 19-12-2014, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING: WP(C).NO. 30965 OF 2009 (M) APPENDIX PETITIONER'S EXHIBITS: EXT.P1: COPY OF ORDER ISSUED BY THE 1ST RESPONDENT DATED 28.09.2009 EXT.P2: COPY OF REVISION PETITION FILED BY THE PETITIONER BEFORE THE 2ND RESPONDENT DATED 15.02.2008 EXT.P3: COPY OF ORDER ISSUED BY THE 2ND RESPONDENT DATED 17.03.2009 RESPONDENTS' EXHIBITS: NIL //TRUE COPY// P A TO JUDGE A.K.JAYASANKARAN NAMBIAR, J. ............................................................. W.P.(C).No.30965 of 2009 ............................................................. Dated this the 19th day of December, 2014 J U D G M E N T The petitioner, who was engaged in the processing of raw cashew nuts, was assessed to tax for the assessment year 2000- 2001 under the Income Tax Act. The assessment proceedings were subsequently reopened by the 1st respondent in terms of Section 147 of the Income Tax Act. By Ext.P1 order, that was passed by the 1st respondent, thereafter, the payments made by the petitioner under the Employees State Insurance Act and towards the Labour Welfare Fund, totalling an amount of Rs.34,180/-, were disallowed for the reason that these payments were effected after the due date stipulated for the said payment under the respective enactments. Aggrieved by Ext.P1 order, the petitioner preferred a revision petition before the 2nd respondent under Section 264 of the Income Tax Act. The 2nd respondent by Ext.P3 order confirmed the disallowances. In the writ petition, the petitioner challenges Exts.P1 and P3 orders of the respondents, to the extent they disallow the amount of Rs.34,180/-, which represents the contributions made under the Employees State Insurance Act and W.P.(C).No.30965 of 2009 2 towards Labour Welfare Fund. 2. A statement has been filed on behalf of the respondents wherein it is admitted that, in respect of the payments representing employers contribution under the Employees State Insurance Scheme, the deduction claimed by the petitioner has to be allowed. It is pointed out, however, that in respect of the employees contribution under the Employees State Insurance Act, the claim of the petitioner for deduction cannot be accepted since the payments were made beyond the due date stipulated under the Employees State Insurance Act, for making the payments. 3. I have heard Sri.Harisankar Menon, the learned counsel for the petitioner and Sri.Jose Joseph, the learned Standing counsel for the Income Tax Department. 4. On a consideration of the facts and circumstances of the case as also the submissions made at the Bar, I find that Ext.P1 and P3 orders need to be modified to allow the deduction claimed by the petitioner in respect of the employers contribution under the Employees State Insurance Act. In the orders impugned in the writ petition, while considering the assessment of the petitioner, the W.P.(C).No.30965 of 2009 3 respondents had erroneously disallowed these payments for the purposes of deduction under the Income Tax Act. The eligibility of the petitioner for deduction of the employers contribution is now settled through the retrospective amendment made to Section 43B by the Finance Act, 2003, as clarified by the Supreme Court in the case of Commissioner of Income Tax v. Solar Export [(2012) 210 Taxman 520]. Thus taking into account the aforesaid aspect Exts.P1 and P3 are set aside, to the extent they disallow an amount of Rs.24,447/-, from out of the total figure of Rs.34,180/-, while considering the deductions permissible to the petitioner in the assessment for the assessment year 2000-01. The 1st respondent shall pass consequential orders of assessments, taking into account the findings in this judgment, within a period of two months from the date of receipt of a copy of this judgment. The writ petition is allowed to the above extent. A.K.JAYASANKARAN NAMBIAR JUDGE mns W.P.(C).No.30965 of 2009 4 "