Mitsu Ltd. v. Asstt. CIT - Taxpublishers.in

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The Tax Publishers2013 TaxPub(DT) 1347 (Ahd-Trib) : (2013) 142 ITD 0157 : (2013) 154 TTJ 0715 : (2013) 087 DTR 0305 INCOME TAX ACT, 1961 --Business disallowance under section 43B--ESI and PF contribution Payment made after due date in respective laws/Acts--Since ESI and PF contribution were paid after due date under respective rates but before due date of filing of Income Tax return same could not be disallowed under section 43B. Omission of second proviso to section 43B and the amendment of first provision by Finance Act, 2003 were made to bring about the uniformity in payment of tax, duty, cess and fees on one hand and contributions to employees welfare funds on the other hand. The change in the said provision through amendment was curative in nature and thus effective retrospectively with effect from 1-4-1988. Earlier, in the case of Vinay Cement Ltd. (supra), the Apex Court has held that the contribution made to Provident Fund before filing of the return could not be disallowed under section 43B of Income Tax Act as it stood prior to the amendment with effect from 1-4-2004. In the light of these decisions and considering the dates of payment, the disallowance was wrongly made by the assessing officer hereby direct to delete the addition.[Para 10] Income Tax Act, 1961 Section 43B INCOME TAX ACT, 1961 --Business income--Business loss Advances written off--Assessee written off certain sums which was given for supply of material/services. Since assessee voluntary written off advances said has offered for taxation. However, no evidence was furnished by the assessee. As such assessee claimed the same as business loss. *Held :Assessee has not placed any supporting evidence through which it could be established that said write off was for the purpose of the business. Rather, assessee himself had offered the said amount for tax during the course of assessment proceeding, hence the view taken by the Revenue Authorities for this disallowance is hereby confirmed. The assessing officer has noted that during the course of assessment proceedings, the assessee-company had vide a letter dated 4-3-2002 voluntarily offered for taxation by disallowing a sum of Rs. 15,54,260. In view of the said voluntary offer, the impugned amount was added back to the income of the assessee. When the matter was carried before the first appellate authority, it was held that the impugned amount was offered for taxation and it was not a case of mistaken impression of law, therefore, in the absence of any other material, the action of the assessing officer was upheld. The explanation of the assessee was that the said amount was paid for supply of materials/services. As per the said explanation, the assessee could not avail the services. The assessee was also not in a position to recover the advances. This explanation of the assessee was not supported by any cogent evidence. Merely writing of an amount do not by itself qualifies for deduction unless and until it is proved beyond doubt that the expenditure/claim wholly and exclusively for the purpose of the business. Assessee has not placed any supporting evidence through which it could be established that said write off was for the purpose of the business. Rather, assessee himself had offered the said amount for tax during the course of assessment proceeding, hence the view taken by the Revenue Authorities for this disallowance is hereby confirmed. [Para 11.1] Income Tax Act,* 1961 Section 28(i) INCOME TAX ACT, 1961 --Deduction under section 80HHC--Business profits Non-compete fee--Where assessee claimed that was compete fee received by it would be treated as profits of business which was rightly disallowed as there was no nexus with export under section 80HHC and non-compete fee and it was held as revenue receipt. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2013 TaxPub(DT) 1347 (Ahd-Trib) : (2013) 142 ITD 0157 : (2013) 154 TTJ 0715 : (2013) 087 DTR 0305

INCOME TAX ACT, 1961

--Business disallowance under section 43B--ESI and PF contribution Payment made after due date in respective laws/Acts--Since ESI and PF contribution were paid after due date under respective rates but before due date of filing of Income Tax return same could not be disallowed under section 43B.

Omission of second proviso to section 43B and the amendment of first provision by Finance Act, 2003 were made to bring about the uniformity in payment of tax, duty, cess and fees on one hand and contributions to employees welfare funds on the other hand. The change in the said provision through amendment was curative in nature and thus effective retrospectively with effect from 1-4-1988. Earlier, in the case of Vinay Cement Ltd. (supra), the Apex Court has held that the contribution made to Provident Fund before filing of the return could not be disallowed under section 43B of Income Tax Act as it stood prior to the amendment with effect from 1-4-2004. In the light of these decisions and considering the dates of payment, the disallowance was wrongly made by the assessing officer hereby direct to delete the addition.[Para 10]

Income Tax Act, 1961 Section 43B

INCOME TAX ACT, 1961

--Business income--Business loss Advances written off--Assessee written off certain sums which was given for supply of material/services. Since assessee voluntary written off advances said has offered for taxation. However, no evidence was furnished by the assessee. As such assessee claimed the same as business loss. Held :Assessee has not placed any supporting evidence through which it could be established that said write off was for the purpose of the business. Rather, assessee himself had offered the said amount for tax during the course of assessment proceeding, hence the view taken by the Revenue Authorities for this disallowance is hereby confirmed.

The assessing officer has noted that during the course of assessment proceedings, the assessee-company had vide a letter dated 4-3-2002 voluntarily offered for taxation by disallowing a sum of Rs. 15,54,260. In view of the said voluntary offer, the impugned amount was added back to the income of the assessee. When the matter was carried before the first appellate authority, it was held that the impugned amount was offered for taxation and it was not a case of mistaken impression of law, therefore, in the absence of any other material, the action of the assessing officer was upheld. The explanation of the assessee was that the said amount was paid for supply of materials/services. As per the said explanation, the assessee could not avail the services. The assessee was also not in a position to recover the advances. This explanation of the assessee was not supported by any cogent evidence. Merely writing of an amount do not by itself qualifies for deduction unless and until it is proved beyond doubt that the expenditure/claim wholly and exclusively for the purpose of the business. Assessee has not placed any supporting evidence through which it could be established that said write off was for the purpose of the business. Rather, assessee himself had offered the said amount for tax during the course of assessment proceeding, hence the view taken by the Revenue Authorities for this disallowance is hereby confirmed. [Para 11.1]

Income Tax Act, 1961 Section 28(i)

INCOME TAX ACT, 1961

--Deduction under section 80HHC--Business profits Non-compete fee--Where assessee claimed that was compete fee received by it would be treated as profits of business which was rightly disallowed as there was no nexus with export under section 80HHC and non-compete fee and it was held as revenue receipt.