Vide Order dated 18.07.2014 passed pursuant to consultations with the collegium of the ITAT constituting the President and two senior-most Vice Presidents available, two Hon'ble Members of the Tribunal have been transferred in public interest and with immediate effect.
Pursuant to the severe strictures passed by the Courts in CIT vs. Sairang Developers (Bom High Court) and ITO vs. Growel Energy Co. Ltd (ITAT Mumbai) regarding the mindless manner in which appeals are filed by the department, without regard to the harassment caused to the taxpayers, the CBDT has issued an Office Memorandum dated 17.07.2014 by which a Committee to study the appellate orders to examine the filing of appeals by the department has been set up
S. 43B covers employees' contribution to Provident Fund & deduction is allowable if paid before due date for filing ROI
On a plain reading of the second proviso to s. 43B, it is clear that the assessees – employers were entitled to deductions only if the contribution to any fund for the welfare of the employees stood credited on or before the due date given in the relevant Act. However, because the second proviso created difficulties for the assessees – employers, an amendment was inserted vide Finance Act, 2003 with effect from 1st April 2004 to delete the second proviso to s. 43B and to amend the first proviso to provide that the deduction would be allowed if the amount was paid on or before the due date for furnishing the return of income u/s 139(1). Therefore, the amendments introduced by the Finance Act, 2003 put on par the benefit of deductions of tax, duty, cess and fee on the one hand with contributions to various Employee's Welfare Funds on the other. In Alom Extrusions Ltd 319 ITR 306 (SC) it was held that the amendment to the s. 43B by the Finance Act, 2003 w.e.f. 01.04.2004 was retrospective in nature and would operate from 01.04.1988. Consequently, the ITAT rightly deleted the addition of Rs.1.82 cr on account of delayed payment of Provident Fund of employees' contribution. Even otherwise, we fail to understand how this deduction could have been disallowed to the Assessee. Admittedly, the AY in question is 2006-07. The second proviso to s. 43B was deleted w.e.f. 01.04.2004 and simultaneously the first proviso was also amended bringing about a uniformity in deductions claimed towards tax, duty, cess and fee on the one hand and contribution to the employees' provident fund, superannuation fund and other welfare funds on the other. These deductions being claimed in the return of income filed for AY 2006-07, the amendments to s. 43B which came into force w.e.f. 01.04.2004 clearly applied to the assessee's case
Loss on account of depreciation in value of securities held as stock is not notional & is allowable as a deduction
A method of accounting adopted by the taxpayer consistently and regularly cannot be discarded by the Departmental authorities on the view that he should have adopted a different method of keeping the accounts or on valuation. Financial institutions like bank, are expected to maintain accounts in terms of the RBI Act and its regulations. The form in which, accounts have to be maintained is prescribed under the aforesaid legislation. Therefore, the account had to be in conformity with the said requirements. The RBI Act or the Companies Act do not deal with the permissible deductions or exclusion under the Income Tax Act. For the purpose of the Income Tax Act, the method of valuation followed by the assessee was to value the investments at cost or market value whichever was lower. The assessee was entitled to claim a deduction for the depreciation in the value of the securities held by it. The fact that the losses were not sold to a third party did not mean that the loss was notional (United Commercial Bank 240 ITR 355 (SC), Bank of Baroda 262 ITR 334 (Bom) & Karnataka Bank Ltd 356 ITR 549 (Kar) followed)
S. 147: In view of the verdicts of the Supreme Court in GKN Driveshafts & Chhabil Dass Agarwal a s. 148 notice & order on objections cannot be challenged in a Writ Petition