Commissioner Of Income Tax, Jaipur-Ii, Jaipur v. M/S Kanhaiyalal Kalyanmal, K.k., House, Bharat Mata Path, Jamnalal Bajaj Marg, C-Scheme, Jaipur

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH ATJAIPUR D.B. Income Tax Appeal No. 123 / 2014 COMMISSIONER OF INCOME TAX, JAIPUR-II, JAIPUR ----Appellant Versus M/S KANHAIYALAL KALYANMAL, K.K., HOUSE, BHARAT MATA PATH, JAMNALAL BAJAJ MARG, C-SCHEME, JAIPUR ----Respondent _____________________________________________________ For Appellant(s) : Mr. R.B. Mathur with Mr. Prateek KedawatFor Respondent(s) : Mr. Sanjay Jhanwar with Ms. Archana _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE INDERJEET SINGH Order 24/07/2017 By way of this appeal, the appellant has assailed thejudgment and order of the Tribunal whereby the Tribunal hasdismissed the appeal. This Court while admitting the matter framed the following questions of law:- “i) Whether in the facts and circumstances of thecase the ITAT was justified in law in confirmingthe order of CIT(A) deleting he addition made bythe Assessing Officer by way of disallowance ofexcess depreciation claimed on wind Turbine. ii) Whether in the facts and circumstances of thecase the ITAT has erred in deleting additionsmade by the Assessing Officer on account ofdisallowance of excess depreciation claimed onwind Turbine Generator Machine. iii) Whether in the facts and circumstances of thecase the ITAT has erred in holding that depreciation @ 80% has to be allowed on windTurbine Machine without segregating investmenton building part and on electric item withoutappreciating that depreciation @ 80% is allowableon Wind Turbine Generator Machine and not onelectrical fitting and building etc. iv) Whether in the facts and circumstances of thecase the ITAT has erred in holding thatemployee’s contribution to PF & ESI are governedby the provision Section 43B and not by Section36(1)(va) read with Section 2(24)(x) of IT Act.” The main issue is regarding question no. 1 to 3 which arecovered by the decision of this Court in DBITA No. 14/2013(Commissioner of Income Tax Udaipur vs. M/s K.K. Enterprises)passed on 18[th] July, 2014 held as under:- “The issue involved in these appeals has beenconsidered by the Hon’ble Gujarat High Courtin Tax Appeal No. 604/2012, decided on29.1.2013 in Commissioner of Income Tax,Ahmedabad-III v. Parry Engineering andElectronics Pvt. Ltd. In the case aforesaidHon’ble Gujarat High Court held that “Windmillwould require a scientifically designedmachinery in order to harness the wind energyto the maximum potential. Such device has tobe fitted and mounted on a civil construction,equipped with electric fittings in order totransmit the electricit6y so generated. Suchcivil structure and electric fittings, therefore, itcan be well imagined, would be highlyspecialized. Thus, such civil construction andelectric fitting would have no use other thanfor the purpose of functioning of the windmill.On the other hand, it can be easily imaginedthat windmill cannot function withoutappropriate installation and electrification. Inother words, the installation of windmill andthe civil structure and the electric fittings areso closely interconnected and linked as to formthe common plant. As already noted, thelegislature has provided for higher rate ofdepreciation of 80 per cent on renewableenergy devises including windmill and anyspecially designed devise, which runs onwindmill. The civil structure and the electricfittings, equipments are part and parcel of thewindmill and cannot be separated from the same. The assessees claim for higherdepreciation on such investment was,therefore, rightly allowed.” Further, DBITA No. 177/2011 (Commissioner of Income Taxvs. M/s State Bank of Bikaner & Jaipur) passed on 6[th] January2014 it has been held as under:- same. The assessees claim for higherdepreciation on such investment was,therefore, rightly allowed.” Further, DBITA No. 177/2011 (Commissioner of Income Taxvs. M/s State Bank of Bikaner & Jaipur) passed on 6[th] January2014 it has been held as under:- “20.On perusal of Sec.36(1)(va) andSec.43(B)(b) and analyzing the judgmentsrendered, in our view as well, it is clear that thelegislature brought in the statute Section 43(B)(b) to curb the activities of such tax payers whodid not discharge their statutory liability ofpayment of dues, as aforesaid; and rightly so ason the one hand claim was being made underSection 36 for allowing the deduction of GPF, CPF,ESI etc. as per the system followed by theassessees in claiming the deduction i.e. accrualbasis and the same was being allowed, as theliability did exist but the said amount thoughclaimed as a deduction was not being depositedeven after lapse of several years. Therefore, toput a check on the said claims/deductions havingbeen made, the said provision was brought in tocurb the said activities and which was approvedby the Hon'ble Apex Court in the case of AlliedMotors (P) Ltd. (supra). 21.A conjoint reading of the proviso toSection 43-B which was inserted by the FinanceAct, 1987 made effective from 01/04/1988, thewords numbered as clause (a), ©, (d), (e) and(f), are omitted from the above proviso and,further more second proviso was removed byFinance Act, 2003 therefore, the deductiontowards the employer's contribution, if paid,prior to due date of filing of return can beclaimed by the assessee. In our view, theexplanation appended to Section 36(1)(va) of theAct further envisage that the amount actuallypaid by the assessee on or before the due dateadmissible at the time of submitting return of theincome under Section 139 of the Act in respect ofthe previous year can be claimed by theassessee for deduction out of their gross totalincome. It is also clear that Sec.43B starts witha notwithstanding clause & would thus overrideSec.36(1) (va) and if read in isolation Sec. 43Bwould become obsolete. Accordingly, contentionof counsel for the revenue is not tenable for the reason aforesaid that deductions out of the grossincome for payment of tax at the time ofsubmission of return under Section 139 ispermissible only if the statutory liability ofpayment of PF or other contribution referred to inClause (b) are paid within the due date under therespective enactments by the assessees and notunder the due date of filing of return. 22.We have already observed that till thisprovision was brought in as the due amounts onone pretext or the other were not beingdeposited by the assessees though substantialbenefits had been obtained by them in the shapeof the amount having been claimed as adeduction but the said amounts were notdeposited. It is pertinent to note that therespective Act such as PF etc. also provides thatthe amounts can be paid later on subject topayment of interest and other consequences andto get benefit under the Income Tax Act, anassessee ought to have actually deposited theentire amount as also to adduce evidenceregarding such deposit on or before the return ofincome under sub-section (1) of Section 139 ofthe IT Act.23.Thus, we are of the view that where thePF and/or EPF, CPF, GPF etc., if paid after the duedate under respective Act but before filing of thereturn of income under Section 139(1), cannotbe disallowed under Section 43B or under Section36(1)(va) of the IT Act. In that view of the matter, the issue no. 1 to 3 are requiredto be answered in favour of the assessee. However, the issue No. 4 will be subject to result of the SLP pending before theSupreme Court. Hence, the appeal stands disposed of. (INDERJEET SINGH)J. (K.S.JHAVERI)J. A.Sharma/130