High Court Of Delhi
CIT vs. Modi Spinning & Weaving Mills Co. Ltd.
Section 37(1), 43B
Asst. Year 1997-98
Madan B. Lokur & V.B. Gupta, JJ.
IT Appeal No. 223 of 2007 & CM No. 2773 of 2007
9th March, 2007
Counsel Appeared :
R.D. Jolly, for the Appellant : None, for the Respondent
JUDGMENT
By the court :
The Revenue is aggrieved by an order dt. 12th Aug., 2005, passed by the Tribunal, Delhi Bench “E”, New Delhi, in ITA No. 2772/Del/2001 relevant for the asst. yr. 1997-98.
The two questions that have been raised for our consideration relate to the payment of Employees State Insurance (ESI) and provident fund and closure compensation and notice fee payable to the workmen of the assessee.
Insofar as the first issue is concerned, it is not in dispute that the Employees State Insurance payment and provident fund payment were made after a few days’ delay but within the grace period of five days allowed by the statute. On this basis, the CIT(A) as well as the Tribunal held in favour of the assessee and came to the conclusion that the AO was not justified in deleting the allowance claimed by the assessee under s. 43B of the IT Act, 1961.
We are of the opinion that there is no error in the view taken by the statutory authorities. Since the payments were made within the grace period allowed by the statute, there was no default on the part of the assessee.
As regards the disallowance of closure compensation and notice fee, although the assessee had claimed an amount of Rs. 1.45 crores because of the closure of its unit in Haryana due to the prohibition policy, the CIT(A) allowed an amount of Rs. 45,32,012 which was the amount that was actually paid during the relevant previous year. The balance amount was disallowed by the CIT, accepting the view taken by the AO, that even though the liability may have arisen it was not discharged by the assessee during the relevant previous year.
The view taken by the CIT was upheld by the Tribunal. We do not find any error in the view taken inasmuch as only an amount of Rs. 45.35 lakhs was actually paid and the deduction was certainly available to the assessee as a business expenditure since the factory was closed due to the policy adopted by the Government of Haryana prohibiting sale and consumption of liquor in that State. No substantial question of law arises for our consideration.
Dismissed.
[Citation : 292 ITR 479]
