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Judgment
The Revenue is aggrieved by an order dated August 12, 2005, passed by the Income Tax Appellate Tribunal, Delhi Bench "E", New Delhi, in I.T.A. No. 2772/Del/2001 relevant for the assessment year 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 assessed.
In so far 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 Commissioner of Income Tax (Appeals) as well as the Tribunal held in favor of the assessed and came to the conclusion that the Assessing Officer was not justified in deleting the allowance claimed by the assessed u/s 43B of the Income Tax 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 assessed.
As regards the disallowance of closure compensation and notice fee, although the assessed had claimed an amount of Rs. 1.45 crores because of the closure of its unit in Haryana due to the prohibition policy, the Commissioner of Income Tax (Appeals) 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 Commissioner, accepting the view taken by the Assessing Officer, that even though the liability may have arisen it was not discharged by the assessed during the relevant previous year.
The view taken by the Commissioner was upheld by the Tribunal. We do not find any error in the view taken in as much as only an amount of Rs. 45.35 lakhs was actually paid and the deduction was certainly available to the assessed 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.