SC issues notice to Siemens VDO

New Delhi, Jul 23, 2008 (Asia Pulse Data Source via COMTEX) -- SI | Quote | Chart | News | PowerRating -- The Supreme Court has issued notice to German automobile electronics supplier Siemens VDO Automotive Ltd on a plea alleging that the company had failed to deposit the provident fund collected from its employees.

A bench headed by Justice S H Kapadia has sought explanation from Siemens VDO on a petition filed by the Income Tax Department challenging the Karnataka High Court judgement that directed the Department to accept the company's contribution towards ESI and provident fund (PF) and also allow deductions as claimed by it.

According to the department, the company had failed to contribute to the PF and ESI and also deposit the employee's contribution to PF for the year 1997-98 on or before the due date.

While stating that the exchequer will suffer, it said that "such asessess will conveniently swallow the actual taxes that they were liable to pay under the law and the actual taxes may not be able to be recovered from them if the operation of the impugned order is not stayed".

Solicitor General GE Vahanvati stated that the employer's contribution should be treated as income of the assessee under Section 36(1) of the Income Tax Act, 1961 and no expenditure can be allowed as deduction.

"If the petitioner is allowed to collect/refund the revenue involved from the respondent, the same can easily be refunded back to them as and when directed and the balance of convenience will be equal on both the sides," the appeal stated.

The department had rejected the disallowance sought by the company under Section 43B in March 2000.

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