CIENA INDIA PRIVATE LIMITED,DELHI V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 4(2), DELHI , DELHI

ITA 3715/DEL/2024

AI Insights

Ciena India Private Limited appealed against the draft assessment order for the Assessment Year 2020-21, which included various additions and disallowances to their declared income. The main issues revolved around the jurisdiction of the Assessing Officer, the correctness of the income assessed, and specific disallowances under Sections 43B and 36(1)(va) of the Income Tax Act. The Tribunal examined each ground of appeal, noting that some were dismissed as they were either not pressed or became infructuous due to subsequent reliefs granted by the lower authorities. Notably, the Tribunal found merit in the appellant's argument regarding the timely deposit of contributions to the Labour Welfare Fund, leading to the deletion of the addition made under Section 36(1)(va).

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 713138 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-07-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Assessment Year: 2020-2021
• Other Referred Cases: Genpact India (P) Ltd. Vs. ACIT (OSD)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S.K. JADHAV
• Assessee Lawyers: YISHU GOEL
• Keywords: Principle of natural justice
• Section: 143(3); 234B; 43B; 115JB

Judgement Text

"P a g e | 1 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) THE INCOME TAX APPELLATE TRIBUNAL “H” BENCH, DELHI BEFORE SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER & MS. MADHUMITA ROY, JUDICIAL MEMBER ITA No.3715/Del/2024 (Assessment Year: 2020-21) Ciena India Private Limited, CO Kochhar and Co. Law Office, Suite No. 1120-1121, 11th Floor, Tower A, DLF Towers Jasola, New Friends Colony S.O Zakir Nagar SO, South East, Delhi – 110025, Vs. DCIT, Circle 4(2) C.R. Building, Delhi – 110002 \u0001थायीलेखासं./जीआइआरसं./PAN/GIR No: AACCC6131B Appellant .. Respondent Appellant by : Sh. Yishu Goel, Adv. Sh. Vishal Kalra, Adv & Sh. Ankit Sahni, Adv Respondent by : Sh. S.K. Jadhav, CIT. DR Date of Hearing 02.07.2025 Date of Pronouncement 30.07.2025 O R D E R PER MADHUMITA ROY, JM: The instant appeal filed by the assessee is directed against the order passed by the Ld. Dispute Resolution Panel – 1, New Delhi, dated Printed from counselvise.com P a g e | 2 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) 27.05.2024 arising out of the draft Assessment Order passed by the AO, dated 25.09.2023 under Section 143(3) r.w.s 144C(13) read with Section 144B of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for Assessment Year 2020-21. “1. That on the facts and circumstances of the case and in law, the final assessment order passed by the Ld. AO/ DRP is erroneous, contrary to the facts, based on surmises, conjectures and against the principles of natural justice and accordingly, the same is liable to be quashed. 2. That on the facts and circumstances of the case and in law, the Ld. AO has acted out of its jurisdiction while issuing the draft assessment order dated 25 September 2023 passed under Section 144C(1) of the Act as well as final assessment order since the said power lies only with the National Faceless Assessment Centre as per the provisions of Section 144B of the Act and therefore, the said order is void ab initio and liable to be quashed. 3. That on the facts and circumstances of the case and in law, the Ld. AO has erred in assessing the total income of the Appellant under Section 143(3) r.w.s. 144C(13) r.w.s 144B of the Act at INR 115,86,25,630 as against INR 106,70,15,000 declared by the Appellant in return of income filed for the subject AY and raised a demand of INR 3,67,88,926 (inclusive of interest under Section 234A, 234B and 234C of the Act). 4. That on the facts and circumstances of the case and in law, the Ld. AO has erred in considering the total income computed by the Centralized Processing Centre as such the total income includes items which does not warrant any disallowance/ addition to the return of income. 5. That on the facts and circumstances of the case and in law, the Ld. AO has erred in disallowing INR 9,15,16,231 under Section 43B of the Act in respect of bonus payment/ reversal. 6. That on the facts and circumstances of the case and in law, the Ld. AO has erred in making the addition amounting to INR 94,400 under Section 36(1)(va) of the Act in respect of employee contribution to labour welfare fund as the same was deposited within the statutory timelines provided under the respective Act. 7. That on the facts and circumstances of the case and in law, the Ld. AO has erred in levying interest under section 234A of the Act (amounting to INR 7,40,715), 234B of the Act (amounting to INR 1,30,73,330) and increasing the interest under Section 234C (amounting to INR 7,49,340) of the Printed from counselvise.com P a g e | 3 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) That the above grounds are independent and without prejudice to each other. The appellant craves to add, amend, alter, delete, rescind, forgo or withdraw any of the above grounds of objection either before or during the course of the hearing.” 2. 1st Ground is general in nature no order needs to be passed. 3. 2nd ground is not pressed by the assessee. Thus, the same is dismissed as not pressed. 4. 3rd Ground is consequential one, no order needs to be passed. 5. 4th Ground is general in nature, no order needs to be passed. 6. So far as the 5th ground is concerned in regard to disallowance of Rs. 9,15,16,231/- under Section 43B Ld. Counsel appearing for the assessee stated that an application for rectification of the order passed by the authorities was filed which was disposed off by the DCIT, Circle 4(2), New Delhi on 13.09.2024 granting relief to the assessee and therefore, this ground has become infructuous. Having regard to the contention made by the assessee which is evident from the order passed by the Ld. AO dated 13.09.2024 appearing at page 35 of the compilation filed before us whereby and whereunder the relief has been granted by the assessee, this ground of appeal become infructuous and hence, dismissed as infructuous. 7. Ground No. 6 relates to addition amounting to Rs.94,400/- under Section 36(1)(va) on account of employees contribution of the Labour Welfare Fund. It is the case of the assessee that the same was deposited within the statutory timeline provided under the respective Act. At the Printed from counselvise.com P a g e | 4 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) time of hearing of the instant appeal the Ld. Counsel appearing for the assessee in this respect drawn our attention to page No. 14 of the compilation which deals with Section 9A of the Punjab Labour Welfare Fund Act, 1965. Section 9A(4) of the said Act extends the time for paying the contribution by the employer for a grace period of 30 days in the following manner: “Any employer who fails to pay the contribution amount within the period of one month from the date specified in sub-section (2) shall be liable to pay interest @ 12% per annum from the said date until such time the amount is actually deposited with the Welfare Commissioner.” 8. The Ld. AR has further referred the payment details made by the employer appearing at page 7 of the compilation wherefrom it reflects that the payment was made on 30.01.2021 for the contribution period from 01.01.2020 to 31.12.2020. The said document further establishes the fact of assessee being governed by the Punjab Labour Welfare Fund Act, 1965. He has further referred the details of contribution received from the employees for various funds as per Section 36(1)(va) appearing at page 7 of the compilation, serial Nos. 22, 23 & 24 whereof speak of “any other welfare fund; due date for making payment is also reflecting as 31.01.2021.” The amount mentioned against serial Nos. 22, 23 & 24 are of Rs.31,250/-, Rs.31,650/- and Rs.31,500/- respectively; total sum becomes Rs.94,400/- which is exactly the amount in dispute before us as submitted by the Ld. AR. Printed from counselvise.com P a g e | 5 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) 9. Under this facts and circumstances of the matter as it is evident from the above several documents placed before us that the employer contribution is to be paid by 30.01.2021 which has duly been paid by the assessee on 30.01.2021 as reflecting from page 10 of the compilation. Thus, the sum amount cannot be added in the hands of the assessee invoking the provision of Section 36(1)(va) of the Act. In this regard the Ld. AR further relied upon the judgment passed by the Coordinate Bench in the case of Genpact India (P) Ltd. Vs. ACIT (OSD) reported in (2025) 174 taxmann.com 691 (Delhi- Trib) a copy whereof has been dully filed before us. On the other hand, the Ld. DR relied upon the order passed by the authorities below and has not been able to controvert the contentions made by the Ld. AR. 10. On this aspect, we have further considered the judgment passed by the Coordinate Bench in the matter of Genpact India (P) Ltd. (supra) on the identical facts. While dealing with this particular aspect of the matter the Coordinate Bench has been pleased to observe as follows: “4. We have heard the rival submissions and perused the material available on record. The assessee is engaged in the business of providing of host of Business Processing Outsourcing (BPO) services, including finance and accounting, collections, insurance, customer fulfillment, data modeling and analytics support, managed IT services, software solutions and elearning. The assessee had filed its return of income and which was later revised on 30.03.2020 declaring net income of Rs. 862,08,58,410/- under the normal provisions of the Act and book profit of Rs. 520,01,23,566/- u/s 115JB of the Act. The assessee during the year under consideration received sum towards employees' contribution to Labour Welfare Fund amounting to Rs. 15,16,090/-. The same were duly remitted to the account of the Govt within the due date specified under the respective labour law and duly disclosed in the tax audit report of the assessee. In respect of the amount collected by the assessee in the sum of Rs. Printed from counselvise.com P a g e | 6 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) 1,21,250/-, Rs. 1,22,330/- and Rs. 1,23,250/- totaling to Rs. 3,66,830/-, the due date of payment was 31.01.2020 as per the section 9 of the Haryana Labour Welfare Board Act, including the grace period of 1 month. The assessee in the statement of facts filed before the Id CIT(A) had also stated that due date was further extended to 30.06.2020 by the Welfare Commissioner, Haryana Labour Welfare Board vide letter dated 02.06.2020. The assessee had duly remitted the Labour Welfare Fund dues within the due-date prescribed thereon. However, the said due dates were beyond the due date of filing of income tax return u/s 139(1) of the Act. Hence, the Id CPC, Bengaluru while processing the return had erroneously construed this employees' contribution to have not been remitted within the due date prescribed under the respective Labour Act and made addition u/s 36(1)(va) of the Act in the sum of Rs. 3,66,830/- which was also confirmed by the assessee Id CIT(A). We find that in view of section 9 of Haryana Labour Welfare Board Act, the labour welfare fund dues of Rs 3,66,830/- in the instant case had been duly remitted within the respective dates prescribed under the Labour Laws. Hence, the decision of Hon'ble Supreme Court in the case of Checkmate Services in Civil Appeal No. 2833 of 2016 dated 12.10.2022. relied by the NFAC is not applicable to the facts of the instant case. Hence, we direct the Id AO to delete the addition in the sum of Rs. 3,66,830/- u/s 36(1)(va) of the Act. Accordingly, Ground No. 2 raised by the assessee is allowed.” 11. Having heard the Ld. Counsels appearing for the parties and having regard to the facts and circumstances of the matter particularly the amount in question paid by the assessee on 30.01.2021 i.e. within the grace period provided by the Punjab Labour Welfare Act, 1965 the addition is found to be not sustainable in the eyes of law under Section 36(1)(va) of the Act and thus, the same is hereby deleted. 12. The appeal preferred by the assessee is partly allowed. Order pronounced in the open court on 30.07.2025 Sd/- (Ramit Kochar) Sd/- (Madhumita Roy) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated 30.07.2025 Rohit, Sr. PS Printed from counselvise.com P a g e | 7 ITA No.3715/Del/2024 Ciena India Private Limited (AY: 2020-21) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI Printed from counselvise.com "