GOPINATH ENGG. CO. P.LTD, MUMBAI V. DCIT 10(2), MUMBAI

CO 113/MUM/2015

• Counselvise Citation: [2015] 123 COUNSELVISE.COM (IT) 1323 (ITAT-MUMBAI)
• Duration Of Justice: 24 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 04-09-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2010-2011
• Appeal Filed On: 11-08-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: B D NAIK
• Section: 43B; 143(3)

Judgement Text

M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 1 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH G , MUMBAI BEFORE SHRI AMIT SHUKLA , JUDICIAL MEMBER AND SHRI RAJESH KUMAR , ACCOUNTANT MEMBER ITA NO. : 7606 /MUM/20 1 3 ( ASSESSMENT YEAR: 20 1 0 - 11 ) DY COMMISSION ER OF INCOME TAX 10 ( 2 ) , ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI 400 020 VS M/S GOPINATH ENGINEERING CO PVT LTD , 15C, SATYAM SHIVAM SUNDARAM, M G ROAD, GHATKOPAR EAST, MUMBAI - 400 0 7 7 (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI B D NAIK RESPONDENT BY : SHRI SURENDRA DAMLE CROSS OBJECTION NO. 113/MUM/2015 ARISING OUT OF ITA NO. : 7606/MUM/2013 , AY 2010 - 11 ( ASSESSMENT YEAR: 2010 - 11 ) M/S GOPINATH ENGINEERING CO PVT LTD , 15 SATYAM C, M G ROAD, GHATKOPAR EAST, MUMBAI 400 077 .: PAN: AAAC G 1935 D VS DY COMMISSIONER OF INCOME TAX 10(2) , ROOM NO. 432, 4 TH FLOOR, AAYAKAR BHAVAN, M K ROAD, MUMBAI 400 020 CROSS OBJECTOR (APPELLANT) (RESPONDENT) APPELLANT CROSS OBJECTOR BY : SHRI SURENDR A DAMLE RESPONDENT BY : SHRI B D NAIK /DATE OF HEARING : 01 - 0 9 - 201 5 / DATE OF PRONOUNCEMENT : 04 - 0 9 - 201 5 ORDER , . . : PER AMIT SHUKLA, J M : THE AFORESAID APPEAL HA S BEEN FILED BY THE REVENUE AND CROSS OBJECTION BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 15 . 1 0.2013 , PASSED BY CIT(A) - 2 1 MUMBAI , FOR THE QUANTUM OF ASSESSMENT PASSED U/S 143(3) R.W.S. 147 FOR THE ASSESSMENT YEAR 20 1 0 - 11 ON FOLLOWING GROUNDS: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE AO U/S 43B OF THE ACT MADE M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 2 ON ACCOUNT OF LATE PAYMENT OF SERVICE TAX LIABILITY OF RS. 1,29,79,838/ - . 1.1 ON THE FACTS AND IN THE C IRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE ASSESSEE MADE THE PAYMENT OF THE SERVICE TAX LIABILITY AMOUNTING TO RS. 1,02,21,606/ - AFTER FILING OF RETURN OF INCOME FOR THE CURRENT YEAR. 1.2 ON THE FACT S AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN NOT APPRECIATING THE FACT THAT THE BALANCE SERVICE TAX PAYMENT MADE ON AMOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION OF PF AMOUNTING TO RS. 29,69,876/ - . 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE BY THE AO U/S 43B OF THE ACT MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AMOUNTING TO RS. 29,69,876/ - . 2.1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AS WELL AS IN LAW, THE LD. CIT(A) ERRED IN NOT APPLYING THE RATIO OF THE DECISION OF THE HONBLE MUMBAI TRIBUNAL IN THE CASE OF LKP SECURITIES LTD IN ITA NO. 638/M/2012 W.R.T. LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF BY THE A SSESSEE COMPANY. 2. DURING THE COURSE OF THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER ON THE PERUSAL OF THE BALANCE SHEET NOTICED THAT THERE IS A MENTION IN SCHEDULE H , REGARDING UNPAID SERVICE TAX LIABILITY AND E MPLOYEES CONTRIBUTION TO PROV IDENT FUND FOR S U M S AMOUNTING TO RS. 1,29,79,838/ - AND RS. 29,69,876/ - RESPECTIVELY. THE ASSESSING OFFICER HELD THAT SUCH A PAYMENT SHOULD BE DISALLOWED U/S 43B AS THERE HAS BEEN DELAYED PAYMENT ON ACCOUNT OF BOTH, E MPLOYEE S CONTRIBUTION TO PF AND DELAY IN PAYMENT OF S ERVICE T AX. 3. THE LD. CIT(A), SO FAR AS DISALLOWANCE OF SERVICE TAX LIABILITY IS CONCERNED, GAVE A VERY IMPORTANT FINDING O F FACT FROM THE PERUSAL OF THE RECORDS THAT THE ASSESSEE HAD NOT DEDUCTED AMOUNT OF RS. 1,29,79,838/ - ON ACCOUNT OF SERVICE TAX LIABILITY FROM THE PROFIT AND LOSS ACCOUNT AND HENCE THERE WAS NO DEDUCTION CLAIMED IN THE P&L M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 3 ACCOUNT SO AS TO REDUCE THE PROFIT OF THE BUSINESS DURING THE YEAR, THEREFORE, ASSESSING OFFICER COULD NOT HAVE DISALLOW ED THIS AMOUNT U/S 43B. FURTH ER , HE HELD THAT ASSESSEE HAD TO PAY THE SERVICE TAX AFTER COLLECTING THE SERVICE TAX FROM THE PAYERS AS PER THE S ERVICE T AX R ULES, WHICH THE ASSESSEE HAD DONE AS PER THE DETAILS MENTIONED AT PAGE 4 OF THE APPELLATE ORDER. THE RELEVANT OBSERVATION AND FIND ING OF THE CIT(A) IN THIS REGARD ARE AS UNDER : - I HAVE CONSIDERED THE FACTS AND CIRCUMSTANCES OF THE CASE. DURING THE YEAR UNDER CONSIDERATION AO HAD ADDED RS. 1,29,79,838/ - FOR NON - PAYMENT OF SERVICE TAX LIABILITY AS ON 31.03.2010. ON VERIFICATION OF T HE RECORDS OF THE APPELLANT, APPELLANT HAD NOT DEDUCTED THIS AMOUNT FROM THE P&L ACCOUNT, HENCE, THE DEDUCTION WAS NOT CLAIMED IN P&L ACCOUNT TO REDUCE THE PROFIT OF THE BUSINESS DURING THE YEAR. THEREFORE, AO COULD NOT DISALLOW THIS AMOUNT U/S 43B AS APPE LLANT HAD NOT CLAIMED THIS AMOUNT IN THE P&L ACCOUNT IN VIEW OF DELHI HIGH COURT IN THE CASE OF CIT VS NOBLE & HEWITT (I) P LTD (2008) 166 TAXMAN 48 (DELHI) WHEREIN IT IS HELD AS UNDER: IN OUR OPINION SINCE THE ASSESSEE DID NOT DEBIT THE AMOUNT TO THE PRO FIT AND LOSS ACCOUNT AS ON EXPENDITURE NOR DID THE ASSESSEE CLAIM ANY DEDUCTION IN RESPECT OF THE AMOUNT AND CONSIDERING THAT THE ASSESSEE IS FOLLOWING THE MERCANTILE SYSTEM OF ACCOUNTING, THE QUESTION OF DISALLOWING THE DEDUCTION NOT CLAIMED WOULD NOT ARI SE. IN THE CASE OF ACIT VS REAL IMAGE MEDIA TECHNOLOGIES (P) LTD (2008) 116 TTJ 964 (CHENNAI) WHEREIN IT IS HELD AS UNDER: (2009) 21 ITD 461 (CHENNAI) (TM) SECTION 43B CAN ONLY BE INVOKED WHEN THE ASSESSEE CLAIMS DEDUCTION FOR ANY SUM PAYABLE BY WAY OF TAX OR DUTY, UNDER ANY LAW FOR THE TIME BEING IN FORCE, AND, AS SUCH, WHETHER NEITHER SUCH DEDUCTION IS CLAIMED NOR CHARGE IS MADE TO THE M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 4 PROFIT AND LOSS ACCOUNT, THERE IS NO QUESTION OF DISALLOWING THE AMOUNT. HAVING REGARD TO THE FACTS, THE ASSESSING OFF ICER WAS NOT JUSTIFIED IN MARKING THE ADDITION UNDER SECTION 43B. IN VIEW OF THE ABOVE DECISION, IT IS CLEAR THAT ADDITION U/S 43B IS APPLICABLE AND APPELLANT HAD CLAIMED DEDUCTION IN P&L ACCOUNT. IN THE INSTANT CASES APPELLANT HAD NOT CLAIMED ANY DEDUCT ION, HENCE, AO CANNOT DISALLOW THE AMOUNT. MOREOVER TILL JULY 2011, THE APPELLANT HAD TO PAY SERVICE TAX ONLY AFTER COLLECTING THE SERVICE TAX FROM THE PAYERS AS PER THE SERVICE TAX RULES. THE APPELLANT HAD COLLECTED THE SERVICE TAX LATER AND PAID THE SAME AS UNDER: DATE BEFORE FILING OF ITR AMOUNT 06.05.2010 1,043,679.00 06.05.2010 62,972.00 06.05.2010 677,202.00 30.06.2010 974 ,379.00 TOTAL 2,758,232.00 DATE AFTER FILING OF ITR AMOUNT 01.11.2010 999,100.00 15.11.2010 499,550. 00 23.11.2010 1,249,905 .00 25.11.2010 1,999,951.00 27.11.2010 2,499,501.00 30.11.2010 1,249,905.00 07.12.2010 1,723,694.00 GRAND TOTAL 12,979,838. 00 AS THE APPELLANT HAD PAID THE SERVICE TAX AND ALSO NOT CLAIMED THE DEDUCTION IN PROFIT AND LOSS ACCOUNT, SEC. 43B OF THE IT ACT IS NOT APPLICABLE IN VIEW OF THE ABOVE MENTIONED CASE. HENCE GROUND OF APPEAL IS ALLOWED. REGARDING E MPLOYEES CONTRIBUT ION TO PF DUES OF RS. 29,69,876/ - , HE HELD FROM THE PERUSAL OF RECORDS THAT THE SAME HAS BEEN PAID MUCH BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 5 THEREFORE, FOLLOWING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSION S LIMITED, REPORTED IN 319 ITR 306 , H E ALLOWED THE SAID DEDUCTION. 4. AFTER HEARING BOTH THE PARTIES AND ON PERUSAL OF THE IMPUGNED ORDER, WE FIND THAT SO FAR AS DISALLOWANCE ON ACCOUNT OF NON - PAYMENT OF SERVICE TAX LIABILITY U/S 43B IS CONCERNED, THE SAME IS NOT TENABLE , FIRSTLY, TH E LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING OF FACT THAT THE ASSESSEE HA D NOT CLAIMED THE AMOUNT OF SERVICE TAX LIABILITY OF RS. 1,29,79,838/ - IN THE PROFIT AND LOSS ACCOUNT AND HENCE THERE WA S NO QUESTION OF MAKING DISALLOWANC E AND SECONDLY, THE ASSESSEE HAD COLLECTED THE SERVICE TAX AND PAID LATER , ON THE DATES AS INCORPORATED ABOVE. THUS, NO DISALLOWANCE U/S 43B CAN BE SUSTAINED UNDER THESE FACTS AND CIRCUMSTANCES. ACCORDINGLY, THE FINDING OF CIT(A) IS UPHELD. REGARDING DISALL OWANCE OF E MPLOYEE S CONTRIBUTION TO PF ALSO , WE UPH O LD THE ORDER OF THE CIT(A) AS IT IS NOT DISPUTED BEFORE US THAT THE PF DUES THOUGH HAVE BEEN PAID BEYOND THE DUE DATE OF P ROVIDENT F UND ACT , BUT MUCH BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) WHICH IS ALLOWABLE IN VIEW OF THE DECISION OF HONBLE SUPREME COURT . THUS, THE ORDER OF THE CIT(A) ON THIS SCORE ALSO IS UPHELD. 5. REGARDING CROSS OBJECTION, IT HAS BEEN ADMITTED THAT IT IS IN SUPPORT OF THE ORDER OF THE CIT(A). ACCORDINGLY, CRO SS OBJECTIONS RAISED BY THE ASSESSEE IS TREATED AS ALLOWED IN VIEW OF THE FINDING GIVEN I N TH E DEPARTMENTAL APPEAL. 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED AND CROSS OBJECTION OF THE ASSESSEE ARE ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT O N 4 TH SEPTEMBER , 2015. SD/ - SD/ - ( RAJESH KUMAR ) ( AMIT SHUKLA ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATE: 4 TH SEPTEMBER , 2015 M/S GOPINATH ENGINEERING CO PVT LTD ITA NO. 7606 /MUM/20 1 3 CO NO. 113/MUM/2015 6 / COPY TO: - 1) / THE AP PELLANT. 2) / THE RESPONDENT. 3) THE CIT (A) - 2 1 , MUMBAI. 4) THE CIT 10 , MUMBAI. 5) , , / THE D.R. G BENCH, MUMBAI. 6) \ COPY TO GUARD FILE. / BY ORDER / / TRUE COPY / / / , DY. / ASSTT. REGISTRAR I.T.A.T., MUMBAI * . . *CHAVAN, SR.PS