M/s. North Brook Jute Company Ltd, Hooghly V. DCIT,Cir-1(1), kol, Kolkata

CO 12/KOL/2023

AI Insights

The case involves an appeal by the Deputy Commissioner of Income Tax (DCIT), Circle-1(1), Kolkata against the North Brook Jute Company Ltd., challenging the order of the National Faceless Appeal Centre (NFAC) which had deleted a disallowance made under section 36(1)(va) read with section 43B of the Income Tax Act, 1961. The disallowance pertained to employees' contributions towards Provident Fund (PF) and Employees' State Insurance (ESI) which were not deposited by the due date prescribed under the relevant Acts. The Tribunal, referencing a Supreme Court decision, confirmed the disallowance but acknowledged the assessee's entitlement to set off brought forward business losses and unabsorbed depreciation against the increased income due to the disallowance.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132609 (ITAT-KOLKATA)
• Duration Of Justice: 28 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 24-07-2023
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Next Hearing Date: 04-07-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 26-06-2023
• Other Referred Cases: Lumino Industries Ltd. vs. ACIT, Checkmate Services (P.) Ltd. v. Commissioner of Income-tax-1
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: MITA RIZVI
• Keywords: Depreciation; Opportunity of being heard; Condonation of delay; Unabsorbed depreciation
• Section: 43B; 250

Judgement Text

| आयकर अपीलीय अिधकरण ᭠यायपीठ, कोलकाता | IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, KOLKATA BEFORE SHRI SANJAY GARG, HON’BLE JUDICIAL MEMBER & DR. MANISH BORAD, HON’BLE ACCOUNTANT MEMBER I.T.A. No. 501/Kol/2023 Assessment Year: 2018-19 DCIT, Circle-1(1), Kolkata Vs North Brook Jute Company Ltd. 1, Champdani G.T. Road Hooghly - 712222 [PAN: AABCN5589P] अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) C.O. No. 12/Kol/2023 Assessment Year: 2018-19 North Brook Jute Company Ltd. 1, Champdani G.T. Road Hooghly - 712222 [PAN: AABCN5589P] Vs DCIT, Circle-1(1), Kolkata अपीलाथᱮ/ (Appellant) ᮧ᭜ यथᱮ/ (Respondent) Assessee by : Mita Rizvi, C.A. Revenue by : Shri P.P. Barman, Addl. CIT Sr. D/R सुनवाई कᳱ तारीख/Date of Hearing : 05/07/2023 घोषणा कᳱ तारीख /Date of Pronouncement: 25/07/2023 आदेश/O R D E R PER DR. MANISH BORAD, ACCOUNTANT MEMBER : The appeal in ITA No. 501/Kol/2023 has been preferred by the revenue against the order of the National Faceless Appeal Centre (hereinafter referred to as the NFAC”], passed u/s 250 of the Income- tax Act, 1961 (hereinafter the ‘Act’), dated 10/03/2022 for the Assessment Year 2018-19. I.T.A. No. 501/Kol/2023 Assessment Year: 2018-19 C.O. No. 12/Kol/2023 Assessment Year: 2018-19 North Brook Jute Company Ltd. 2 The assessee has filed a cross-objection against the appeal preferred by the revenue in C.O. No. 12/Kol/2023. 2. The registry has informed that the cross-objections is time barred by 444 days and no application for condonation of delay has been filed. However, during the course of hearing, it was submitted by the ld. Counsel for the assessee that in the cross-objection the only plea is that the assessee’s claim of brought forward loss/depreciation should have been allowed being reflected in the return of income filed for the year under appeal and the preceding years and these details are very well available in the income tax return filed by the assessee. Therefore, in order to compute the correct income of the assessee and on observing that all these details are available in the main appeal, we in the larger interest of justice condone the delay and admit the cross- objection for adjudication. 3. At the outset, the ld. Counsel for the assessee submitted that so far as the revenue’s appeal is concerned, wherein, the revenue has challenged the finding of the ld. CIT(A) deleting the disallowance made u/s 36(1)(va) r.w.s. 43B of the Act placing reliance on the decision of the Tribunal in the case of Lumino Industries Ltd. vs. ACIT in ITA Nos. 231 & 365/Kol/2021, order dt. 17/11/2021. However, the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. Commissioner of Income-tax-1 [2022] 143 taxmann.com 178 (SC), has clarified the position of law and, therefore, since the employees’ contribution towards PF & ESI has been deposited beyond the due I.T.A. No. 501/Kol/2023 Assessment Year: 2018-19 C.O. No. 12/Kol/2023 Assessment Year: 2018-19 North Brook Jute Company Ltd. 3 date prescribed under the relevant Act governing PF & ESI, the said disallowance needs to be confirmed. However, prayer is made that on account of the said disallowance, the income of the assessee will be increased and the assessee has brought forward business loss as well as brought forward depreciation loss available for set off against the income which will be computed after making the disallowance and to this extent, necessary directions may be given to the AO to give the set off of brought forward business loss and other business depreciation. 4. On the other hand, the ld. D/R, supported the order of the AO but could not controvert the contentions made by the ld. Counsel for the assessee. 5. We have heard rival contentions and perused the material placed before us. 6. We notice that there was a delay in deposit of employees’ contribution towards PF & ESI at Rs.3,50,86,108/-. There is no dispute to the fact that the alleged sum was not deposited before the due date of filing of return. Therefore, in view of the recent judgment of the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. v. Commissioner of Income-tax-1 (supra), the alleged sum has to be treated as income in the hands of the assessee u/s 36(1)(va) r.w.s. 2(24)(x) of the Act. To this extent, there is no disputed at the end of the ld. Counsel for the assessee. However, the prayer of the ld. Counsel for the assessee, is that the assessee is entitled to set off against brought forward business loss and depreciation and a chart exhibiting the I.T.A. No. 501/Kol/2023 Assessment Year: 2018-19 C.O. No. 12/Kol/2023 Assessment Year: 2018-19 North Brook Jute Company Ltd. 4 same has been placed at page 6 of the paper book, which is reproduced below:- Details of b/f business loss and unabsorbed depreciation eligible for adjustment during AY 2018-19 AY Brought forward Business Loss Brought forward Unabsorbed Depreciation 2015-16 16,19,997 2016-17 1,01,39,183 72,69,627 2017-18 3,75,54,816 64,52,240 TOTAL 4,76,93,999 1,53,41,864 Position of b/f loss after adjustment in the current year AY Brought forward Business Loss Brought forward Unabsorbed Depreciation 2015-16 - - 2016-17 - 55,52,681 2017-18 3,35,71,656 64,52,240 7. Perusal of the above details shows that prior to AY 2018-19 there are brought forward business losses amounting to Rs.4,76,93,999/-and brought forward unabsorbed depreciation of Rs.1,53,41,864/-. On account of the said disallowance of the employees’ contribution towards PF & ESI discussed (supra) income of the assessee stands increased by the alleged sum, but since the claim of business loss and unabsorbed depreciation has been made in the preceding year and duly claimed in the Income-tax returns in preceding years, the assessee deserves set off of the alleged sum as per the provisions of the Income tax Act. 8. We thus, restore the issue to the file of the AO, who shall examine the veracity of the claim of the assessee and also call for the copy of income tax return for the AY 2015-16 and 2016-17 indicating I.T.A. No. 501/Kol/2023 Assessment Year: 2018-19 C.O. No. 12/Kol/2023 Assessment Year: 2018-19 North Brook Jute Company Ltd. 5 brought forward business loss and brought forward unabsorbed depreciation and if found to be correct, then necessary set off may be allowed as provided under the law. Needless to mention, that the assessee shall be provided sufficient opportunity of being heard and to file relevant document/s qua the issue. 9. In the result, the appeal of the revenue is dismissed and cross- objection file by the assessee is allowed for statistical purposes as per the terms indicated above. Order pronounced in the Court on 25 th July, 2023 at Kolkata. Sd/- Sd/- (SANJAY GARG) (DR. MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER Kolkata, Dated 25/07/2023 *SC SrPs आदेश कᳱ ᮧितिलिप अᮕेिषत/Copy of the Order forwarded to : 1. अपीलाथᱮ / The Appellant 2. ᮧ᭜यथᱮ / The Respondent 3. संबंिधत आयकर आयुᲦ / Concerned Pr. CIT 4. आयकर आयुᲦ)अपील (/ The CIT(A)- 5. िवभागीय ᮧितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाडᭅ फाई/ Guard file. आदेशानुसार/ BY ORDER, TRUE COPY Assistant Registrar आयकर अपीलीय अिधकरण ITAT, Kolkata