Delta Paper Mills Private Limited, West Godavari District V. Assistant Commissioner of Income Tax, Circle-1(1), Rajamahendravaram

CO 9/VIZ/2019

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1040 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 2 month(s) 13 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 20-03-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2014-2015
• Appeal Filed On: 07-01-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SONAWAL
• Keywords: Corroborative evidences; TDS
• Section: 43B; 40A(3); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE SHRI V. DURGA RAO , HONBLE JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , HONBLE ACCOUNTANT MEMBER ITA NO S . 502 & 503 / VIZ /201 8 (ASST. YEAR : 20 13 - 14 & 20 14 - 1 5 ) ACIT, CIRLCE - 1(1), RAJAMAHENDRAVARAM. V S . M/S. DELTA PAPER MILLS PVT. LTD., D.NO. 4 - 1, VENDRA, PALAKODERU , W.G. DISTRICT. PAN NO. AAACD 6022 C (APPELLANT) (RESPONDENT) C.O.NOS. 8 & 9/VIZ/2019 (ARISING OUT OF ITA NO S . 502 & 503 / VIZ /201 8 ) (ASST. YEAR : 20 13 - 14 & 2014 - 15 ) M/S. DELTA PAPER MILLS PVT. LTD., D.NO. 4 - 1, VENDRA, PALAKODERU, W.G. DISTRICT. VS. ACIT, CIRLCE - 1(1), RAJAMAHENDRAVARAM. PAN NO. AAACD 6022 C (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI G.V.N. HARI ADV OCATE . DEPARTMENT BY : SHRI D.K. SONAWAL CIT DR DATE OF HEARING : 05 / 0 2 /201 9 . DATE OF PRONOUNCEMENT : 20 / 0 3 /201 9 . O R D E R PER V. DURGA RAO, JUDICIAL MEMBER THESE APPEAL S BY THE REVENUE AND THE CROSS OBJECTION S BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDER S OF 2 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) COMMISSIONER OF INCOME TAX (APPEALS) - 11 , HYDERABAD , BOTH DATED 29 /0 6 /201 8 FOR THE ASSESSMENT YEARS 20 13 - 14 & 20 14 - 1 5 . SINCE THE FACTS AND ISSUES ARE COMMON, CLUBBED AND HEARD TOGETHER AND DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER . 2 . THERE IS A DELAY OF 3 DAYS IN FILING OF BOTH THE APPEALS. WE HAVE GONE THROUGH THE PETITION S FILED BY THE ASSESSEE S AND FIND THAT THERE IS A SUFFICIENT CAUSE FOR FILING THE APPEALS IN TIME . THEREFORE, DELAY IS CONDONED. ITA NO. 50 3 /VIZ/2018 (A.Y. 2014 - 1 5 ) 3 . THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: - 1. THE ORDER OF THE LD. CIT(A), RAJAHMUNDRY IS ERRONEOUS ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN REDUCING THE PERCENTAGE OF DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER @ 10% TOWARDS 'REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY' TO A MERE 2% WITHOUT ANY BASIS OR ANALYSIS OF SUCH EXPENDITURE. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE CLAIMED HUGE EXPENDITURE TOWARDS ' OTHER MANUFACTURING CHARGES AND REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY' BUT HAD NOT MADE ANY TDS EVEN THOUGH THE SAME WERE LIABLE TO BE PAID TO PROFESSIONALS AND ON CONTRACT BASIS. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE CASH PORTION OF EXPENDITURE UNDER THE RELEVANT HEAD WAS AROUND 50% OF THE TOTAL EXPENDITURE, WHI CH WAS QUITE HIGH AND ALSO WAS NOT SUPPORTED BY PROPER BILLS AND VOUCHERS AND THE DISALLOWANCE MADE BY THE AO AT 10% OF EXPENDITURE IS QUITE REASONABLE. 5. THE CIT(A) OUGHT TO HAVE UPHELD THE ENTIRE DISALLOWANCE MADE U/S 40A(3) OF THE ACT , SINCE THE PAYMENTS AMOUNTING TO WERE UNDISPUTEDLY PAID IN CASH AND IN EXCESS OF RS. 20,000/ - ON A SINGLE DAY AND THE ASSESSEE FAILED TO DEMONSTRATED THAT PAYMENTS IN QUESTION WERE 3 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) MADE IN THE CIRCUMSTANCES ENUMERATED IN RULE 6DD. 6. THE CIT(A) OUGHT TO H AVE CALLED FOR A REPORT FROM THE AO BEFORE THE RELYING ON THE INFORMATION FILED BY THE ASSESSEE AND REDUCING THE DISALLOWANCE MADE U/S. 40A(3) OF THE IT ACT , WITHOUT ASSIGNING PROPER REASONS FOR GRANTING SUCH RELIEF. 7. THE CIT(A) FURTHER FAILED TO APPRECIATE THE FACT THAT THE AO HAD MADE THE DISALLOWANCE U/S. 40A(3) OF THE IT ACT ONLY AFTER THROUGH VERIFICATION OF THE VOUCHERS AND LEDGER EXTRACTS OF VARIOUS EXPENDITURE FURNISHED DURING THE COURSE OF ASSESSMENT PROCEEDINGS. 8 . THE CIT(A) OUGHT TO HAVE SUSTAINED THE DISALLOWANCE OF BELATED REMITTANCE OF EMPLOYEE'S CONTRIBUTION OF RS.1, 24 , 43 , 981 / - TOWARDS PF AND ESI AND THAT THE PROVISIONS OF SEC.43 B ARE NOT APPLICABLE TO REMITTANCE OF BELATED EMPLOYEE'S CONTRIBUTIONS TOWARDS PF AND E SI AND THE SAME ARE GOVERNED BY SEC.36(1)(VA) OF THE IT ACT AND EMPLOYEE'S CONTRIBUTION RECOVERED AND REMITTED AFTER THE DUE DATE FOR DEPOSIT THEREOF AS PR ESCRIBED IN THE RESPECTIVE PF/ ESI ACT/RULES ARE TO BE ADDED AS INCOME U/S.2(24)(X) R.W.S. 36(1 )(VA). 9 . THE CIT(A) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION (265 CTR 64), H EREIN IT WAS HELD THAT EMPLOYEE'S CONTRIBUTION REMITTED AFTER THE DUE DATE FOR DEPOSIT THEREOF AS PR ESCRIBED IN THE RESPECTIVE PF/ ESE ACT/RULES, IS NOT ADMISSIBLE DEDUCTION U / S.36(1)(VA) OF THE IT ACT. 10. THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OR ALTER OR DELETE ANY GROUND AT THE TIME OF HEARING OF THE APPEAL. 11 . FOR THESE AND ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF APPEAL HEARING BEFORE THE HON'BLE ITAT , THE ADDITIONS MADE BY THE ASSESSING OFFICER TOWARDS DISALLOWANCE OF EXPENDITURE @10% AND DISALLOWANCE OF BELATED PAYMENT OF EMPLOYEES CONTRIBUTIONS TOWARDS PF & ESI, BE RESTORED. 4 . GROUND NOS. 1, 10 & 11 ARE GENERAL IN NATURE, NO ADJUDICATION IS REQUIRED, THEREFORE, SAME ARE DISMISSED. GROUND NOS. 2 TO 4 RELATE TO DISALLOWANCE OF EXPENDITURE. 4 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) 5 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS CLAIMED EXPENSES TO THE TUNE OF RS. 4,06,66,755/ - & RS. 45,94,607/ - AGAINST OTHER MANUFACTURING EXPENSES AND REPAIRS TO BUILDINGS RESPECTIVELY. ON EXAMINATION OF THE ABOVE EXPENSES WITH RESPECT TO BILLS AND VOUCHERS, IT IS FOUND THAT MOST OF THE EXPENDITURE WA S INCURRED IN CASH AND WAS BACKED BY EITHER SELF MADE VOUCHERS OR IMPROPER VOUCHERS. HENCE, THE SAID EXPENDITURE IS NOT SUSCEPTIBLE FOR VERIFICATION. AT THE SAME TIME , THE ENTIRE EXPENDITURE CANNOT BE TREATED AS REFUTE KEEPING IN VIEW THE NATURE AND VOLUME OF ASSESSEES BUSINESS . AS SUCH , IN ORDER TO MEET THE ENDS OF JUSTICE , AN AMOUNT OF RS. 45,26,136/ - (BEING 10% OF THE EXPENDITURE CLAIMED AT RS.4,52,61,362/ - ) IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 6 . ON APPEAL, LD. CIT(A) HAS CONSIDERED THE ISSUE AND RESTRICTED THE ADDITION MADE BY THE ASSESSING OFFICER TO 2% AND APPEAL FILED BY THE ASSESSEE IS ALLOWED PARTLY. THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER: - 5.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, AR OF THE APPELLANT CONTENDED THAT THE AO IS THE JUSTIFIED IN MAKING AD - HOC DISALLOWANCE AND ALSO THAT THE DISALLOWANCE IS ON HIGHER SIDE. THE ASSESSMENT ORDER, SUBMISSION OF THE ASSESSEE AND MATERIAL PLACED BEFORE ME ARE CONSIDERED . THE DISCREPANCIES POINTED OUT BY THE AO ARE NOT CONTRADICTED. HOWEVER, HAVING REGARD TO NATURE OF THE ASSESSEES BUSINESS AND ITS VOLUME, THE DISALLOWANCE IS FOUND TO 5 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) BE ON HIGHER SIDE. THE SAME IS RESTRICTED TO 2% AND THE GROUND IS DISPOSED OFF ACCOR DINGLY. 7 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 8 . THE ASSESSING OFFICER HAS DISALLOWED 10% OF THE EXPENDITURE OUT OF THE TOTAL EXPENDITURE CLAIMED BY THE ASSESSEE. ON APPEAL, LD. CIT(A) RESTRICTED TO 2% AND APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. WE HAVE GONE THROUGH THE FACTS AND CIRCUMSTA N CES OF THE CASE AND ALSO NATURE OF THE BUSINESS CARRIED BY THE ASSESSEE AND FIND THAT THE LD. CIT(A) BY CONSIDERING ALL THE FACTS , REST RICTED TO 2% , THEREFORE , WE FIND NO INFIRMITY IN THE ORD E R PASSED BY THE LD. CIT(A) . THUS, THIS APPEAL FILED BY THE REVENUE ON THIS ISSUE IS DISMISSED. 9 . GROUND NOS. 5 TO 7 RELATE TO DISALLOWANCE UNDER SECTION 40 A(3) OF THE ACT. 10 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT ON EXAMINATION OF THE MATERIAL AVAILABLE ON RECORD, IT IS FOUND THAT THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 69,93,456/ - AGAINST PAPER HANDLING CHARGES , OUT OF WHICH AN AMOUNT OF RS. 58,90,907/ - WAS PAID IN CASH BEYOND STIPULATED LIMITS I.E. MORE THAN RS. 20,000/ - IN A DAY. SINCE THESE PAYMENTS ARE NOT 6 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) ALLOWABLE AS PER SECTION 40A(3) OF THE I.T. ACT, THE SAID AMOUNT OF RS. 59,90,907/ - IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. 1 1 . ON AP PEAL, LD. CIT(A) CONSIDERED THIS ISSUE AND RESTRICTED THE DISALLOWANCE TO 2% . FOR THE SAKE OF CONVENIENCE, THE RELEVANT PORTION OF THE ORDER IS EXTRACTED AS UNDER : - 4. DURING THE APPELLATE PROCEEDINGS, SRI GVN HARI, AR APPEARED AND FILED SUBMISSIONS. THE GROUND NOS. 1 & 6 RAISED BY THE ASSESSEE ARE GENERAL IN NATURE, WHICH DO NOT REQUIRE SPECIFIC ADJUDICATION. THE GROUND NO.2 IS AGAINST DISALLOWANCE OF RS. 58,90,907/ - U/S 40A(3) OF THE ACT. THE ISSUE IS DISCUSSED BY THE AO IN THE ORDER AS UNDER: - ON E XAMINATION OF THE MATERIAL AVAILABLE ON RECORD, IT IS FOUND THAT THE ASSESSEE HAS CLAIMED AN EXPENDITURE OF RS. 69,93,456/ - AGAINST PAPER HANDLING CHARGES OUT OF WHICH AN AMOUNT OF RS.58,90,907/ - WAS PAID IN CASH BEYOND STIPULATED LIMITS I.E. MORE THAN RS. 20,000/ - IN A DAY. SINCE THESE PAYMENTS ARE NOT ALLOWABLE AS PER SECTION 40A(3) OF THE I.T. ACT, THE SAID AMOUNT OF RS. 59,90,907/ - IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME. 4.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, AR OF THE APPELLANT CONTENDED THAT THE AO IS NOT JUSTIFIED IN MAKING ADHOC DISALLOWANCE AND ALSO THAT THE DISALLOWANCE IS ON HIGHER SIDE. THE ASSESSMENT ORDER, SUBMISSION OF THE ASSESSEE AND MATERIAL PLACED BEFORE ME ARE CONSIDERED . THE DISCREPANCIES POINTED OUT BY THE AO ARE NOT CONTRADICTED . HOWEVER, HAVING REGARD TO NATURE OF THE ASSESSEES BUSINESS AND ITS VOLUME, THE DISALLOWANCE IS FOUND TO BE ON HIGHER SIDE. THE SAME IS RESTRICTED TO 2% AND THE GRO UND IS DISPOSED OFF ACCORDINGLY. 1 2 . AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE ASSESSEE IS IN APPEAL BEFORE THIS TRIBUNAL. 13 . LD. COUNSEL FOR THE ASSESSEE BY FILING CROSS OBJECTION HAS SUBMITTED THAT THE ASSESSING OFFICER WITHOUT DISCUSSING THE DETAILS ABOUT THE PAYMENTS AND WHAT ARE THE PAYMENTS PAID BY THE 7 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) ASSESSEE EXCEEDED MORE THAN RS. 20,000/ - BUT SIMPLY INVOKED SECTION 40A(3), THEREFORE, THE ADDITION CANNOT SURVIVE. 14 . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE SUPPORTED THE ORD E R S PASSED BY THE AUTHORITIES BELOW. 15 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 1 6 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS CLAIMED RS. 69,93,456/ - RE LATING TO PAPER HANDLING CHARGES , OUT OF WHICH AN AMOUNT OF RS. 58,90,907/ - WAS PAID IN CASH BEYOND STIPULATED LIMIT I.E. MORE THAN RS. 20,000/ - IN A DAY. SINCE THESE PAYMENTS ARE NOT ALLOWABLE A S PER SECTION 40A(3) OF THE ACT, T HE SAID AMOUNT OF RS. 58,90,907/ - IS DISALLOWED AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. O N APPEAL, LD. CIT(A) HAS OPINED THAT THE ASSESSING OFFICER HAS MADE DISALLOWANCE ON AD - HOC BASIS, THEREFORE, HE RESTRICTED THE SAME TO 2%. WE HAVE GONE THROUGH THE ASSESSMENT ORDER AND FIND THAT THE ASSESSING OFFICER HAS NOT DISCUSSED ANY DETAILS WHAT ARE THE PAYMENTS MADE BY THE ASSESSEE EXCEEDING MORE THAN RS.20,000/ - TO WHOM PAYMENTS ARE MADE, NO DETAILS, NO DISCUSSION , SIM P LY ADDITION WAS MADE. WE FIND THAT THE ORDER PASSED BY THE ASSESSING OFFICER CANNOT BE SURVIVED. ACCORDINGLY, THE ADDITION MADE BY THE ASSESSING OFFICER HAS TO BE DELETED. IN 8 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) VIEW OF THE ABOVE, APPEAL OF THE REVENUE ON THESE GROUNDS ARE DISMISSED. 17 . GROUND NOS. 8 & 9 RELAT E TO DIS A LLOWANCE UNDER SECTION 43(B) OF THE ACT. 18 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS MADE PAYMENT OF PF & ESI BEYOND DUE DATES TO T HE TUNE OF RS. 2,14,78,960/ - & RS. 66,27,661/ - RESPECTIVELY . AS THE SAID PAYMENTS ARE NOT ALLOWABLE AS PER THE ACT, THE SAME ARE DISALLOWED AND ADDED BACK TO TOTAL INCOME. 1 9 . ON APPEAL, LD. CIT(A) BY FOLLOWING THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF APEPDCL IN ITA NO. 371/VIZ/2017, DATED 20/09/2017 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 20 . ON BEING AGGRIEVED , THE REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 21 . LD. COUNSEL FOR THE ASSESSEE HAS SUBMITTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF JURISDICTIONAL ITAT AND HE RELIED ON THE ORDER OF THE LD. CIT(A) AND SUBMITTED THAT APPEAL OF THE REVENUE MAY BE DISMISSED. 22 . LD. DEPARTMENTAL REPRESENTATIVE HAS RELIED ON THE ORDER OF THE ASSESSING OFFICER. 9 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) 23 . WE HAVE HEARD B OTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 24 . THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. IN ITA NO. 609/VIZ/2014, DATED 29/07/2016 WHEREIN IT HAS BEEN HELD AS UNDER: - 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A.O. MADE ADDITIONS TOWARDS BELA TED PAYMENT OF EMPLOYEES CONTRIBUTIONS TO PF. ACCORDING TO THE A.O., EMPLOYEES CONTRIBUTION TO PROVIDENT FUND IS DEDUCTIBLE UNDER THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE SPECIFIED UNDER THE PROVIDENT FUND ACT. THE A.O. FURTHER WAS OF THE OPINION THAT IN VIEW OF THE CLEAR PROVISIONS OF SECTION 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT, ANY RECOVERY FROM EMPLOYEES TOWARDS PROVIDENT FUND CONTRIBUTION IS DEEMED TO BE INCOME OF THE ASSESSEE, IF THE EMPLOYER NO T PAID THE SAME TO THE PROVIDENT FUND ACCOUNT OF THE EMPLOYEE WITHIN DUE DATE SPECIFIED UNDER THE PROVISIONS OF PF ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT SECOND PROVISO TO SECTION 43B OF THE ACT PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED UNLESS S UCH SUM IS ACTUALLY BEEN PAID ON OR BEFORE DUE DATE AS SPECIFIED IN EXPLANATION TO 36(1)(VA) OF THE ACT WHICH WAS OMITTED BY THE FINANCE ACT, 2003 W.E.F. 1.4.2004 AND ACCORDINGLY, THERE WAS NO SPECIAL PROVISION REGARDING EMPLOYEES CONTRIBUTION TO PF. IT IS FURTHER CONTENDED THAT AS PER THE AMENDED PROVISIONS OF SECTION 43B OF THE ACT, ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO PF SHALL BE ALLOWED, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. 6. THE ONLY ISSUE TO BE RESOLVED IS WHETHER THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION FOR THE EMPLOYEES CONTRIBUTION MADE TO PF AFTER THE DUE DATE PRESCRIBED UNDER THE PF ACT, BUT BEFORE THE DUE DATE PRESCRIBED FOR FILING OF IN COME TAX RETURN IN THE LIGHT OF THE PROVISIONS CONTAINED IN SECTION 36(1)(VA) OF THE ACT AND SECTION 43B(B) OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THERE IS NO DISTINCTION BETWEEN EMPLOYER AND EMPLOYEE CONTRIBUTION AFTER OMISSION OF SECOND P ROVISO OF SECTION 43B OF THE ACT BY FINANCE ACT, 2003 W.E.F. 1.4.2004. WE FIND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THERE IS NO DIFFERENCE BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION UNDER THE PF ACT. SECTION 6 OF PROVIDENT FUND ACT PROVIDES FOR CONTRIBUTION AND THE MANNER IN WHICH SUCH CONTRIBUTION SHALL BE MADE. PARAGRAPH 30 OF THE PF SCHEME PROVIDES 10 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) FOR PAYMENT OF CONTRIBUTIONS. AS PER THE SAID SCHEME, THE EMPLOYER AT THE FIRST INSTANCE SHALL MAKE THE TOTAL CONTRIBUTION INCLUDIN G EMPLOYEES SHARE. PARAGRAPH 32 PROVIDES FOR RECOVERY OF MEMBER SHARE OF CONTRIBUTION AND AS PER THE SCHEME, THE EMPLOYER CAN RECOVER THE EMPLOYEES SHARE FROM THE WAGES PAID TO THE EMPLOYEE. THEREFORE, AS PER THE PF ACT AND SCHEME OF CONTRIBUTIONS, THE CONTRIBUTIONS MEANS AND INCLUDE BOTH EMPLOYEES AND EMPLOYERS SHARE. SIMILARLY, SECTION 2(C) OF THE PROVIDENT FUND ACT DEFINES THE CONTRIBUTION TO MEAN A CONTRIBUTION PAYABLE IN RESPECT OF A MEMBER UNDER THE SCHEME OR THE CONTRIBUTION PAYABLE IN RESPECT OF AN EMPLOYEE TO WHOM THE SCHEME APPLIES. THERE IS A PRESCRIBED MODE OF PAYMENT OF CONTRIBUTIONS UNDER THE PF ACT. UNDER THE SAID ACT, THE EMPLOYER SHALL CONTRIBUTE BOTH EMPLOYEES AND EMPLOYER SHARE ALONG WITH ADMINISTRATIVE CHARGES BEFORE THE DUE DATE SPECIFIED UNDER THE PF ACT. THE ACT PRESCRIBED ONLY ONE DUE DATE FOR DEPOSITING THE CONTRIBUTION I.E. 15 TH OF SUBSEQUENT MONTH WITH THE GRACE PERIOD OF 5 DAYS WHICH INDICATES THAT THERE IS NO DIFFERENCE BETWEEN EMPLOYEE AND EMPLOYER CONTRIBUTION. IF THE L EGISLATURE INTENDS TO DIFFERENTIATE EMPLOYEES AND EMPLOYER CONTRIBUTION, THEN THERE WOULD HAVE BEEN TWO DUE DATES LIKE IN THE CASE OF INCOME TAX ACT. THEREFORE, FROM THE ABOVE, IT IS CLEAR THAT THE PROVIDENT FUND ACT DOES NOT DIFFERENTIATE EMPLOYEES AND E MPLOYER CONTRIBUTION AND CONTRIBUTION MEANS BOTH EMPLOYEES AND EMPLOYER CONTRIBUTION UNDER THE PF SCHEME. 7. SECTION 43B OF THE ACT PROVIDES FOR CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS. SUB CLAUSE (B) OF SECTION 43B OF THE ACT COVE RS ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES. THE PROVISO TO SECTION PROVIDES THAT ANY SUM PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN NO DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. A CAREFUL CONSIDERATION OF SECTION 43B OF THE ACT, IT IS CLEAR THAT AN EXTENSION IS GRANTED TO T HE ASSESSEE TO MAKE THE PAYMENT OF PF CONTRIBUTIONS OR ANY OTHER FUND TILL THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT. THEREFORE, IN OUR OPINION, THERE IS NO DIFFERENCE BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION TO PF AND IF SUCH C ONTRIBUTION IS MADE ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN DEDUCTION IS TO BE ALLOWED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. 8. THE HONBLE KARNATAKA HIGH COURT, IN THE CASE OF ESSAE TERAOKA (P) LTD. VS. DCIT 366 ITR 408 TOOK THE VIEW THAT THE WORD CONTRIBUTION OCCURRING IN SECTION 43B OF THE ACT WOULD INCLUDE EMPLOYEES CONTRIBUTION TO PF IN THE LIGHT OF THE DEFINITION OF THE WORD CONTRIBUTION AS PER THE PROVISIONS OF SECTION 2(C) OF THE PF ACT. AS PER THE SAID SECTION, CONTRIBUTION WOULD MEAN BOTH EMPLOYERS CONTRIBUTION AND EMPLOYEES CONTRIBUTION. ACCORDINGLY, IT WAS HELD THAT THE PROVISIONS OF SECTION 43B OF THE ACT ALLOWING DEDUCTION FOR PAYMENT MADE BEFORE THE DUE DATE OF FILING 11 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) OF INCOME TAX R ETURN CANNOT BE IGNORED. SIMILARLY, THE ITAT, HYDERABAD TRIBUNAL IN THE CASE OF TETRA SOFT (INDIA) PVT. LTD. VS. ACIT (2015) 40 ITR (TRIB) 470 HELD THAT WHEN ASSESSEE REMITTED EMPLOYEES CONTRIBUTION TO PF WITHIN DUE DATE OF FILING RETURN OF INCOME U/S 139 (1) OF THE ACT, AMOUNT OF EMPLOYEES CONTRIBUTION TO PF CANNOT BE DISALLOWED. SIMILAR VIEW WAS UPHELD BY THE CHENNAI BENCH OF THE ITAT, IN THE CASE OF ACIT VS. FARIDA SHOES PVT. LTD. (2016) 46 CCH 29. THE COORDINATE BENCH HELD THAT IF ASSESSEE HAD NOT DEPO SITED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND UP TO THE DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE, BUT BEFORE DUE DATE OF FILING OF RETURN NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT. IN THE CASE OF CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. 35 TAXMAN 616, THE HONBLE HIGH COURT OF RAJASTHAN, AFTER REFERRING TO THE APEX COURT DECISION IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. 319 ITR 306 & CIT VS. VINAY CEMENT LTD. HELD THAT THE DEDUCTIONS SHOULD BE ALLOWED FOR THE PAYMENT OF EMPLOYEES CONTRIBUTION MADE BEFORE THE DUE DATE OF FILING OF RETURN. SIMILARLY, IN THE CASE OF CIT VS. STATE BANK OF BIKANER, THE HONBLE RAJASTHAN HIGH COURT HELD THAT CONTRIBUTION PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACT, BUT BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT CANNOT BE DISALLOWED U/S 43B OF THE ACT AND OR U/S 36(1)(VA) OF THE ACT. 9. THE LD. D.R. RELIED UPON THE DECISION OF HONBLE HIGH COURT OF KERALA, IN THE CASE OF CIT VS. MERCHEM LTD, REPORTE D IN (2015) 378 ITR 443 AND SUBMITTED THAT EMPLOYEES CONTRIBUTION TO PROVIDENT FUND IS ALLOWED AS DEDUCTION, IF THE SAME IS DEPOSITED ON OR BEFORE THE DUE DATE SPECIFIED UNDER THE PROVISIONS OF PROVIDENT FUND ACT. THE D.R. ALSO RELIED UPON THE DECISION OF GUJARAT HIGH COURT, REPORTED IN (2014) 366 ITR 170, WHEREIN THE HONBLE GUJARAT HIGH COURT HELD THAT SINCE ASSESSEE HAD NOT DEPOSITED SAID CONTRIBUTION TO RESPECTIVE FUND ACCOUNT ON THE DATE AS PRESCRIBED IN EXPLANATION TO SECTION 36(1)(VA) OF THE ACT, DI SALLOWANCE MADE BY THE A.O. WAS JUST AND PROPER. THOUGH, THE D.R. RELIED UPON CERTAIN JUDICIAL PRECEDENTS WHICH ARE IN FAVOUR OF THE REVENUE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. M/S. VEGETABLES PRODUCTS LTD. REPORTED IN 88 ITR 192, WHEREIN THE HONBLE SUPREME COURT HELD THAT IF TWO REASONABLE CONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED, THEREFORE, BY RESPECTFULLY FOLLOWING THE DECISION OF SUPREME COURT, WH EN DIVERGENT VIEWS ARE EXPRESSED BY DIFFERENT JUDICIAL FORUMS, WE PREFER TO FOLLOW THE VIEWS EXPRESSED BY THE COURTS WHICH ARE IN FAVOUR OF THE ASSESSEE. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO FOLLOWING THE JUDICIAL PRECEDENTS AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO DISTINCTION BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION TO PF, AND IF THE TOTAL CONTRIBUTION IS DEPOSITED ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN NO DISALLO WANCE CAN BE MADE TOWARDS EMPLOYEES CONTRIBUTION TO PROVIDENT FUND. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS RIGHTLY DELETED THE ADDITIONS MADE BY 12 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 2 5 . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD.CIT(A). THUS, THIS APPEAL FILED BY THE REVENUE ON THESE ISSUES ARE DISMISSED. C.O.NO. 09/VIZ/2019 2 6 . SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR DECISION IN ABOVE APPEAL, THIS CROSS OBJECTION HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. ITA NO. 502/VIZ/2013 2 7 . GROUNDS RAISED BY THE REVENUE IN THIS APPEAL ARE AS UNDER: - 1. THE ORDER OF THE LD. CIT(A), RAJAHMUNDRY IS ERRONEOUS ON FACTS AND IN LAW. 2. THE CIT(A) ERRED IN REDUCING THE PERCENTAGE OF DISALLOWANCE OF EXPENDITURE MADE BY THE ASSESSING OFFICER @ 10% TOWARDS 'REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY' TO A MERE 2% WITHOUT ANY BASIS OR ANALYSIS OF SUCH EXPENDITURE. 3. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE CLAIMED HUGE EXPENDITURE TOWARDS 'REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY' BUT HAD NOT MADE ANY TDS EVEN THOUGH THE SAME WERE LIABLE TO BE PAID TO PROFESSIONALS AND ON CONTRACT BASIS. 4. THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE CASH PORTION OF EXPENDITURE UNDER THE RELEVANT HEAD WAS AROUND 50% OF THE TOTAL EXPENDITURE, WHICH WAS QUITE 13 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) LA1SO WAS NOT SUPPORTED BY PROPER BILLS AND VOUCHERS AND THE DISALLOWANCE MADE BY THE AO AT 10% OF EXPENDITURE IS QUITE REASONABLE. 5. THE CIT(A) OUGHT TO HAVE SUSTAINED THE DISALLOWANCE OF BELATED REMITTANCE OF EMPLOYEE 'S CONTRIBUTION OF RS.1,13,26,341/ - TOWARDS PF AND EST AND THAT THE PROVISIONS OF SEC.4313 ARE NOT APPLICABLE TO REMITTANCE OF BELATED EMPLOYEE'S CONTRIBUTIONS TOWARDS PF AND EST AND THE SAME ARE GOVERNED BY SEC.36(1)(VA) OF THE IT ACT AND EMPLOYEE'S CONTR IBUTION RECOVERED AND REMITTED AFTER THE DUE DATE FOR DEPOSIT THEREOF AS PR ESCRIBED IN THE RESPECTIVE PF/ ESI ACT/RULES ARE TO BE ADDED AS INCOME U/S.2(24)(X) R.W.S. 36(L)(VA). 6. THE CIT(A) OUGHT TO HAVE CONSIDERED THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION (265 CTR 64), H EREIN IT WAS HELD THAT EMPLOYEE'S CONTRIBUTION REMITTED AFTER THE DUE DATE FOR DEPOSIT THEREOF AS PR ES CRIBED IN THE RESPECTIVE PF/ ESE ACT/RULES, IS NOT ADMISSIBLE DEDUCTION U / S.36(1)(VA) OF THE IT ACT. 7 . THE APPELLANT CRAVES LEAVE TO ADD OR AMEND OR ALTER OR DELETE ANY GROUND AT THE TIME OF HEARING OF APPEAL. 2 8 . GROUND NOS. 1, 7 & 8 ARE GENERAL IN NATURE, NO ADJUDICATION IS REQUIRED, SAME ARE DISMISSED. GROUND NOS. 2 TO 4 RELATE TO DISALLOWANCE OF EXPENDITURE. 29 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT A S SEEN F ROM THE P ROFIT AND LOSS ACCOUNT , THE ASSESSEE HAS DEBITED AN AMOUN T OF RS.5,86,43,588/ - TOWARDS REPAIRS AND MAINTENANCE TO PLANT AND MACHINERY. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AR OF THE ASSESSEE WAS ASKED TO PRODUCE BILLS/VOUCHERS IN RESPECT OF THESE EXPENSES. ON VERIFICATION OF THE BILLS AND VOUCHERS PR ODUCED, IT WAS FOUND THAT 14 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) SOME OF THESE EXPENSES WERE PAID IN CASH AND SUPPORTED BY SELF MADE VOUCHERS ONLY. HENCE, THE EXPENDITURE IS NOT SUSCEPTIBLE FOR VERIFICATION IN THE ABSENCE OF PROPER SUPPORTING EVIDENCES. IN VIEW OF THE ABOVE, IT WAS PROPOSED TO DISALLOW AN AMOUNT OF RS.58,64,359/ - BEING 10% OF THE TOTAL EXPENDITURE TOWARDS REPAIRS AND MAINTENANCE TO MEET THE ENDS OF JUSTICE. ACCORDINGLY, RS.58,64,359/ - IS DISALLOWED AND ADDED B ACK TO THE TOTAL INCOME. 30 . ON APPEAL, LD. CIT(A) RESTRICTED THE DISALLOWANCE TO 2% ON THE GROUND TH A T THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS ON HIGHER SIDE. THE RELEVANT PORTION OF THE ORDER OF THE LD. CIT(A) IS EXTRACTED AS UNDER: - 4.1 DURING THE COURSE OF APPELLATE PROCEEDINGS, AR OF THE APPELLANT CONTENDED THAT THE AO IS NOT JUSTIFIED IN MAKING AD - HOC DISALLOWANCE AND ALSO THAT THE DISALLOWANCE IS ON HIGHER SIDE. . THE ASSESSMENT ORDER, SUBMISSION OF THE ASSESSEE AND MATERIAL PLACED BEFORE ME ARE CONSIDERED. THE DISCREPANCIES POINTED OUT BY THE AO ARE NOT CONTRADICTED. HOWEVER, HAVING REGARD TO NATURE OF THE ASSESSEE'S BUSINESS AND ITS VOLUME, THE DISALLOWANCE IS FOUND TO BE ON HIGHER SIDE. THE SAME IS RESTRICTED TO 2% AND THE GROUND IS DISPOSED OFF ACCORDINGLY . 31 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 32 . WE FIND TH A T THE LD. CIT(A) BY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE RESTRICTED THE DISALLOWANCE TO 2%. WE 15 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A). THUS , THIS GROUND OF APPEAL RAISED BY THE REVENUE IS DISMISSED. 33 . GROUND NOS. 5 & 6 RELATE TO DISALLOWANCE UNDER SECTION 43B OF THE ACT. 34 . IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT DURING THE FINANCIAL YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAS RECEIVED AND PAID AN AMOUNT OF RS.96,58,663/ - TOWARDS PROVIDENT FUND AND RS.16,67,678/ - TOWARDS ESI. ON VERIFICATION OF THE PAYMENTS MADE BY THE ASSESSEE COMPANY, IT WAS FOUND THAT FOR ALL THE MONTHS, THE PAYMENTS WE RE MADE BEYOND THE SPECIFIED DUE DATE IN VIOLATION OF THE PROVISIONS OF SEC.36(1)(VA) OF THE ACT. HENCE, IT WAS PROPOSED TO DISALLOW THE ENTIRE AMOUNT OF RS.96,58,663/ - AND RS. 16,67,678/ - BEING THE EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI PAID BEYOND DUE DATE BY THE ASSESSEE COMPANY. WHEN THE ASSESSEE WAS ASKED TO FURNISH ITS OBJECTIONS FOR THE PROPOSED DISALLOWANCE , IT WAS SUBMITTED THAT SINCE THESE PAYMENTS WERE MADE BEFORE THE DUE DATE FOR FILING OF THE RETURN OF INCOME, THE EXPENDITURE IS ALLOWABLE U/S.4 3 B OF THE ACT. THE ASSESSEE HAS ALSO RELIED UPON THE DECISIONS OF THE ITAT, HYDERABAD IN THE CASES OF M/S. VBC INDU STRIES LTD, M/S. TETRA SOFT (INDIA) PVT LTD. AND M/S. NUZIVEDU SWATI COASTAL CONSORTIUM AND REQUESTED TO ALLOW THE ENTIRE 16 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) EXPENDITURE. HOWEVER, AS PER THE EXPLANATION TO SEC.36(1)(VA) OF THE ACT CLEARLY ENVISAGES THE NEED OF CREDITING THE AMOUNT RECEIVED BY THE EMPLOYER TO THE EMPLOYEES ACCOUNT OF THE RELEVANT FUND BEFORE THE SPECIFIED DUE DATE BY SUCH RULE OR ORD ER. ON EXAMINATION OF THE DETAILS FURNISHED BY THE ASSESSEE COMPANY, IT IS CLEAR THAT ALL THE PAYMENTS WERE MADE BEYOND THE SPECIFIED DUE DATE OF RELEVANT PROVIDENT FUND AND ESI RULES. FURTHER, AS PER THE PROVISIONS OF SECTION 2(24)(X) OF THE ACT THE EMPLO YEES CONTRIBUTION IS INCOME TO THE ASSESSEE AND IT IS AN ALLOWABLE DEDUCTION U/S.43B OF THE ACT IF IT IS PAID BEFORE THE SPECIFIED DUE DATE. FURTHER, RELIANCE IS PLACED ON DECISION OF ITAT, MUMBAI IN THE CASE OF PAN INDIA NETWORK INFRAVEST PVT. LTD VS. ADD L. CIT, RANGE - 7(1), MUMBAI (2014(7) TMI 801, DATED 10 - 07 - 2014 AND ON THE DECISION OF HON'BLE GUJARAT HIGH COURT IN THE CASE OF CIT - II VS. GSRTC (2014 (1) TMI 502), DATED 26 - 12 - 2013, WHEREIN IT WAS HELD THAT SECTION 43B DOES NOT APPLY TO EMPLOYEES CONTRIB UTION. ONLY SECTION 2(24)(X) R.W. SECTION 36(1)(VA) IS APPLICABLE AND THERE FORE EMPLOYEES CONTRIBUTION IS DISALLOWED IF NOT PAID WITHIN DUE DATE AS PER EPF / ESI ACT. FURTHER, IN TH E ABSENCE OF A DECISION BY THE HON'BLE SUPREME COURT, THE ISSUE OF DEDUCTI ON FOR DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION STILL REMAINS OPEN. HENCE, THE ASSESSEES SUBMISSION THAT THE PAYMENTS WERE MDE 17 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) BEFORE THE SPECIFIED DUE DATE IS NOT ACCEPTABLE SINCE IT IS NOT APPLICABLE TO THE CONTRIBUTIONS RECEIVED FROM ITS EMPLOYEES. ACCORDINGLY, RS. 1,13,26,341/ - IS DISALLOWED U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT AND ADDED BACK TO THE TOTAL INCOME. 3 5 . O N APPEAL, LD. CIT(A) BY FOLLOWING THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF APEPDCL IN ITA NO. 371/VIZ/2017 DATED 20/09/2017 DELETED THE ADDITION MADE BY THE ASSESSING OFFICER. 36 . ON BEING AGGRIEVED, REVENUE CARRIED THE MATTER IN APPEAL BEFORE THIS TRIBUNAL. 37 . WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERIAL AVAILABLE ON RECORD AND ORDERS OF THE AUTHORITIES BELOW. 38 . THE ISSUE INVOLVED IN THIS APPEAL IS SQUARELY COVERED BY THE DECISION OF THE ITAT, VISAKHAPATNAM BENCH IN THE CASE OF EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. IN ITA NO. 609/VIZ/2014, DATED 29/07/2016 WHEREIN IT HAS BEEN HELD AS UNDER: - 5. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATERIALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE A.O. MADE ADDITIONS TOWARDS BELATED PAYMENT OF EMPLOYEES CONTRIBUTIONS TO PF. ACCORDING TO THE A.O., EMPLO YEES CONTRIBUTION TO PROVIDENT FUND IS DEDUCTIBLE UNDER THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE SPECIFIED UNDER THE PROVIDENT FUND ACT. THE A.O. FURTHER WAS OF THE OPINION THAT IN VIEW OF THE CLEAR PR OVISIONS OF SECTION 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT, ANY RECOVERY FROM EMPLOYEES TOWARDS PROVIDENT FUND CONTRIBUTION IS DEEMED TO BE INCOME OF THE ASSESSEE, IF THE EMPLOYER NOT PAID THE SAME TO THE PROVIDENT FUND ACCOUNT OF THE EMPLOYEE WITHIN DUE DAT E SPECIFIED UNDER THE PROVISIONS OF PF ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT SECOND PROVISO TO SECTION 43B OF 18 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) THE ACT PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED UNLESS SUCH SUM IS ACTUALLY BEEN PAID ON OR BEFORE DUE DATE AS SPECIFIED IN EXPLANAT ION TO 36(1)(VA) OF THE ACT WHICH WAS OMITTED BY THE FINANCE ACT, 2003 W.E.F. 1.4.2004 AND ACCORDINGLY, THERE WAS NO SPECIAL PROVISION REGARDING EMPLOYEES CONTRIBUTION TO PF. IT IS FURTHER CONTENDED THAT AS PER THE AMENDED PROVISIONS OF SECTION 43B OF TH E ACT, ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO PF SHALL BE ALLOWED, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. 6. THE ONLY ISSUE TO BE RESOLVED IS WHETHER THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION FOR THE EMPLOYEES CONTRIBUTION MADE TO PF AFTER THE DUE DATE PRESCRIBED UNDER THE PF ACT, BUT BEFORE THE DUE DATE PRESCRIBED FOR FILING OF INCOME TAX RETURN IN THE LIGHT OF THE PROVISIONS CONTAINED IN SECTION 36(1)(VA ) OF THE ACT AND SECTION 43B(B) OF THE ACT. IT IS THE CONTENTION OF THE ASSESSEE THAT THERE IS NO DISTINCTION BETWEEN EMPLOYER AND EMPLOYEE CONTRIBUTION AFTER OMISSION OF SECOND PROVISO OF SECTION 43B OF THE ACT BY FINANCE ACT, 2003 W.E.F. 1.4.2004. WE F IND FORCE IN THE ARGUMENTS OF THE ASSESSEE FOR THE REASON THAT THERE IS NO DIFFERENCE BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION UNDER THE PF ACT. SECTION 6 OF PROVIDENT FUND ACT PROVIDES FOR CONTRIBUTION AND THE MANNER IN WHICH SUCH CONTRIBUTION SHALL B E MADE. PARAGRAPH 30 OF THE PF SCHEME PROVIDES FOR PAYMENT OF CONTRIBUTIONS. AS PER THE SAID SCHEME, THE EMPLOYER AT THE FIRST INSTANCE SHALL MAKE THE TOTAL CONTRIBUTION INCLUDING EMPLOYEES SHARE. PARAGRAPH 32 PROVIDES FOR RECOVERY OF MEMBER SHARE OF C ONTRIBUTION AND AS PER THE SCHEME, THE EMPLOYER CAN RECOVER THE EMPLOYEES SHARE FROM THE WAGES PAID TO THE EMPLOYEE. THEREFORE, AS PER THE PF ACT AND SCHEME OF CONTRIBUTIONS, THE CONTRIBUTIONS MEANS AND INCLUDE BOTH EMPLOYEES AND EMPLOYERS SHARE. SIMI LARLY, SECTION 2(C) OF THE PROVIDENT FUND ACT DEFINES THE CONTRIBUTION TO MEAN A CONTRIBUTION PAYABLE IN RESPECT OF A MEMBER UNDER THE SCHEME OR THE CONTRIBUTION PAYABLE IN RESPECT OF AN EMPLOYEE TO WHOM THE SCHEME APPLIES. THERE IS A PRESCRIBED MODE OF PA YMENT OF CONTRIBUTIONS UNDER THE PF ACT. UNDER THE SAID ACT, THE EMPLOYER SHALL CONTRIBUTE BOTH EMPLOYEES AND EMPLOYER SHARE ALONG WITH ADMINISTRATIVE CHARGES BEFORE THE DUE DATE SPECIFIED UNDER THE PF ACT. THE ACT PRESCRIBED ONLY ONE DUE DATE FOR DEPOSI TING THE CONTRIBUTION I.E. 15 TH OF SUBSEQUENT MONTH WITH THE GRACE PERIOD OF 5 DAYS WHICH INDICATES THAT THERE IS NO DIFFERENCE BETWEEN EMPLOYEE AND EMPLOYER CONTRIBUTION. IF THE LEGISLATURE INTENDS TO DIFFERENTIATE EMPLOYEES AND EMPLOYER CONTRIBUTION, THE N THERE WOULD HAVE BEEN TWO DUE DATES LIKE IN THE CASE OF INCOME TAX ACT. THEREFORE, FROM THE ABOVE, IT IS CLEAR THAT THE PROVIDENT FUND ACT DOES NOT DIFFERENTIATE EMPLOYEES AND EMPLOYER CONTRIBUTION AND CONTRIBUTION MEANS BOTH EMPLOYEES AND EMPLOYER CONT RIBUTION UNDER THE PF SCHEME. 7. SECTION 43B OF THE ACT PROVIDES FOR CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS. SUB CLAUSE (B) OF SECTION 43B OF THE ACT COVERS ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF 19 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES. THE PROVISO TO SECTION PROVIDES THAT ANY SUM PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT , THEN NO DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. A CAREFUL CONSIDERATION OF SECTION 43B OF THE ACT, IT IS CLEAR THAT AN EXTENSION IS GRANTED TO THE ASSESSEE TO MAKE THE PAYMENT OF PF CONTRIBUTIONS OR ANY OTHER FUND TILL T HE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT. THEREFORE, IN OUR OPINION, THERE IS NO DIFFERENCE BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION TO PF AND IF SUCH CONTRIBUTION IS MADE ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN DEDUCTION IS TO BE ALLOWED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. 8. THE HONBLE KARNATAKA HIGH COURT, IN THE CASE OF ESSAE TERAOKA (P) LTD. VS. DCIT 366 ITR 408 TOOK THE VIEW THAT THE WORD CONTRIBUTION OCCURRING IN SECTION 43B OF THE ACT WOULD INCLUDE EMPLOYEES CONTRIBUTION TO PF IN THE LIGHT OF THE DEFINITION OF THE WORD CONTRIBUTION AS PER THE PROVISIONS OF SECTION 2(C) OF THE PF ACT. AS PER THE SAID SECTION, CONTRIBUTION WOULD MEAN BOTH EMPLOYERS CONTRIBUTION A ND EMPLOYEES CONTRIBUTION. ACCORDINGLY, IT WAS HELD THAT THE PROVISIONS OF SECTION 43B OF THE ACT ALLOWING DEDUCTION FOR PAYMENT MADE BEFORE THE DUE DATE OF FILING OF INCOME TAX RETURN CANNOT BE IGNORED. SIMILARLY, THE ITAT, HYDERABAD TRIBUNAL IN THE CASE OF TETRA SOFT (INDIA) PVT. LTD. VS. ACIT (2015) 40 ITR (TRIB) 470 HELD THAT WHEN ASSESSEE REMITTED EMPLOYEES CONTRIBUTION TO PF WITHIN DUE DATE OF FILING RETURN OF INCOME U/S 139(1) OF THE ACT, AMOUNT OF EMPLOYEES CONTRIBUTION TO PF CANNOT BE DISALLOWED . SIMILAR VIEW WAS UPHELD BY THE CHENNAI BENCH OF THE ITAT, IN THE CASE OF ACIT VS. FARIDA SHOES PVT. LTD. (2016) 46 CCH 29. THE COORDINATE BENCH HELD THAT IF ASSESSEE HAD NOT DEPOSITED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND UP TO THE DUE DATE AS P RESCRIBED UNDER RELEVANT STATUTE, BUT BEFORE DUE DATE OF FILING OF RETURN NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT. IN THE CASE OF CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. 35 TAXMAN 616, THE HONBLE HIGH CO URT OF RAJASTHAN, AFTER REFERRING TO THE APEX COURT DECISION IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. 319 ITR 306 & CIT VS. VINAY CEMENT LTD. HELD THAT THE DEDUCTIONS SHOULD BE ALLOWED FOR THE PAYMENT OF EMPLOYEES CONTRIBUTION MADE BEFORE THE DUE DATE OF FILING OF RETURN. SIMILARLY, IN THE CASE OF CIT VS. STATE BANK OF BIKANER, THE HONBLE RAJASTHAN HIGH COURT HELD THAT CONTRIBUTION PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACT, BUT BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT CANNOT BE DISALLOWED U/S 43B OF THE ACT AND OR U/S 36(1)(VA) OF THE ACT. 9. THE LD. D.R. RELIED UPON THE DECISION OF HONBLE HIGH COURT OF KERALA, IN THE CASE OF CIT VS. MERCHEM LTD, REPORTED IN (2015) 378 ITR 443 AND SUBMITTED THAT EMPLOYEES CONTRIBUTION TO PROVID ENT FUND IS ALLOWED AS DEDUCTION, IF THE SAME IS DEPOSITED ON OR BEFORE THE DUE DATE SPECIFIED 20 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) UNDER THE PROVISIONS OF PROVIDENT FUND ACT. THE D.R. ALSO RELIED UPON THE DECISION OF GUJARAT HIGH COURT, REPORTED IN (2014) 366 ITR 170, WHEREIN THE HONBLE GUJ ARAT HIGH COURT HELD THAT SINCE ASSESSEE HAD NOT DEPOSITED SAID CONTRIBUTION TO RESPECTIVE FUND ACCOUNT ON THE DATE AS PRESCRIBED IN EXPLANATION TO SECTION 36(1)(VA) OF THE ACT, DISALLOWANCE MADE BY THE A.O. WAS JUST AND PROPER. THOUGH, THE D.R. RELIED UPO N CERTAIN JUDICIAL PRECEDENTS WHICH ARE IN FAVOUR OF THE REVENUE, IN VIEW OF THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS. M/S. VEGETABLES PRODUCTS LTD. REPORTED IN 88 ITR 192, WHEREIN THE HONBLE SUPREME COURT HELD THAT IF TWO REASONABLE C ONSTRUCTIONS OF A TAXING PROVISION ARE POSSIBLE THAT CONSTRUCTION WHICH FAVOURS THE ASSESSEE MUST BE ADOPTED, THEREFORE, BY RESPECTFULLY FOLLOWING THE DECISION OF SUPREME COURT, WHEN DIVERGENT VIEWS ARE EXPRESSED BY DIFFERENT JUDICIAL FORUMS, WE PREFER TO FOLLOW THE VIEWS EXPRESSED BY THE COURTS WHICH ARE IN FAVOUR OF THE ASSESSEE. 10. CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CASE AND ALSO FOLLOWING THE JUDICIAL PRECEDENTS AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO DISTINCTION BETWEEN EM PLOYEES AND EMPLOYER CONTRIBUTION TO PF, AND IF THE TOTAL CONTRIBUTION IS DEPOSITED ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN NO DISALLOWANCE CAN BE MADE TOWARDS EMPLOYEES CONTRIBUTION TO PROVIDENT FUND. THE CIT (A) AFTER CONSIDERING THE RELEVANT DETAILS RIGHTLY DELETED THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 3 9 . THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE COORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. (SUPRA), WE FIND NO REASON TO INTERFERE WITH THE ORDER PASSED BY THE LD.CIT(A). THUS, THIS APPEAL FILE D BY THE REVENUE IS DISMISSED. C.O.NO. 08/VIZ/2019 40 . SO FAR AS CROSS OBJECTION FILED BY THE ASSESSEE IS CONCERNED, IT IS ONLY SUPPORTIVE TO THE ORDER OF THE LD. CIT(A). IN VIEW OF OUR 21 ITA NO S . 502 & 503 /VIZ/2018 & C.O.NOS. 8 & 9/VIZ/2019 ( M/S. DELTA PAPER MILLS PVT. LTD. ) DECISION IN ABOVE APPEAL, THIS CROSS OBJECTION HAS BECOME INFRUCTUOUS AND IS DISMISSED ACCORDINGLY. 41 . IN THE RESULT, APPEALS FILED BY THE REVENUE AS WELL AS CROSS OBJECTIONS FILED BY THE ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON TH IS 2 0 T H DAY OF MAR CH , 201 9 . S D / - S D / - ( D.S. SUNDER SINGH ) ( V. DURGA RAO ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED : 2 0 T H MARCH , 201 9 . VR/ - COPY TO: 1. THE ASSESSEE M/S. DELTA PAPER MILLS PVT. LTD., D.NO. 4 - 1, VENDRA, PALAKODERU, W.G. DISTRICT. 2. THE REVENUE ACIT , CIRCLE - 1(1), RAJAMAHENDRAVARAM. 3. THE PR. CIT - RAJAHMUNDRY. 4. THE CIT(A) - 11, HYDERABAD. 5. THE D.R . , VISAKHAPATNAM. 6. GUARD FILE. BY ORDER (VUKKEM RAMBABU) SR. PRIVATE SECRETARY, ITAT, VISAKHAPATNAM.