ACIT, New Delhi V. M/s. Vipul Facility Management Pvt. Ltd., New Delhi

ITA 1020/DEL/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 65320 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-09-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Next Hearing Date: 06-09-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 29-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: RAJESH ARORAAR
• Section: 43B; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D ELHI H BENCH BEFORE SHRI RAJPAL YADAV, J M & SHRI A.N. PAHUJA, AM ITA NO. 1 0 20 / DEL / 2012 ASSESSMENT YEAR:2008-09 DATE OF HEARING:15.7.11 DATE OF DRAFTING:20.7.11 ACIT CENTRAL CIRCLE-2 ROOM NO.323,3 RD FLOOR,ARA CENTRE,E-2,JHANDEWALAN EXTENSION,NEW DELHI V/S . M/S VIPUL FACILITY MANAGEMENT PVT. LTD.,14/185- 14/186,GROUND FLOOR,MAIN SHIVALIK,MALVIYA NAGAR,NEW DELHI [PAN:AA B C V4229N ] (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI RAJESH ARORA,AR REVENUE BY:- SHRI SANJAY KUMAR JAIN, DR DATE OF HEARING:- 06-09-2012 DATE OF PRONOUNCEMENT:- 06-09-2012 O R D E R A.N.PAHUJA:- THIS APPEAL BY THE REVENUE FILED ON 29.2.2012 AGAI NST AN ORDER DATED 5.12.2011 OF THE LD. CIT (APPEALS)-III, NEW DELHI, RAISES THE FOLLOWING GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD.CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF .` ` 33,111,56/-MADE BY THE ASSESSING OFFICER ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION OF ESIC & PF. 2. THE ORDER OF THE CIT(A)IS ERRONEOUS AND IS NOT T ENABLE ON FACTS AND IN LAW. 3. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY/ALL OF THE GROUNDS OF THE APPEAL BEFORE OR DURING THE COURSE O F THE HEARING OF THE APPEAL. 2. FACTS, IN BRIEF, AS RELEVANT ORDERS ARE THAT E-R ETURN DECLARING INCOME OF ` 1,50,37,034/- FILED ON 30 TH NOVEMBER, 2008 BY THE ASSESSEE, PROVIDING MANAGEMENT SERVICES FOR LARGE BUILDINGS, HOSPITALS, FACTORIES ETC., WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOTICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) ISSUED ON 16 .3.2009. DURING THE COURSE OF ITA NO.1020/DEL/2012 PAGE 2 ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOTICED THAT THE ASSESSEE DEPOSITED AN AMOUNT OF 33,11,156/-,DETAILE D IN PARA 5 OF THE ASSESSMENT ORDER ON ACCOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PF, BEYOND THE DUE DATE PRESCRIBED IN THE RELEVANT ENACTMENT. SINCE THE AFO RESAID CONTRIBUTION WAS DEPOSITED BEYOND THE DUE DATE STIPULATED UNDER THE PF ACT, TH E AO DISALLOWED THE AMOUNT OF 33,11,156/-,IN TERMS OF PROVISIONS OF SECTION 2(24) (X) READ WITH SEC. 36(1)(VA)OF THE ACT. 3. ON APPEAL, THE LD. CIT(A),AFTER HAVING A REMAND REPORT FROM THE AO AND COMMENTS OF THE ASSESSEE THEREON, ALLOWED THE CLAIM OF THE ASSESSEE IN TERMS OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CI T VS. ALMIL LTD., 321 ITR 508 (DELHI). 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(APPEALS). THE LD. DR SUPPORTED THE ORDER OF THE AO WHILE THE LD. AR ON BEHALF OF ASSESSEE RELIED UPON THE DECISIONS OF HON BLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD.(2009) 319 ITR 306 (S C) AND CIT VS. VINAY CEMENT LTD.,213CTR 268(SC) BESIDES DECISIONS IN CIT VS. DH ARMENDRA SHARMA,297 ITR 320(DEL),CIT VS. PM ELECTRONICS LTD.,313 ITR 161(DE L.)AND ALIMIL LTD.& OTHERS(SUPRA). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS. AS REGARDS EMPLOYE RS AND EMPLOYEES CONTRIBUTION TOWARDS PF , HONBLE DELHI HIGH COURT IN THE CASE O F CIT V. P.M. ELECTRONICS LTD., 220 CTR 635 (DELHI) WHILE RELYING UPON THE DECISIO N OF HONBLE APEX COURT IN THE CASE OF CIT VS. VINAY CEMENT LTD.,213 CTR (SC) 268 , CONCURRED WITH THE VIEW TAKEN BY THE HONBLE MADRAS HIGH COURT IN NEXUS COM PUTER (P) LTD.,219 CTR(MAD) 54 THAT EMPLOYER/EMPLOYEES CONTRIBUTION TOWARDS P ROVIDENT FUND PAYMENTS MADE AFTER THE DUE DATE PRESCRIBED UNDER THE EMPLOYEES PROVIDENT FUND ACT AND RULES MADE THEREUNDER AND BEFORE THE DUE DATE FOR FURNISH ING THE RETURN OF INCOME UNDER SUB SEC. 1 OF SEC. 139 OF THE ACT, ARE ALLOWABLE UN DER S.36(1)(VA) READ WITH SEC. 2(24(X) AND SEC. 43B OF THE ACT. ITA NO.1020/DEL/2012 PAGE 3 5.1 MOREOVER, RECENTLY HONBLE APEX COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD., 319 ITR 306 (SC) HELD THAT THE OMISSION OF TH E SECOND PROVISO TO SECTION 43B OF THE ACT BY THE FINANCE ACT, 2003, OPERATED, RETROSP ECTIVELY, WITH EFFECT FROM, APRIL 1, 1988 AND NOT PROSPECTIVELY FROM APRIL 1, 2004. HON BLE COURT OBSERVED THAT EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, THE ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF THE CO NTRIBUTION STOOD CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUNDS AC T. THIS CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATION MADE TO THE FINANCE MINISTR Y, ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDME NT WAS MADE APPLICABLE WITH EFFECT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATI VE IN NATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1988.IT W AS CLARIFIED THAT WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENC ES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMI SSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. 5.2 HONBLE KARNATAKA HIGH COURT IN THEIR DECIS ION IN ANZ INFORMATION TECHNOLOGY P LTD., 318 ITR 123 WHILE FOLLOWING THEIR EARLIER D ECISION IN CIT VS. SABARI ENTERPRISES,298 ITR 141(KAR.) CONCLUDED THAT DEPOS ITS MADE BY THE EMPLOYER OF THE EMPLOYEES CONTRIBUTION BELATEDLY AND CONTRIBUTION TOWARDS ESI & PF UNDER THE RELEVANT ENACTMENTS CAN NOT BE TREATED AS INCOME OF THE ASSESSEE U/S 36(1)(VA) READ WITH SEC. 2(24)(X) IN VIEW OF PROVISIONS OF S EC. 43B OF THE ACT. 5.3 HONBLE DELHI HIGH COURT IN ANOTHER DECISION DATED 23.12.2009 IN CIT VS. AIMIL LTD.(DELHI)IN ITA NO. 1063/2008 NOW REPORTED IN 321 ITR 508 OBSERVED THAT SEC. 2(24)(X) PROVIDES THAT AMOUNTS RECEIVED BY AN ASSESSEE FROM EMPLOYEES TOWARDS PF CONTRIBUTIONS ETC. SHALL BE INCOME. S. 36 (1) (VA) PROVIDES THAT IF SUCH SUMS ARE CONTRIBUTED TO THE EMPLOYEES ACCOUNT IN TH E RELEVANT FUND ON OR BEFORE THE DUE DATE SPECIFIED IN THE PF LEGISLATION, THE ASSES SEE SHALL BE ENTITLED TO A DEDUCTION. THE SECOND PROVISO TO S. 43B (B) PROVIDE D THAT ANY SUM PAID BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO A NY PROVIDENT FUND SHALL BE ALLOWED AS A DEDUCTION ONLY IF PAID ON OR BEFORE TH E DUE DATE SPECIFIED IN 36(1)(VA) OF THE ACT. AFTER THE OMISSION OF THE SECOND PROVISO W .E.F 1.4.2004, THE DEDUCTION IS ALLOWABLE UNDER THE FIRST PROVISO IF THE PAYMENT IS MADE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME. THE HONBLE HIGH C OURT WHILE CONSIDERING WHETHER ITA NO.1020/DEL/2012 PAGE 4 THE BENEFIT OF S. 43B CAN BE EXTENDED TO EMPLOYEES CONTRIBUTION AS WELL, WHICH ARE PAID AFTER THE DUE DATE UNDER THE PF LAW BUT BEFORE THE DUE DATE FOR FILING THE RETURN, HELD THAT ( I) THOUGH THE REVENUE HAS ARGUED THAT A DISTINCTION IS TO BE MADE BETWEEN EMPLOYERS CONTRIBUTION AND EMPLOYEES CONTRIBUT ION AND THAT EMPLOYEES CONTRIBUTION BEING IN THE NATURE OF TRUST MONEY IN THE HANDS OF THE ASSESSEE CANNOT BE ALLOWED AS A DEDUCTION IF NOT PAID ON OR BEFORE THE DUE DATE SPECIFIED IN THE PF ETC LAW, THE SCHEME OF THE ACT IS THAT EMPLOYEES C ONTRIBUTION IS TREATED AS INCOME U/S 2 (24) (X) ON RECEIPT BY THE ASSESSEE AND ALLOW ED AS A DEDUCTION U/S 36 (1) (VA) ON MAKING DEPOSIT WITH THE CONCERNED AUTHORITIES. S . 43B (B) STIPULATES THAT SUCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAYME NT; (II) THE QUESTION AS TO WHEN ACTUAL PAYMENT SHOULD BE MADE IS ANSWERED BY VINAY CEMENTS 213 CTR 268 WHERE THE DELETION OF THE SECON D PROVISO TO S. 43B W.E.F 1.4.2004 WAS HELD APPLICABLE TO EARLIER YEARS AS WE LL. AS THE DELETION OF THE 2ND PROVISO IS RETROSPECTIVE, THE CASE HAS TO BE GOVERN ED BY THE FIRST PROVISO. DHARMENDRA SHARMA 297 ITR 320 (DEL) & P.M. ELECTRON ICS 313 ITR 161 (DELHI) FOLLOWED; (III) IF THE EMPLOYEES CONTRIBUTION IS NOT DEPOSIT ED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOY ER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR W HICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. T HEREFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJ ECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS THE INCOME-TAX ACT IS CONC ERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE TH E RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN IN VINAY CEMENT. 5.4 IN VIEW OF THE FOREGOING AND IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS , WE HAVE NO HESITATION IN HOLDING THAT T HE EMPLOYEES CONTRIBUTION TOWARDS PF PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FI LING OF RETURN U/S 139(1) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CONSIDERATION IS ADMI SSIBLE. CONSEQUENTLY, FINDINGS OF THE LD. CIT(A) ARE UPHELD . WITH THESE DIRECTIONS, GROUND NO. 1 IN THE APPEAL IS DISMISSED. 6. GROUND NO.2 IN THE APPEAL BEING GENERAL IN NATU RE, DOES NOT REQUIRE ANY SEPARATE ADJUDICATION WHILE NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE US IN TERMS OF RESIDUARY GROUND NO.3 IN THE APPEAL, ACCORDINGLY, T HESE GROUNDS ARE DISMISSED. 7. NO OTHER PLEA OR ARGUMENT WAS RAISED BEFORE US . ITA NO.1020/DEL/2012 PAGE 5 8. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (RJPAL YADAV) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) COPY OF THE ORDER FORWARDED TO :- 1. M/S VIPUL FACILITY MANAGEMENT PVT. LTD.,14/185- 14/186,GROUND FLOOR,MAIN SHIVALIK,MALVIYA NAGAR,NEW DELHI 2. ACIT CENTRAL CIRCLE-2 ROOM NO.323,3 RD FLOOR,ARA CENTRE,E- 2,JHANDEWALAN EXTENSION,NEW DELHI 3. CIT CONCERNED 4. CIT (APPEALS)-III, NEW DELHI 5. DR, ITAT,H BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI