ACIT CIR 4(2), MUMBAI V. GRASIM BHIWANI TEXTILES LTD, MUMBAI

ITA 113/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 3853 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 4 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-05-2013
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: G
• Next Hearing Date: 16-05-2013
• Assessment Year: 2008-2009
• Appeal Filed On: 05-01-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: D K SINHA

Judgement Text

ITA NO. 8526 /M/2011 & 113/M/2012 GRASIM BHIWANI TEXTILES LTD. 1 | PA GE IN THE INCOME TAX APPELLATE TRIBUNAL 'G' BENCH, MUMBAI BEFORE SHRI RAJENDRA SINGH, ACCOUNTANT MEMBER AND SHRI AMIT SHUKLA, JUDICIAL MEMBER ITA NO 8526/MUM/2011 (ASSESSMENT YEAR; -2008-09) GRASIM BHIWANI TEXTILES LTD. 409, COTTON EXCHANGE BUILDING KALBADEVI ROAD, MUMBAI 400 002. PAN;- AACCG9347F VS. ASST. CIT, CIRCLE 4(2), 6 TH FLOOR, ROOM NO. 642. AAYKAR BHAVAN MUMBAI APPELLANT RESPONDENT ITA NO 113/MUM/2012 (ASSESSMENT YEAR; -2008-09) ASST. CIT, CIRCLE 4(2), 6 TH FLOOR, ROOM NO. 642. AAYKAR BHAVAN MUMBAI. VS. GRASIM BHIWANI TEXTILES LTD. 409, COTTON EXCHANGE BUILDING KALBADEVI ROAD, MUMBAI 400 002. PAN;- AACCG9347F APPELLANT RESPONDENT ASSESSEE BY: SHRI MADHUR AGRAWAL. DEPARTMENT BY: SHRI D.K. SINHA DATE OF HEARING: 16/5/2013 DATE OF PRONOUNCEMENT: 16/ 5 /2013 O R D E R PER RAJENDRA SINGH A.M. THESE CROSS APPEALS ARE DIRECTED AGAINST THE ORDER DATED 14.10.2011 OF CIT (A)A FOR THE ASSESSMENT YEAR 2008 -09. THE DISPUTES RAISED IN THESE APPEALS RELATE TO DISALLOWANCE OF E XPENSES U/S 40 (A) (IA) AND ADDITIONS MADE ON ACCOUNT OF BELATED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND WELFARE FUND. ITA NO. 8526 /M/2011 & 113/M/2012 GRASIM BHIWANI TEXTILES LTD. 2 | PA GE 2. WE FIRST TAKE UP THE DISPUTE RELATING TO DISALLO WANCE ON ACCOUNT OF RENT PAID TO SISTER CONCERN U/S 40 (A) (IA) AMOU NTING TO RS. 1,42,662/-. THE AO NOTED THAT THE ASSESSEE HAD PAID RENT OF RS. 1,43,662/- TO M/S CRAFTED CLOTHING PVT. LTD., ON WH ICH NO TAX HAD BEEN DEDUCTED AT SOURCE. THE ASSESSEE EXPLAINED THAT THE AMOUNT PAID BY THE ASSESSEE WAS REIMBURSEMENT OF EXPENSES TO M/S CRAFT ED CLOTHING PVT. LTD., A SISTER CONCERN WHICH WAS THE TENANT AND WHI CH WAS LIBLE FOR DEDUCTING THE TAX AT SOURCE. THE AO, HOWEVER, DID N OT ACCEPT THE EXPLANATION GIVEN AND HELD THAT THE ASSESSEE WAS LI ABLE TO DEDUCT TAX AND ACCORDINLGY DISALLOWED THE AMOUNT OF RS. 1,43, 662/-. 2.1 IN APPEAL THE ASSESSEE SUBMITTED THAT IT WAS T HE SISTER CONCERN OF THE COMPANY WHO WAS TENANT OF THE PREMISES AND WHO HAD DEDUCTED TAX ON THE PAYMENT OF RENT. THE ASSESSEE HAD ONLY REIMB URSED THE COST OF USING THE PART OF PREMISES TO THE SISTER CONCERN ON WHICH NO TAX WAS REQUIRED TO BE DEDUCTED. CIT (A) AGREED WITH THE AS SESSEE THAT REIMBURSEMENT OF RENT BY THE ASSESSEE TO THE SISTER CONCERN WAS NOT IN THE NATURE OF PAYMENT OF RENT AND, THREFORE, THE PR OVISIONS OF SECTION 194I WERE NOT APPLICABLE. CIT (A) ACCORDINLGLY DELE TED THE ADDITIONS MADE BY AO, AGGRIEVED BY WHICH THE REVENUE IS IN AP PEAL BEFORE TRIBUNAL. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE ISSUE IS RAGAR DING DISALLOWANCE OF EXPENSES INCURRED BY THE ASSESSEE RELATING TO USE O F PART OF PREMISES TAKEN BY THE SISTER CONCERN ON RENT. THE SISTER CON CERN WAS THE TENANT OF THE PREMISES WHO HAD DEDUCTED TAX IN RESPECT OF RENT TO THE LANDLORD. THE ASSESSEE HAD ONLY REIMBURSED THE CHARGES RELATI NG TO USE OF PART OF THE PREMISES ON ACTUAL COST BASIS. THE CLAIM OF THE ASSESSEE THAT THE EXPENDITURE INCURRED BY THE ASSESSEE WAS ONLY IN TH E NATURE OF REIMBURSEMENT HAS NOT BEEN CONTROVERTED BY THE AUTH ORITIES BELOW OR BEFORE US. THEREFORE, IN OUR VIEW THERE IS NO INCOM E ELEMENT INVOLVED IN REIMBURSEMENT OF EXPENSES AND, THREREFORE NO TAX IS REQUIRED TO BE ITA NO. 8526 /M/2011 & 113/M/2012 GRASIM BHIWANI TEXTILES LTD. 3 | PA GE DEDUCTED. WE, THEREFORE, SEE NO INFIRMITY IN THE CO NCLUSION DRAWN BY CIT (A) THAT NO DISALLOWANCE WAS CALLED FOR. WE ACC ORDINGLY CONFIRM THE ORDER OF CIT (A) ON THIS POINT. 3. THE SECOND DISPUTE IS REGARDING ADDITION MADE ON ACCOUNT OF DISALLOWANCE OF PF CONTRIBUTION AND CONTRIBUTION TO WELFARE FUND AGGREGATING TO RS. 17,77,545/-. THE AO NOTED THAT C ONTRIBUTION TO PF AND WELFARE FUND HAD NOT BEEN DEPOSITED WITHIN DUE DATE AND, THEREFORE, HE ADDED THE SAME AS INCOME U/S 2(24 (X) (READ WITH SECTION 36 (1) (VA). 3.1 IN APPEAL, CIT (A) NOTED THAT CONTRIBUTION TO T HE PF AMOUNTING TO RS. 17,52,385/- HAD BEEN DEPOSITED WITHIN THE GRACE PERIOD OF FIVE DAYS AFTER THE DUE DATE AND, THEREFORE, THE SAME WAS NOT REQUIRED TO BE TREATED AS INCOME. HE ACCORDINLGY DELETED THE ADDIT ION OF RS. 17,52,385/-. REGARDING CONTRIBUTION TO WELFARE FUND OF RS. 25,160/-. CIT (A) NOTED THAT THE SAME HAD BEEN DEPOSITED AFTE R THE GRACE PERIOD AND, THREFORE, HE CONFIRMED THE ADDITION OF RS. 25, 160/-. AGGRIEVED BY THE DECISION OF CIT (A), BOTH THE PARTIES ARE IN AP PEAL. 4. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE REC ORDS AND CONSIDERED THE MATTER CAREFULLY. THE EMPLOYEES CON TRIBUTION TO PF IF DEPOSITEED WITHIN THE GRACE PERIOD OF FIVE DAYS OF THE DUE DATE CANNOT BE ADDED AS INCOME UNDER THE PROVISION OF SECTION 3 6 (1) (VA). THERE IS NO DISPUTE IN THIS CASE THAT THE ASSESSEE HAD DEPOS ITED THE CONTRIBUTION WITHIN THE GRACE PERIOD OF FIVE DAYS. THEREFORE, OR DER OF CIT(A) DELETING THE ADDITION OF RS.17,52,385/- IS UPHELD. AS REGAR DS CCONTIBUTION TO WELFARE FUND, THE SAME HAD BEEN DEPOSITED AFTER THE GRACE PERIOD BUT WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME A ND, THEREFORE, SUCH CONTRIBUTION AS PER THE AMENDED PROVISIONS OF LAW I S NOT REQUIRED TO BE ADDED TO THE TOTAL INCOME. WE, THEREFORE, SET ASIDE THE ORDER OF CIT (A) IN RELATION TO THE CONTRIBUTION TO WELFARE FUND AND DE LETE THE ADDITION MADE. ITA NO. 8526 /M/2011 & 113/M/2012 GRASIM BHIWANI TEXTILES LTD. 4 | PA GE 5. IN THE RESULT APPEAL OF THE ASSESSEE IS ALLOWED WHEREAS THAT BY THE REVENUE IS DISMISSED. ORDER PRONOUCNED IN THE OPEN COURT TODAY I.E 16.5.2 013. SD/- SD/- (AMIT SHUKLA ) (RAJENDRA SINGH) JUDICIAL MEM BER ACCOUNTANT MEMBER MUMBAI, DATED 16TH MAY, 2013. SK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. THE DR, G BENCH, ITAT, MUMBAI BY ORDER ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCHES, MUMBAI