Minilec India Private Limited, Pune V. Deputy Commissioner of Income tax, Pune

ITA 1147/PUN/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7604 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Next Hearing Date: 10-06-2019
• Assessment Year: 2008-2009
• Appeal Filed On: 09-05-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Earning of tax free income; Condonation of delay
• Section: 43B; 14A; 6

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH SMC, PUNE BEFORE SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER . / ITA NO.1147/PUN/2017 / ASSESSMENT YEAR : 2008-09 MINILEC INDIA PRIVATE LIMITED, 1073/1-2-3, AT & POST PIRANGUT, PUNE 412 111. PAN : AABCM2682E . / APPELLANT V/S THE DY.COMMISSIONER OF INCOME TAX , CIRCLE 11(2), PUNE. . / RESPONDENT ASSESSEE BY : SHRI KISHORE PHADKE. REVENUE BY : SHRI SHASHANK DEOGADKAR / ORDER PER ANIL CHATURVEDI, AM : 1. THIS APPEAL FILED BY ASSESSEE IS EMANATING OUT OF THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) 1, PUNE DATED 16.04 .2012 FOR A.Y. 2008-09. 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON RE CORD ARE AS UNDER :- ASSESSEE IS A COMPANY STATED TO BE ENGAGED IN THE BUS INESS OF MANUFACTURING OF ELECTRONIC PRODUCTS AND BIO-DIESEL. ASSES SEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2008-09 ON 21.04.2009 / DATE OF HEARING : 07.08.2019 / DATE OF PRONOUNCEMENT: 16.10.2019 2 DECLARING TOTAL INCOME AT RS.31,92,770/-. THE CASE WAS SELE CTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143 (3) OF THE ACT VIDE ORDER DT.31.12.2010 AND THE TOTAL INCOME WAS DETERM INED AT RS.49,43,423/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE C ARRIED THE MATTER BEFORE LD.CIT(A), WHO VIDE ORDER DATED 16.04.2012 (IN APPEAL NO.PN/CIT(A)-I/DCIT CIR.11(2) PN/345/10-11) DISMISSED THE A PPEAL OF ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW IN APPEAL AND HAS RAISED THE FOLLOWING GROUNDS : 1. THE LEARNED AO AND LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT GRANTING THE DEDUCTION OF EMPLOYEES' CONTRIBUTION T O PROVIDENT FUND, AMOUNTING TO RS. 4 , 81,077/- U/S 36(1)(VA) OF THE ITA, 1961, WITHOUT APPRECIATING THE FACT THAT THE SAID PAYMENT WAS WIT HIN THE DUE DATE SPECIFIED BY THE SAID ACT , CONSIDERING THE GRACE PERIOD FOR PAYMENT . 2. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN SUSTAINING THE DISALLOWANCE OF RS . 1,20,573/- , U/S 36(1)(VA) ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEE'S CONTRIBUTION TO PROVIDENT FUN D WITHOUT APPRECIATING THE FACT THAT IT WAS PAID BEFORE THE D UE DATE OF FILING OF RETURN OF INCOME. THE LEARNED AO OUGHT TO HAVE GRAN TED DEDUCTION U/S 43B OF THE ITA, 1961 . 3. THE LEARNED AO ERRED IN LAW AND ON FACTS I N MAKING AND LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN CONFIRMING THE DISALLOWANCE OF RS . 90,105/- PERTAINING TO EXPENDITURE ON EXEMPT DIVIDE ND INCOME, U/S 14A OF THE ITA, 1961 R.W.R. 8D THE IT RULES, 1962. THE LEARNED AO OUGHT TO HAVE APPRECIATED THAT THE APPELLANT HAS SUFFICIENT OWN FUNDS FOR MAKING THE INVESTMENTS WHICH GENERATE EXEMPT INCOME . 4. WITHOUT PREJUDICE TO GROUND NO. 4 ABOVE, THE LEA RNED AO AND LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN NOT RESTRICTING THE DISALLOWANCE U/S 14A TO THE EXEMPT INCOME EARNED I . E. RS. 81,967/- 5. THE LEARNED CIT(A) ERRED IN LAW AND ON FACTS IN SUSTAINING THE DISALLOWA N CE AMOUNT I NG TO RS. 2,00,947/ - ON ACCOUNT OF INTEREST, ON THE ANALOGY THAT THE BORROWED FUNDS ARE DIVERTED FOR NO N BUSINESS CONSIDERATION. THE LEARNED CIT(A) OUGHT TO HAVE APP RECIATED THAT NON- INTEREST BEARING FUNDS ARE FAR MORE THAN NON- INTER EST BEARING ADVANCES , AND THUS NO DISALLOWANCE IS WARRANTED. 3. BEFORE ME, AT THE OUTSET, LD.A.R. SUBMITTED THAT HE DO ES NOT WISH TO PRESS GROUND NOS.3 TO 5. HENCE, THE SAME ARE DISMISSED AS NOT PRESSED. THE REMAINING GROUNDS FOR ADJUDICATION I.E ., GROUNDS 1 AND 2 BEING INTER-CONNECTED ARE CONSIDERED TOGETHER. 3 4. THE CASE FILE REVEALS THAT THERE IS A DELAY OF 1644 DAYS IN FILING THE PRESENT APPEAL. LD.A.R. FILED THE SWORN AFFIDAVIT OF MANAGE R (ACCOUNTS) OF ASSESSEE COMPANY STATING THE REASONS FOR THE DELAY IN FILING THE APPEAL. HE HAS ALSO FILED THE AFFIDAVIT OF THE MANAGIN G DIRECTOR OF THE COMPANY EXPLAINING THE REASONS WHICH HAS LEAD TO THE DELAY IN FILING THE PRESENT APPEAL. HE FURTHER SUBMITTED TH AT THE DELAY IN FILING THE PRESENT APPEAL WAS NOT ON ACCOUNT OF MALAFIDE INTENTION. HE SUBMITTED THAT THERE WAS FREQUENT TURNOVER OF EMPLOY EES HANDLING TAXATION RELATED MATTERS AND DUE TO MULTIPLICITY OF TAX PR OCEEDINGS FOR A.Y. 2008-09, CONFUSION PREVAILED OVER THE ASSESSEES STAFF. IN SUPPORT OF THE CONTENTION OF MULTIPLICITY OF PROCEEDINGS, HE POINTED T O THE CHART OF EVENTS SHOWING VARIOUS PROCEEDINGS AT DIFFERENT LE VELS. HE FURTHER SUBMITTED THAT ASSESSEE HAD FILED ALL THE APPEALS BEFORE THE APPROPRIATE AUTHORITIES WITHIN THE SPECIFIED TIME AND IT WA S THE ONLY CAPTIONED APPEAL WHERE THERE WAS DELAY. HE FURTHER SU BMITTED THAT WHEN SUBSTANTIAL JUSTICE WAS PITTED AGAINST TECHNICALITY, TH E CAUSE OF JUSTICE SHOULD BE PREFERRED AND FOR THE AFORESAID PROPOSIT ION, HE ALSO PLACED RELIANCE ON CERTAIN DECISIONS. HE PRAYED THAT THE DELAY IN FILING THE APPEAL BE CONDONED. THE LD. D.R. OBJECTED TO THE PRAYER OF THE LD.A.R. SEEKING CONDONATION OF DELAY. HE SUBMITTED THAT THE REASONS STATED FOR THE DELAY IN THE AFFIDAVIT ARE NOT AT ALL SUSTAIN ABLE AND HE ALSO RELIED ON THE DECISION IN THE CASE OF VAMA APPARELS (INDIA) (P.) LTD., VS. ACIT REPORTED IN (2019) 102 TAXMANN.COM 398 (BO M). HE THUS SERIOUSLY OBJECTED TO THE APPLICATION FOR CONDONATION OF DELAY . 5. LD.A.R. IN THE REJOINDER ON THE MERITS OF THE GROUND IN APPEAL, SUBMITTED THAT THERE WAS DELAY IN DEPOSITING OF EMPLOYEES 4 CONTRIBUTION OF P.F., BUT HOWEVER THE AMOUNTS WERE DEPOS ITED WITH THE APPROPRIATE AUTHORITIES BEFORE THE FILING OF RETURN OF INCOME. IN SUCH A SITUATION, HE SUBMITTED THAT THE ISSUE IS COVERED IN AS SESSEES FAVOUR BY THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL REPORTED IN 368 ITR 749. HE THEREFORE SUBM ITTED THAT CONSIDERING THE TOTALITY OF THE FACTS, THE DELAY IN FILING THE APPEAL BE CONDONED. 6. ON THE ISSUE OF CONDONATION OF DELAY OF APPEAL, I HAVE G ONE THROUGH THE SWORN AFFIDAVIT FILED BY THE ASSESSEE AND HEA RD THE LD.A.R. IT IS AN UNDISPUTED FACT THAT THERE WAS DELAY OF 1 644 DAYS. IT IS ALSO A FACT THAT ASSESSEE HAS POINTED OUT THAT THERE WAS MULTIPLICITY OF PROCEEDINGS FOR THE YEAR UNDER CONSIDERATION. ASSESSE E HAS ALSO FILED AFFIDAVIT OF THE MANAGER (ACCOUNTS) AND THE MANAGING DIR ECTOR OF THE ASSESSEE COMPANY STATING THE REASONS INCLUDING FREQU ENT EMPLOYEE TURNOVER HANDLING THE TAXATION RELATED MATTERS. ON MER ITS, IT IS LD.A.R.S CONTENTION THAT THE ISSUE IS COVERED IN ASSESSEE S FAVOUR BY THE DECISION OF HONBLE BOMBAY HIGH COURT. 7. I FIND THAT VARIOUS COURTS HAVE HELD THAT WHEN SUBST ANTIAL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EA CH OTHER, THE CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED A ND THAT RENDERING SUBSTANTIAL JUSTICE SHOULD BE THE PARAMOUNT CO NSIDERATION RATHER THAN REJECTING ON HYPER-TECHNICALITIES. AT THIS MO MENT, IT WOULD BE RELEVANT TO REFER TO THE OBSERVATIONS MADE BY HONB LE BOMBAY HIGH COURT IN THE CASE OF SITALDAS K. MOTWANI & DGIT REPORTED IN (2010) 323 ITR 223 (BOM). 5 15.THE LEGISLATURE HAS CONFERRED THE POWER TO C ONDONE DELAY TO ENABLE THE AUTHORITIES TO DO SUBSTANTIVE JUSTICE TO THE PARTIES BY DISPOSING OF THE MATTERS ON MERIT. THE EXPRESSION 'GENUINE' HAS RECEIVED A LIBERAL MEA NING IN VIEW OF THE LAW LAID DOWN BY THE APEX COURT REFERRED TO HEREINA BOVE AND WHILE CONSIDERING THIS ASPECT, THE AUTHORITIES ARE EXPECT ED TO BARE IN MIND THAT ORDINARILY THE APPLICANT, APPLYING FOR CONDONATION OF DELAY DOES NOT STAND TO BENEFIT BY LODGING ITS CLAIM LATE. REFUSIN G TO CONDONE DELAY CAN RESULT IN A MERITORIOUS MATTER BEING THROWN OUT AT THE VERY THRESHOLD AND CAUSE OF JUSTICE BEING DEFEATED. AS AGAINST THIS, W HEN DELAY IS CONDONED THE HIGHEST THAT CAN HAPPEN IS THAT A CAUS E WOULD BE DECIDED ON MERITS AFTER HEARING THE PARTIES. WHEN SUBSTANTI AL JUSTICE AND TECHNICAL CONSIDERATIONS ARE PITTED AGAINST EACH OT HER, CAUSE OF SUBSTANTIAL JUSTICE DESERVES TO BE PREFERRED FOR TH E OTHER SIDE CANNOT CLAIM TO HAVE VESTED RIGHT IN INJUSTICE BEING DONE BECAUSE OF A NON- DELIBERATE DELAY. THERE IS NO PRESUMPTION THAT DELA Y IS OCCASIONED DELIBERATELY, OR ON ACCOUNT OF CULPABLE NEGLIGENCE, OR ON ACCOUNT OF MALAFIDES. A LITIGANT DOES NOT STAND TO BENEFIT BY RESORTING TO DELAY. IN FACT HE RUNS A SERIOUS RISK. THE APPROACH OF THE AU THORITIES SHOULD BE JUSTICE ORIENTED SO AS TO ADVANCE CAUSE OF JUSTICE. IN THE LIGHT OF THE AFORESAID DECISION AND IN THE ABSENCE OF ANY MATERIAL TO DEMONSTRATE THAT THE DELAY IN FILING THE APPEA L WAS WITHOUT MALAFIDE INTENTION, I AM OF THE VIEW THAT THE DELAY IN FILING TH E APPEAL BY THE ASSESSEE CANNOT BE CONSIDERED TO BE WITH MALAFIDE INTENTION OR WAS A DELIBERATE ON ITS PART. FURTHER EVEN ON MERITS, IT IS LD.A.R.S CONTENTION THAT THE ISSUE IS COVERED IN FAVOUR OF ASSESS EE BY THE DECISION OF HONBLE BOMBAY HIGH COURT WHICH FACT HAS NOT BEEN CONTROVERTED BY REVENUE. CONSIDERING THE TOTALITY OF THE AFORESAID FACTS, I CONDONE THE DELAY AND ADMIT THE APPEAL. 8. BEFORE ME, ON THE MERITS OF ISSUE, IT WAS SUBMITTED THAT THE ISSUE INVOLVED IN THE APPEAL WAS WITH RESPECT TO NON-GRAN TING OF DEDUCTION OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND U/ S 43B OF THE ACT. HE SUBMITTED THAT HONBLE BOMBAY HIGH COURT IN TH E CASE OF CIT VS. GHATGE PATIL TRANSPORTS LIMITED (SUPRA) HAS HELD THAT SECTION 43B OF THE ACT IS APPLICABLE TO BOTH THE EMPLOYEES AND EMPLOYE ES CONTRIBUTION. I FIND THAT THE HONBLE BOMBAY HIGH COURT H AS HELD THAT 6 SEC.43B OF THE ACT IS APPLICABLE TO EMPLOYEES AND EMPLOYEE S CONTRIBUTION. BEFORE ME, IT IS ASSESSEES CONTENTION THAT THE EMPLOYEES CONTRIBUTION OF P.F. HAS BEEN DEPOSITED WITH THE APPROPRIATE AUTHORITIES WITHIN THE GRACE PERIOD ALLOWED BY THE AUTHORITIES AND ALSO BEFORE THE FILING OF RETURN OF INCOME. IN SUCH A SITUATION, FOLLOWING THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL (SUPRA), I AM OF THE VIEW THAT NO DISAL LOWANCE IS CALLED FOR AND ASSESSEE IS ELIGIBLE FOR DEDUCTION U/S 43B OF T HE ACT. I THEREFORE DIRECT ACCORDINGLY. THUS, THE GROUND OF ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED ON 16 TH DAY OF OCTOBER, 2019. /- SD/- ( ANIL CHATURVEDI ) ' / ACCOUNTANT MEMBER PUNE; DATED : 16 TH OCTOBER, 2019. YAMINI #$%&'(' % / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3. 4. 5 6. CIT(A)-1, PUNE. PR. CIT-1, PUNE. '#$ %%&',) &', *+ / DR, ITAT, SMC PUNE; $-.// GUARD FILE. / BY ORDER // TRUE COPY // 012%3&4 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE.