The ITO, Ward-8(2), Ahmedabad V. Stallion Laboratories Pvt.Ltd., Ahmedabad

ITA 1162/AHD/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9422 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 10-12-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 25-04-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: KALPESH MAKWANA
• Assessee Lawyers: KETAN H SHAH
• Keywords: Depreciation; Onus to prove; Revised return
• Section: 43B; 143(3); 131

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH AHMEDABAD BEFORE S/SHRI RAJPAL YADAV, JM, & MANISH BORAD, AM. ITA NO.1162 & 2145 /AHD/2013 ASST. YEARS: 2009-10 & 2010-11 ITO, WD-8(2), AHMEDABAD VS. M/S STALLION LABORATORIES PVT. LTD., 8 TH FLOOR, DEV PATH LAL BUNGLOW, CG ROAD, NAVNAGPURA, AHMEDABAD. APPELLANT RESPONDENT PAN AACCS6205N APPELLANT BY SHRI KALPESH MAKWANA, SR. DR RESPONDENT BY SHRI KETAN H. SHAH, AR DATE OF HEARING: 10/12/2015 DATE OF PRONOUNCEMENT: 2 / 3 /2016 O R D E R PER MANISH BORAD, ACCOUNTANT MEMBER . THESE TWO APPEALS OF THE REVENUE FOR ASST. YEARS 2 009-10 & 2010-11 ARE DIRECTED AGAINST TWO SEPARATE ORDERS OF CIT(A)-XIV, AHEDABAD, DATED 25.2.2013 & 5/6/2013 RESPECTIVELY. ASSESSMENT FOR ASST. YEAR 2009-10 WAS FRAMED U/S 143(3) OF THE IT ACT, 1961 (IN SHORT THE ACT) ON 27.12.2011 AND THAT FOR ASST. YEA R 2010-11 U/S 143(3) OF THE ACT ON 11.3.2013 BY ITO, WD-8(2), AHM EDABAD. 2. WE FIRST TAKE UP ITA NO.1162/AHD/2013 FOR ASST. YEAR 2009- 10. REVENUE HAS RAISED FOLLOWING GROUNDS IN THIS APPEAL :- ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 2 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS )-XLV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWA NCE OF RS.51,40,632/- MADE ON ACCOUNT OF COMMISSION EXPENSES NOT INCURRED WHOLLY & INCLUSIVELY FOR THE PURPOSE OF BUSINESS AND THE ASSESSEE HAS FAILED TO PRODUCE ANY EVIDENTIAL PROOF REGARDING SERVICES REN DERED BY SUCH PARTIES. 2). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAV E UPHELD THE ORDER OF THE ASSESSING OFFICER. 3). IT IS THEREFORE, PRAYED THAT THE ORDER OF THE LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XLV, AHMEDABAD MAY BE SET-A-SIDE AND THAT OF THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 3. BRIEFLY STATED FACTS AS CULLED OUT FROM THE RECO RDS ARE THAT ASSESSEE IS A PRIVATE LIMITED COMPANY ENGAGED IN TH E BUSINESS OF MANUFACTURING AND FORMULATION OF MEDICINES. IT FILE D ITS RETURN OF INCOME ON 17.9.2009 THROUGH ELECTRONIC MEDIA DECLAR ING TOTAL INCOME OF RS.24,80,610/-. THE CASE WAS SELECTED FOR SCRUTI NY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 19/0 8/2010 AND DULY SERVED UPON THE ASSESSEE. DURING THE COURSE OF ASSE SSMENT PROCEEDINGS INFORMATION WAS CALLED FOR BY THE ASSES SING OFFICER ABOUT THE GENUINENESS OF COMMISSION EXPENDITURE OF RS.51,56,882/- AND VARIOUS DETAILS AND EXPLANATION WERE SUBMITTED BY THE ASSESSEE. HOWEVER, IT PARTLY SATISFIED THE ASSESSING OFFICER AND SO HE ASSESSED THE INCOME BY MAKING ADDITION OF RS.51,40,632/- DIS ALLOWING COMMISSION PAYMENT, ADDITION ON ACCOUNT OF INTEREST OF RS.15,694/- AND DISALLOWANCE OF DEPRECIATION OF RS.7,626/-. 4. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE LD. CI T(A) WHO DELETED THE ADDITION ON ACCOUNT OF DISALLOWANCE OF COMMISSION OF RS.51,40,632/- AND DISMISSED THE GROUNDS RELATING T O ADDITION ON ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 3 ACCOUNT OF INTEREST INCOME BEING NOT PRESSED BY THE ASSESSEE AND SUSTAINED THE DISALLOWANCE OF DEPRECIATION OF RS.7, 626/-. 5. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE T RIBUNAL AGAINST THE ACTION OF LD. CIT(A) DELETING THE ADDIT ION OF RS. 51,40,632/- ON ACCOUNT OF COMMISSION EXPENDITURE WH ICH WERE NOT INCURRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS. 6. LD. DR SUPPORTED THE ORDER OF ASSESSING OFFICER. 7. ON THE OTHER HAND LD. AR RELIED ON THE ORDER OF LD. CIT(A) AND SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROC EEDINGS COMPLETE DETAILS OF COMMISSION PAID TO VARIOUS PART IES WERE PROVIDED WHICH INCLUDED THE COPIES OF THE PROOF OF IDENTITY, PAN, CONFIRMATION LETTERS, BASIS OF CALCULATION OF COMMISSION, BUSINE SS PROVIDED THROUGH THESE PARTIES, DETAILS OF TDS DEDUCTED AND DEPOSITE D AND COPIES OF AGREEMENTS WITH SOME PARTIES AND THUS ALL DETAILS H AS BEEN RIGHTLY APPRECIATED BY THE LD. CIT(A) AND HE HAS RIGHTLY DE LETED THE ADDITION OF RS.51,40,632/- MADE ON ACCOUNT OF COMMISSION EXP ENSES. LD. AR FURTHER SUBMITTED THAT GROSS TURNOVER FOR THE YEAR UNDER APPEAL STOOD AT RS.15.17 CRORES WHEREAS IN THE PRECEDING ASST. Y EAR 2008-09 THE TURNOVER OF THE COMPANY WAS AT RS.10.67 CRORES AND, THEREFORE, HAS BEEN INCREASED OF RS.4.5 CRORES OF SALES. COMMISSIO N EXPENSES HAVE BEEN REGULARLY INCURRED IN PREVIOUS YEARS ALSO WHICH HAVE BEEN ALLOWED ACCORDINGLY. FURTHER IT WAS ALSO SUBMITTED THAT NET PROFIT OF THE COMPANY HAS ALMOST DOUBLED FROM RS.11.6 LACS IN ASST. YEAR ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 4 2008-09 TO RS.20.74 LACS IN THE YEAR UNDER APPEAL A ND, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE IMPUGNED ADDITION. 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) HAS GIVEN FOLLOW ING FINDING WHILE DELETING THE ADDITION OF RS.51,40,632/- - 3.3 DECISION I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND THE SUBMISSIONS GIVEN BY THE APPELLANT. THE AO HAS DISA LLOWED THE COMMISSION PAID EXPENDITURE ON GROUNDS, NO CONFIRMA TION FILED FOR VENKATA YAMUNA IMPEX AND NO PROOF SUBMITTED BY ASSE SSEE FOR SERVICES RENDERED BY THE PARTIES IN QUESTION. THE A O HAS GIVEN PROPER OPPORTUNITY TO THE APPELLANT AND ASKED FOR THE CONFIRMATIONS FROM THE PARTIES TO WHOM COMMISSION HAS BEEN PAID. THE S HOW CAUSE FOR COMMISSION PAID ACCOUNT OF R$. 49,32,229/- HAS BEEN GIVEN. THE AFFIDAVIT DATED 29706/2012 FILED BY SHRI DHAVAL SHA H (AR ATTENDED ASSESSMENT PROCEEDINGS) SAYING THAT NO PROPER OPPOR TUNITY WAS GIVEN AND ONLY 7 DAYS WERE GIVEN TO FILE DETAILS INCLUDIN G CERTAIN DETAILS TO BE CALLED FROM OUTSTATION PARTIES. THE DETAILS WHICH T HE APPELLANT INTENDED TO FILE FOR CONSIDERATION HAVE BEEN FILED DURING TH E COURSE OF APPEIIATE PROCEEDINGS AND SAME WERE SENT TO THE AO FOR HIS CO MMENTS. . FURTHER, IN THE ASSESSMENT ORDER, THE AO HAS RELIED ON FOLLOWING CASE LAWS: (I) ASSAM PESTICIDES VS. CIT [227 ITR 846], GAUHATI HC (II) CIT VS. PREMIER BREWERIES LTD. [279 ITR 51 (KER) (III) BHARGAV REFRIGERATION INDUSTRIES PVT. LTD. VS . ITO [28 TTJ 587], ITAT, DELHI BENCH (IV) ITO VS. MADDI LAXMAIAH & CO. (P) LTD. [31 ITJ 71 (HYD] THE AO HAS EMPHASIZED THAT THE MERE PAYMENT BY ITSE LF DOES NOT QUALIFY FOR DEDUCTION IN COMPUTING THE INCOME UNLESS, THE N ECESSITY FOR SUCH PAYMENT WAS ALSO SHOWN AS FOR THE PURPOSE OF BUSINE SS. NO RECOURSE TO SECTION 40(A) (2) (B) OF THE I.. T. ACT, 1961 HAS B EEN TAKEN FOR RELATED PARTIES. ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 5 ON THE OTHER HAND, THE APPELLANT HAS FILED DIFFEREN T CASE LAWS AND DISTINGUISHED THE DECISION OF SWADESHI COTTON MILLS CO. LTD. REPORTED AT [63ITR 57 (SC)] AND INSTEAD RELIED ON THE DECISION OF ANUPAM SYNTHETICS REPORTED AT [104 TTJ 119 (DEL.)]. THE APPELLANT HAS FILED CONFIRMATIONS FROM THE PARTIES, TDS DETAILS, FULL ADDRESSES WITH PA NO . AND SUBMITTED THAT THE COMMISSION PAYMENT IS A USUAL PRACTICE AND WITHOUT THE PAYMENT OF SUCH COMMISSION, THE CONDUCTING OF BUSINESS IS NOT EXPED IENT. THEREFORE, IT IS CLAIMED THAT THE EXPENDITURE INCURRED IS GENUINE TH ROUGH BANKING CHANNEL AND THE SAME HAS BEEN DONE AS IT WAS NECESSITY OF I TS BUSINESS. THE FACT REMAINS THAT THE AO HAS NOT PROVED THAT THIS WAS NO N-GENUINE EXPENDITURE. THE AO ALSO COULD NOT EXTRACT POSITIVE EVIDENCES FOR REVENUE BY RECORDING STATEMENTS U/S. 131 OF THE I. T. ACT, 1961 OF THE COMMISSION AGENTS TO PROVE THAT NO SUCH SERVICES WERE RENDERED TO THE APPELLANT. THE FULL DETAILS WERE ON RECORD AND THE AO COULD HAVE D ONE THE SAME AS HE IS BESTOWED WITH SUCH POWERS WHICH WOULD HAVE BEEN VER Y MUCH WITHIN THE DEPARTMENTAL PROCEDURE. I HAVE ALSO GONE THROUGH TH E COPY OF EACH OF THE APPOINTMENT LETTERS ISSUED BY THE APPELLANT COMPANY TO THE COMMISSION AGENTS. THE SPECIFIC WORK OR TERRITORY OF OPERATION IS MENTIONED IN SUCH APPOINTMENT LETTERS. THE WORKING OF COMMISSION TO B E PAID HAS ALSO BEEN PLACED ON RECORD AND GONE THROUGH THE OTHER DETAILS SUBMITTED AND NOT REPRODUCING FOR SAKE OF BREVITY (PLEASE SEE PAGES 2 TO 5 OF THIS ORDER). AS REGARDS, SPECIFIC NAME OF COMMISSION AGENT - M/S. V ENKATA YAMUNA IMPEX, THE APPELLANT HAS FILED A COPY OF APPOINTMEN T LETTER APPOINTING M/S. VENKATA YAMUNA IMPEX AS LIAISON AGENT FOR CLIENT NA MED NEW HEIGHTS PHARMA LIMITED, LAGOS, STIPULATING OTHER CONDITIONS OF THEIR RELATIONSHIP. A COPY OF DEBIT NOTE OF M/S. VENKATA YAMUNA IMPEX DAT ED 15/03/2009 ADDRESSED TO APPELLANT IS ALSO FILED GIVING SPECIFI C DETAILS OF WORKING OF COMMISSION. A COPY OF LEDGER ACCOUNT GIVING DETAILS ABOUT TDS IS ALSO FILED. A COPY OF FORM NO. 16A IS ALSO FILED. ALL TH ESE DETAILS WERE FORWARDED TO AO FOR HIS COMMENTS BEFORE ADMITTING THE ADDITIO NAL EVIDENCE UNDER RULE 46A. THE INFORMATION SUBMITTED BY APPELLANT IS REPRODUCED IN TABULAR FORM BELOW: SL. NO. NAME OF THE PARTY ADDRESS P.A.NO. GROSS COMMIS SION TDS AMOUNT NET COMMISSIO N 1. ALLIANZ PHARMA CARE PLOT NO.201, BAPUJI NAGAR, BHUBANESHWAR- 771003 AAMFA 3767G 99110 10209 88901 2 AMEGH PHARMA P. B-606, CRYSTAL PLAZA, NEW LINK ROAD, AAGCA 4614H 642000 66125 575874 ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 6 LTD. ANDHERI(W), MUMBAI- 400053 3. GOKUL TRADERS 9, 1 ST FLOOR, NATIONAL CHAMBERS, NR. CITY GOLD MULTIPLEX, ASHRAM ROAD, AHMEDABAD-380009 AJBPS 1381E 217462 22464 194998 4 JIGNA S SHAH 121,MANEKBAUG SOCIETY, NEHRU NAGAR, AHMEDABAD ANKPS 7883E 399932 41192 358740 5 SANIDH B. SHAH 6, 1' FLOOR, NATIONAL CHAMBERS, NR. CITY GOLD MULTIPLEX, ASHRAM ROAD, AHMEDABAD 380009 AJBPS 2294N 195000 20085 174915 6 JAGUMANI DASH PLOT NO. 90, LANE NO. 3, JAGANNATH VIHAR, BARAMUNDA, BHUBANESHWAR -751003 AIEPD 5322Q 262047 26991 235056 7 SPECTRUM ENTERPRISE S. NO. 1A, 4, GANESH PARK (ANAND PARK), CHINCHWADGAON, PUNE- 411 033 ACLPI 1316K 214140 22056 192084 8 VENKATA YAMUNA IMPEX PLOT NO. 80, KACYAM GARDNER, B/H. SAINIKPURI, SECUNDRABAD -500 894 AAFFV 0754M 1250000 128750 1121250 9 VENUS INTERNATIONAL B-603, COROLLA JEWEL, MILITARY ROAD, MAROL, ANDHERI (E), MUMBAI - 400059 AAYPM 2525L 100000 10300 89700 10 VIJAY J. SHAH 26/B, JAIN MERCHANT SOCIETY, PALDI, AHMEDABAD ANTPS 6602C 880000 90640 789360 11 VIJAY J. SHAH (HUF) 814, DEVPATH, NR. LAL BUNGALOW , OFF C. G. ROAD, AHMEDABAD. AABHS 4374J 890000 91670 7983331 TOTAL 5149691 530483 4619208 ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 7 - THE APPELLANT HAS BEEN ABLE TO DISCHARGE ITS ONUS [63 TTJ 191 (DEL.)] - INSTRUMED (INDIA) INTERNATIONAL VS. ITO AND SUCCESS FULLY SHIFTED THE BURDEN TO PROVE ON REVENUES AS HAS BEEN HELD IN [159 ITR 7 8 (SC)] - ORISSA CORPORATION. THE APPELLANT HAS ALSO FILED RELEVANT JUDGMENT TO ADVANCE ITS ARGUMENT IN THE CASE OF BHARATBIJII LTD. REPORTED A T [71 ITD412 (MUM.)]. I AM INCLINED TO ACCEPT THE ARGUMENT OF APPELLANT AND RELY ON THE RATIO LAID DOWN BY HON'BLE GUJARAT HIGH COURT IN THE CASE OF R OHINI BUILDERS .REPORTED AT [256 ITR 360 (GUJ.)]. THE RATIO LAID D OWN BY ITAT, AHMEDABAD IN THE CASE OF DEPUTY COMMISSIONER OF INCOME TAX VS . TYCO VALVES & CONTROL INDIA (P) LTD. [(2013) 81 DTR(AHD) (TRIB) 4 8] IS RELEVANT AND HAS BEEN RELIED, 'ASSESSEE HAVING FURNISHED THE STATEMENT OF COMMISS ION PAYMENT GIVING THE NAMES OF THE COMMISSION AGENTS AND THE SERVICES RENDERED BY THEM AS WELL AS VOUCHER NUMBERS, DATES OF PAYMENTS, PANS OF THE AGENTS, AMOUNT OF INVOICES, RATE OF COMMISSION, ETC. AND TH E AO HAVING NOT FOUND THE PAYMENT OF COMMISSION TO BE BOGUS PAYMENTS, DED UCTION THEREOF IS ALLOWABLE.' THE APPELLANT HAS SUBMITTED COPY OF APPOINTMENT LET TERS ISSUED TO THE COMMISSION AGENTS STIPULATING CONDITIONS OF THEIR C ONTRACT, THE BUSINESS PLAN HAS BEEN EXECUTED AND WORKING OF COMMISSION TH EREON SUBMITTED, INDICATES THAT THE SERVICES HAVE BEEN RENDERED FOR APPELLANT'S BUSINESS BY THESE COMMISSION AGENTS. IN MY OPINION, THE APPELLA NT HAS DISCHARGED ITS ONUS BY FILING ALL POSSIBLE DETAILS INCLUDING CONFI RMATIONS AND TDS AND SUCCESSFULLY ESTABLISHED THAT THE GENUINE EXPENDITU RE HAS BEEN EXPENDED FOR THE BUSINESS PURPOSES. ON THE OTHER HAND, THE A O COULD NOT GATHER THE POSITIVE EVIDENCES FOR THE DEPARTMENT AND TAKEN DEC ISION BASED ON PRESUMPTIONS AND NOT ON THE FACTS ON RECORD. THE GR OUND OF APPEAL IS ACCORDINGLY ALLOWED. 9. WE FIND FROM GOING THROUGH THE ORDER OF LD. CIT( A) THAT ASSESSEE HAS SUBMITTED COMPLETE DETAILS OF PARTY-WI SE COMMISSION PAID, AS WELL AS TDS DEDUCTED THEREON, ALONG WITH C ONFIRMATION FROM ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 8 THE PARTIES, FULL PARTICULARS WITH PAN AND COPIES O F LIAISON AGREEMENT WITH VARIOUS PARTIES. IT IS A GENERAL ACCEPTED FACT THAT IN PHARMA BUSINESS COMMISSION EXPENSES ARE INCURRED FOR BOOST ING UP SALES AND IT IS A USUAL PRACTICE. WE FURTHER FIND THAT AS SESSEE GROSS TURNOVER IS ALSO INCREASED TO 15.17 CRORES FROM RS. 10.66 CRORES IN THE IMMEDIATE PRECEDING FINANCIAL YEAR AND PROFIT HAS A LSO DOUBLED REACHING RS.20.74 LACKS IN THE YEAR UNDER APPEAL FR OM RS.11.06 LACS. WE THEREFORE ARE OF THE VIEW THAT LOOKING TO THE NA TURE OF BUSINESS OF ASSESSEE VARIOUS DETAILS AND DOCUMENTARY EVIDENCES PRODUCED BEFORE THE LOWER AUTHORITIES, INCREASE IN SALES ALO NG WITH INCREASE IN PROFITS AND ALLOWABILITY OF COMMISSION EXPENDITURE IN PREVIOUS YEARS, WE ARE OF THE VIEW THAT LD. CIT(A) HAS RIGHTLY DELE TED THE IMPUGNED ADDITION MADE BY THE ASSESSING OFFICER DISALLOWING COMMISSION OF RS.5140632/- AND WE FIND THAT THE SAME HAS BEEN INC URRED WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSINESS AND ASS ESSEE HAS PRODUCED SUFFICIENT PROOF REGARDING SERVICES RENDER ED BY THESE PARTIES. WE, THEREFORE, FIND NO REASON TO INTERFERE WITH THE ORDER OF LD. CIT(A) AND ACCORDINGLY DISMISS THE GROUND OF REVENU E. 10. OTHER TWO GROUNDS ARE GENERAL IN NATURE, WHICH NEED NO ADJUDICATION. 11. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.2145/AHD/2013: FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENUE I N THIS APPEAL- ; 1). THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) -XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCES OF R S.38,43,245/- & OF RS.3,81,930/- MADE ON ACCOUNT OF COMMISSION AND DIS TRIBUTION CHARGES, ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 9 RESPECTIVELY EVEN THOUGH THE ASSESSEE FAILED TO PRO VE ANY SERVICE RENDERED BY THE PERSONS TO WHOM PAYMENT IS CLAIMED. 2) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS )-XIV, AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS .2,76,912/- MADE ON ACCOUNT OF PRIOR PERIOD EXPENSES. 3) THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV , AHMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF RS.13,601/- MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION T O PROVIDENT FUND U/S.36(1)(VA) OF THE ACT. 4). ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE : THE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDABAD OUGHT TO HAVE U PHELD THE ORDER OF THE ASSESSING OFFICER. 5). IT IS THEREFORE, PRAYED THAT THE ORDER OF T HE LD. COMMISSIONER OF INCOME-TAX (APPEALS)-XIV, AHMEDAHAD MAY HE SET-A-SIDE AND THAT OT THE ORDER OF THE ASSESSING OFFICER BE RESTORED. 12. BRIEFLY STATED FACTS ARE THAT THE ASSESSEE IS A PRIVATE LIMITED COMPANY. IT FILED ITS ORIGINAL RETURN OF INCOME ON 29.9.2010 DECLARING TOTAL INCOME AT RS.15,81,530/-. THEREAFTER ASSESSEE FILED REVISED RETURN OF INCOME ON 30.09.2011 DECLARING TOTAL INCO ME OF RS.16,03,900/-. THE CASE WAS SELECTED FOR SCRUTINY ASSESSMENT AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 21.9.201 1 AND DULY SERVED UPON THE ASSESSEE. AFTER RECEIVING THE SUBMISSIONS AND VARIOUS DETAILS FROM ASSESSEE ASSESSMENT WAS FRAMED ON 11.3 .2013 ASSESSING THE INCOME OF ASSESSEE AT RS.61,26,790/- AFTER MAKING FOLLOWING ADDITIONS :- 1) DISALLOWANCE OF COMMISSION & DISTRIBUTION CHARGES RS.42,32,375/- 2) DISALLOWANCE OF PRIOR PERIOD EXPENSES RS. 2,7 6,912/- 3) DISALLOWANCE U/S 36(1)(VA) RS. 13,601/- ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 10 13. AGGRIEVED, ASSESSEE WENT IN APPEAL BEFORE CIT(A ) WHO DELETED THE ADDITIONS MADE BY THE ASSESSING OFFICER. 14. AGGRIEVED, REVENUE IS NOW IN APPEAL BEFORE THE TRIBUNAL. 15. GROUND NO.1 OF THE APPEAL RELATES TO DELETION O F DISALLOWANCE OF COMMISSION AND DISTRIBUTION EXPENSES. AFTER CONSIDE RING THE RIVAL CONTENTIONS AND PERUSING THE MATERIAL ON RECORD, WE WOULD LIKE TO MENTION THAT WE HAVE ALREADY DEALT WITH SIMILAR GRO UND FOR ASST. YEAR 2009-10 IN ITA NO.1162/AHD/2013 ABOVE AND HAVE DISM ISSED THE GROUND OF REVENUE VIDE PARA NO.8 & 9 ABOVE HOLDING THAT THE COMMISSION EXPENDITURE CLAIMED BY THE ASSESSEE WAS GENUINE. THE ISSUE BEING SIMILAR, WE APPLY THE RATIO OF OUR ABOV E DECISION TO THIS GROUND ALSO AND ACCORDINGLY WE UPHOLD THE ORDER OF LD. CIT(A). THIS GROUND OF REVENUE IS DISMISSED. 16. GROUND NO.2 OF REVENUES APPEAL RELATES TO DELE TION OF DISALLOWANCE OF RS. 2,76,912/- ON ACCOUNT OF PRIOR PERIOD EXPENSES. 17. THE LD. DR SUPPORTED THE ORDER OF ASSESSING OFF ICER 18. ON THE OTHER HAND LD. AR RELIED ON THE ORDER O F CIT(A) AND SUBMITTED THAT THE EXPENSES OF RS. 2,76,912/- WERE REPORTED IN THE AUDIT REPORTS ITSELF. THE AMOUNT IN QUESTION RELATE S TO EXPENSES INCURRED BY THE RUDRAPUR BRANCH OF ASSESSEE. THE AS SESSEE WAS HAVING NO INFORMATION ABOUT THE EXPENDITURE IN THE PRIOR PERIOD AND ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 11 THE INVOICES WERE RECEIVED AND EXPENDITURE CRYSTAL LIZED DURING ASST. YEAR 2010-11 SO THE SAME WERE RIGHTLY CLAIMED. 19. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) WHILE DELETING T HE IMPUGNED DISALLOWANCE HAS OBSERVED AS UNDER :- 3.3 DECISION: I HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSIONS GIVEN BY THE APPELLANT. THIS GROUND IS REGARDING DISALLOWANCE OF PRIOR PERIOD EXPENDITURE OF RS.2,76,912/-, WHICH IS AS PER ASSESSING OFFICER'S ORDER PAGE 7 PARA 4 THEREOF. BEFORE THE ASSESSING OFFICER, APPELLANT STATED THAT THIS EXPENDITURE IS INCURRED FOR THE RUDRAPUR BRANCH OF THE APPELLANT AND THE ACCOUN T IS MAINTAINED AT HEAD OFFICER AT AHMEDABAD. AS THE INVOICE WAS RECEIVED I N THE F.Y.2009-10, THE EXPENDITURE HAS BEEN CLAIMED IN THE YEAR UNDER CONS IDERATION. IT IS ADMITTED FACT THAT NO SUCH EXPENDITURE HAS BEEN CLAIMED IN THE IM MEDIATE PRECEDING YEAR. THE SUBMISSION BEFORE THE ASSESSING OFFICER IS DATED 30 .0] .2013 AT PAPER BOOK PAGE 1 PARA 4 THEREOF. THE DETAILS REGARDING INVOIC ES, DATE WISE IN TABULAR FORM SUBMITTED BY APPELLANT AS PER PAGE 5 TO 5F VIDE SUB MISSION DATED 30/01/2013. THE APPELLANT RELIED ON THE RATIO LAID DOWN IN THE JUDGMENT OF GAUHATI HIGH COURT IN THE CASE OF CIT VS. NATHMAL TOLARAM [88 ITR 234 (GAUHATI)] AS WELL AS CALCUTTA HIGH COURT IN THE CASE OF SUTNA STONE & LI ME CO. LTD. VS. CIT [192 ITR 478 (KO!)], WHEREIN IT IS LAID DOWN THAT THE LIABIL ITY IS ASCERTAINED IN THE YEAR OF CLAIM, THE SAME IS REQUIRED TO BE ALLOWED. THE FACT REMAINS THAT THE GENUINENESS OF EXPENDITURE HAS NOT BEEN DISPUTED. IT IS CONCLUD ED BY THE AO THAT THE EXPENDITURE SHOULD HAVE BEEN CLAIMED IN A. Y. 2009- 10. HOWEVER, AS PER FACTS THERE IS NO POSTPONEMENT OF LIABILITY BY THE APPELL ANT. HAVING NOT CLAIMED EXPENDITURE IN A. Y. 2009-10, THE APPELLANT HAS PAI D MORE INCOME TAX IN A. Y. 2009-10. IN VIEW OF RATIO LAID DOWN BY HON'BLE BOMB AY HIGH COURT DECISION IN THE CASE OF CIT VS. NAGRI MILLS REPORTED IN 33 ITR 681 (BOM), GAUHATI HIGH COURT IN THE CASE OF CIT VS. NATHMAL TOLARAM [88 ITR 234 (GA UHATI)] AND CALCUTTA HIGH COURT IN THE CASE OF SUTNA STONE & LIME CO. LTD. VS . CIT [1 92 ITR 478 (KOL), THE DISALLOWANCE MADE BY THE AO IS DIRECTED TO BE DELET ED AND THE GROUND OF APPEAL IS ACCORDINGLY ALLOWED. 20. FROM GOING THROUGH THE ABOVE OBSERVATIONS MADE BY LD. CIT(A) AS WELL AS GOING THROUGH THE FACTS OF THE CASE THAT THESE EXPENSES WERE CLAIMED IN THE PRECEDING YEARS AND THE SAME HA S NOT BEEN ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 12 CONTROVERTED BY THE REVENUE AND LOOKING TO THE COUR SE OF BUSINESS OF ASSESSEE WHEREIN ASSESSEE IS HAVING VARIOUS BRANCHE S AND DETAILS OF EXPENSES ARE TO BE SENT TO THE HEAD OFFICE THEN THE RE REMAINS THE POSSIBILITY THAT SOME INVOICES WHICH PERTAIN TO PRI OR PERIOD HAVE BEEN RECEIVED BY THE HEAD OFFICE OF THE ASSESSEE DURING THE YEAR UNDER APPEAL. AS THE GENUINENESS OF THE EXPENDITURE HAS N OT BEEN DOUBTED WE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD . CIT(A) WHO HAS RIGHTLY DELETED THE ADDITION MADE ON ACCOUNT OF DIS ALLOWANCE OF PRIOR PERIOD EXPENSES BY ASSESSING OFFICER. ACCORDINGLY, WE DISMISS THIS GROUND OF REVENUE. 21. GROUND NO.3 RELATES TO DISALLOWANCE OF RS.13,60 1/- MADE ON ACCOUNT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION. 22. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. WE FIND THAT LD. CIT(A) HAS OBSERVED AS UNDER WHILE DEALING WITH THIS GROUND :- 4.3 DECISION: ! HAVE CAREFULLY PERUSED THE ASSESSMENT ORDER AND T HE SUBMISSION GIVEN BY THE APPELLANT. THE APPELLANT HAS RELIED ON VARIOUS CASE LAWS. NO CASE LAW FROM JURISDICTIONAL ITAT OR HIGH COURT WAS PRODUCED BEFORE THE UNDERSIGNED DURING THE COURSE OF APPELLATE PROCEEDI NGS. THE PROPOSITION BY APPELLANT IS THAT IF THE AMOUNT IS PAID SO AS TO EN ABLE IT TO GET DEDUCTION U/S 43B, IT SHOULD BE ALLOWED. IN MY OPINION, THERE ARE TWO PORTION OF CONTRIBUTION TO PF ACCOUNT I.E. ONE PART BY THE EMPLOYER AND ANOTHE R BY THE EMPLOYEES. THE CONTRIBUTION OF THE EMPLOYEE IF NOT PAID BEFORE THE STIPULATED DATE AS PER PROVISIONS UNDER SECTION 36(1 )(VA) IS NOT ALLO WABLE AS PER PLAIN READING OF PROVISIONS OF INCOME TAX ACT, 1961. AS REGARDS ANO THER PORTION WHICH IS EQUAL CONTRIBUTION BY EMPLOYER ON BEHALF OF EMPLOYEE, A L IBERAL VIEW IS POSSIBLE AND THE APPELLANT CAN GET BENEFIT OF DOUBT. THE IMPUGNED AM OUNT IS THE CONTRIBUTION OF EMPLOYEES TOWARDS THEIR PF ACCOUNT I.E. THE AMOUNT HAS BEEN CONTRIBUTED BUT ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 13 REMAINED IN THE ACCOUNT OF EMPLOYER WHO GOT ENRICHE D AT THE COST OF EXCHEQUER. SIMILAR ISSUE HAS BEEN DECIDED RECENTLY BY HON'BLE ITAT IN THE CASE OF LKP SECURITIES PVT. LTD. [MAY, 2013] AGAINST APPELLANT. HOWEVER, THE APPELLANT HAS SUBMITTED THAT THE EMPLOYEES CONTRIBUTION WERE DEPO SITED AFTER THE DUE DATE BUT THE SAME HAS BEEN DEPOSITED BEFORE THE DUE DATE OF FIFING OF RETURN U/S. 139(1) OF THE INCOME TAX ACT, AND THEREFORE, THE DEDUCTION SHOULD BE ALLOWED. THE APPELLANT HAS ALSO RELIED ON SEVERAL JUDICIAL PRONO UNCEMENTS WHICH HAS BEEN MENTIONED IN THE WRITTEN SUBMISSION OF THE APPELLAN T. RECENT JUDGMENT OF SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD.[2009] 319 ITR 306 IS RELIED. I HAVE GONE THROUGH THIS JUDGMENT BY HON'BL E SUPREME COURT AND FIND THAT THE BENEFIT OF PAYMENT U/S. 43B, BEFORE DUE DATE OF FILING WAS AVAILABLE FOR PAYMENT OF TAX, DUTY, CESS AND FEE BUT WAS NOT AVAI LABLE FOR ANY CONTRIBUTION TO LABOUR WELFARE FUNDS (PF - ESIC). AS PER JUDGMENT, THE SAME BENEFIT IS NOW AVAILABLE W.E.F, 01/04/2004 BY THE AMENDMENT BY FIN ANCE ACT, 2003. IT HAS BEEN HELD THAT THE FIRST PROVISO TO SECTION 43S WAS CURATIVE IN NATURE AND, HENCE, RETROSPECTIVE IN OPERATION WITH EFFECT FROM 1-4-198 8. IT IS IMPORTANT TO NOTE ONCE AGAIN THAT BY THE FINANCE-ACT, 2003, NOT ONLY THE S ECOND PROVISO IS DELETED BUT EVEN THE FIRST PROVISO IS SOUGHT TO BE AMENDED BY BRINGING ABOUT AN UNIFOR MITY IN TAX, DUTY, CESS AND FEE ON THE ONE HAND VIS-A-VIS C ONTRIBUTIONS TO WELFARE FUNDS OF EMPLOYEE(S) ON THE OTHER. THIS IS ONE MORE REASON T O HOLD THAT THE FINANCE ACT, 2003, IS RETROSPECTIVE IN OPERATION. MOREOVER, THE JUDGMENT IN ALLIED MOTORS (P) LTD.'S CASE SUPRA) IS DELIVERED BY A BENCH OF THREE JUDGES , WHICH IS BINDING ON THE COURT. ACCORDINGLY, THE FINANCE ACT, 2003., TO THE EXTENT INDICATED ABOVE, IS CURATIVE IN NATURE AND, HENCE, IT IS RETROSPECTIVE AND WOULD OP ERATE WITH EFFECT FROM 1-4-1988 WHEN THE FIRST PROVISO CAME TO BE INSERTED. RESPECTFULLY FOLLOWING THE JUDGMENT OF HON'BLE SUPREME COURT AND AS THINGS STAND TODAY, TH E CONTRIBUTION TO PF / ESIC BOTH BY EMPLOYEES OR EMPLOYERS' CONTRIBUTION TOWARDS EMP LOYEES' PF / ESIC ARE ALLOWABLE U/S. 43B PROVIDED THE SAME ARE DEPOSITED BEFORE THE DUE DATE OF FILING RETURN OF INCOME U/S. 139(1) OF THE I.T.ACT, 1961. CONSIDERING ALL THE FACTS AND CIRCUMSTANCES AND THE FACT THAT THE PAYMENT HAS BEE N MADE BEFORE DUE DATE OF FILING OF RETURN U/S. 139(1) OF THE INCOME TAX ACT, THE DI SALLOWANCE MADE BY THE A. O. IS DIRECTED TO BE DELETED. THE GROUND OF APPEAL IS, TH EREFORE, ALLOWED. LOOKING TO THE FACTS OF THE CASE,WE AGREE WITH THE VIEW TAKEN BY LD. CIT(A) ON THIS GROUND AND WE UPHOLD HIS ORDER ON TH E ISSUE. THE GROUND RAISED BY THE REVENUE IS DISMISSED. 23. OTHER TWO GROUNDS ARE OF GENERAL NATURE AND NEE D NO ADJUDICATION. ITA NO.1162 & 2145/AHD/2013 ASST. YEAR 2009-10 & 2010-11 14 24. IN THE RESULT, BOTH THE APPEALS FILED BY THE RE VENUE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2/3/ 2016 SD/- SD/- (RAJPAL YADAV) JUDICIAL MEMBER (MANISH BORAD) ACCOUNTANT MEMBER DATED 2 / 3 /2016 MAHATA/- COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER ASST. REGISTRAR, ITAT, AHMEDABAD 1. DATE OF DICTATION: 18/02/2016 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE T HE DICTATING MEMBER: 25/02/2016 OTHER MEMBER: 3. DATE ON WHICH APPROVED DRAFT COMES TO THE SR. P. S./P.S.: 4. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE TH E DICTATING MEMBER FOR PRONOUNCEMENT: __________ 5. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE S R. P.S./P.S.: 6. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK: 2/3/16 7. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK: 8. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT REGISTRAR FOR SIGNATURE ON THE ORDER: 9. DATE OF DESPATCH OF THE ORDER: