DCIT, Corp Cir-2(1), Chennai V. Florind Uppers Pvt LTd, Chennai

ITA 118/CHNY/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 5469 (ITAT-CHENNAI)
• Duration Of Justice: 7 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-01-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Question of law; Set aside
• Section: 43B

Judgement Text

, , IN THE INCOME-TAX APPELLATE TRIBUNAL A BENCH, CHE NNAI . , , BEFORE SHRI DUVVURU RL REDDY, JUDICIAL MEMBER & SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ! ./ I.T.A.NO.118/CHNY/2019 '# $' / ASSESSMENT YEAR :2013-14 THE DY. COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE-2(1), CHENNAI. VS. M/S. FLORIND UPPERS PVT. LTD., NO.29, COLLEGE ROAD, NUGAMBAKKAM, CHENNAI 600 006. [PAN: AAACF 9811D] ( /APPELLANT ) ( / RESPONDENT ) ! %& ' ( / APPELLANT BY : SHRI ARV SREENIVASAN, JCIT )*%& ' ( / RESPONDENT BY : NONE + ' ,- / DATE OF HEARING : 08.07.2019 ./$# ' ,- /DATE OF PRONOUNCEMENT : 21.08.2019 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINS T THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-6, CHENNAI DATED 31.10.2018 RELEVANT TO THE ASSESSMENT YEAR 2013-14. THE GROUN DS RAISED BY THE REVENUE ARE REPRODUCED AS UNDER: 1. THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO THE LAW AND FACTS OF THE CASE. 2.1 THE CIT(A) ERRED IN DIRECTING THE AD TO VERIFY AND ALLOW THE BELATED PAYMENTS ON EMPLOYEES ESI & PF BY HOLDING THAT IF THE SAME WERE PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U /S.139(1) OF THE ACT EVEN WHEN THE SAME WERE NOT PAID BY THE ASSESSEE WITHIN THE DUE DATE OF RELEVANT ACTS. I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.118 118118 118/ // /CHNY CHNY CHNY CHNY/ // /20 2020 201 11 19 99 9 2 2.2 THE CIT(A) OUGHT TO HAVE APPRECIATED THAT THE E MPLOYEES CONTRIBUTION OF ESI & PF ARE GOVERNED BY THE SECTION 36(1)(VA) O F THE ACT AND NOT UNDER SECTION 43B OF THE ACT. 2.3 THE CIT(A) OUGHT TO HAVE CONSIDERED THE BOARDS CIRCULAR NO.22/2015, DT.17.12.2015 HAS ACCEPTED THE DECISION OF THE SUPR EME COURT IN THE CASE OF ALOM EXTRUSIONS ONLY IN RESPECT OF DISALLOWANCE U/S 43B OF THE ACT AND HAS STATED THAT THIS CIRCULAR DOES NOT APPLY TO THE CLAIM OF DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION TO WELFARE FUND S WHICH ARE GOVERNED BY SECTION 36(1)(VA) OF THE ACT. 3 FOR THESE AND OTHER GROUNDS THAT MAY BE ADDUCED A T THE TIME OF HEARING, IT IS PRAYED THAT THE ORDER OF THE LEARNED COMMISSI ONER OF INCOME TAX (APPEALS) BE SET ASIDE AND THAT OF THE ASSESSING OF FICER BE RESTORED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE F ILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 26.09.2013 DECLA RING A LOSS OF RS. 7,53,72,974/-. THE ASSESSEE IS ENGAGED IN THE BUSI NESS OF MANUFACTURE OF LEATHER SHOE UPPERS AND EARNED REVENUE FROM THE OPE RATIONS OF RS. 43,56,35,750/-. THE ASSESSEE HAD DELAYED THE PAYME NT/DEPOSIT OF THE EMPLOYEES CONTRIBUTION TO ESI AND PF AMOUNTING TO R S. 94,20,941/- DURING THE YEAR. HOWEVER, THE ASSESSEE HAD DEPOSITED THE SAID AMOUNT BEFORE FILING OF THE DUE DATE OF THE FILING OF RETURN U/S. 139(1) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). THE AO HAS STATED THAT W HEN THE AMOUNTS ARE COLLECTED FROM THE EMPLOYEES, IT PAR TAKES THE CHAR ACTER OF INCOME U/S. 2(24)(X) OF THE ACT AND THE SAME IS ALLOWED AS EXPE NDITURE WHEN THE SAME IS PAID IN ACCORDANCE WITH S. 36(1)(VA) OF THE ACT. T HE SAID PROVISION ALLOWS FOR DEDUCTION OF EMPLOYEES CONTRIBUTION OF STATUTORY FU NDS ONLY WHEN IT IS PAID BEFORE THE DUE DATES PRESCRIBED UNDER RELEVANT STAT UTES AND IN THE CIRCUMSTANCES, THE QUESTION OF ALLOWING LESS PAYMEN TS AS DEDUCTION U/S. I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.118 118118 118/ // /CHNY CHNY CHNY CHNY/ // /20 2020 201 11 19 99 9 3 36(1)(VA) OF THE ACT DOES NOT ARISE. THE LD. AO RE LIED ON THE DECISION IN THE CASE OF LKP SECURITIES LTD. IN ITA NO.638/MUM/2012 DATED 17 .05.2013 AND THE DECISION OF HONBLE HIGH COURT OF GUJARAT IN TH E CASE OF GSRTC LTD. [2014] 41 TAXMANN.COM 100 (GUJ) A ND THE SAID AMOUNT OF RS. 94,20,941/- WAS TREATED AS INCOME OF THE ASSESSEE AS PER THE PR OVISIONS OF S. 2(24)(X) OF THE ACT R/W R. 36(1)(VA) OF THE ACT AND ADDED BACK TO THE TOTAL INCOME OF THE ASSESSEE. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEF ORE LD. CIT(A). AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AND REL YING ON THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TAX CASE (APPEAL) N OS.585 & 586 AND MP NO.1 OF 2015 DATED 24.07.2015 AND ALLOWED THE APPEAL OF THE ASSESSEE. ON BEING AGGRIEVED, THE REVENUE FILED THIS APPEAL BEFO RE US. 4. WE HAVE HEARD BOTH THE SIDES, PERUSED THE MATERI ALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES B ELOW. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO NOTICED FROM FORM -3CD THAT THE CONTRIBUTIONS TOWARDS PF AND ESI OF RS. 94,20,941/- HAVE BEEN REMITTED BELATEDLY SINCE, THE ASSESSEE HAS NOT REMITTED THE CONTRIBUTION OF PF AND ESI BEFORE DUE DATE (AS PER RELEVANT ACT), THE AO H ELD THAT THE ASSESSEE DOES NOT QUALIFY FOR CLAIMING DEDUCTION U/S. 36(1)( VA) OF THE ACT TO AVAIL THE BENEFIT U/S. 43B OF THE ACT. HOWEVER, IT IS NOT TH AT THE ASSESSEE HAS NOT PAID I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.118 118118 118/ // /CHNY CHNY CHNY CHNY/ // /20 2020 201 11 19 99 9 4 THE ESI AND PF AMOUNT BEFORE DUE DATE OF THE FILING OF THE RETURN OF INCOME. THE LD. CIT(A) BY RELYING ON THE DECISION OF HONBL E JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD . (SUPRA) DIRECTED THE AO TO DELETE THE ADDITION OF RS. 94,20 ,941/-. THE TRIBUNAL HAS ALSO FOLLOWED THE ABOVE DECISION IN SEVERAL CASES A ND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. THE RELEVANT PORTION OF TH E ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IS REPRODUCED AS UNDER: 5. WE FIND THAT THE TRIBUNAL HAS RIGHTLY RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306, WHEREBY, THE SUPREME COURT HELD THAT O MISSION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT TO FIRS T PROVISO BY FINANCE ACT, 2003 ARE CURATIVE IN NATURE AND ARE EF FECTIVE RETROSPECTIVELY, I.E., WITH EFFECT FROM 1.4.1988 I. E., THE DATE OF INSERTION OF FIRST PROVISO. THE DELHI HIGH COURT I N THE CASE OF CIT V. AMIL LTD. REPORTED IN 321 ITR 508 HELD THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYEE'S CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT , BUT BEFORE THE DUE DATE OF FILING OF RETURN UNDER THE INCOME TAX A CT, NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY FINANCE ACT, 2003. 6. IN THE PRESENT CASE, THE ASSESSEE HAD REMITTED THE EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE FOR PAYMENT, BUT W ITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME. HENCE, FOLLOWING THE ABOVE-SAID DECISIONS, WE FIND NO REASON TO DIFFER WITH THE FIN DINGS OF THE TRIBUNAL. ACCORDINGLY, WE FIND NO QUESTION OF LAW MUCH LESS A NY SUBSTANTIAL QUESTION OF LAW ARISES FOR CONSIDERATION IN THESE A PPEALS. ACCORDINGLY, BOTH THE TAX CASE (APPEALS) STAND DISM ISSED. NO COSTS. CONSEQUENTLY, M.P.NO.1 OF 2015 IS ALSO DISM ISSED. 5. AFTER CONSIDERING THE RATIO LAID DOWN BY THE DEC ISION OF HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER S PASSED BY I.T.A. NO. I.T.A. NO. I.T.A. NO. I.T.A. NO.118 118118 118/ // /CHNY CHNY CHNY CHNY/ // /20 2020 201 11 19 99 9 5 THE LD. CIT(A). HENCE, THE APPEAL FILED BY THE REV ENUE IS LIABLE TO BE DISMISSED. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS DISMISSED. ORDER PRONOUNCED ON THE 21 ST AUGUST, 2019 AT CHENNAI. SD/- SD/- (S JAYARAMAN) ACCOUNTANT MEMBER (DUVVURU RL REDDY) JUDICIAL MEMBER CHENNAI, DATED, THE 21.08.2019 EDN, SR. PS 0 ' ),1 2! 32$, /COPY TO: 1. ! %& / APPELLANT, 2. )*%& / RESPONDENT, 3. 4, ( ! ) /CIT(A), 4. 4, /CIT, 5. 256 ),7 /DR & 6. 6' 8+ /GF.