M/S K.S. CARS PVT. LTD., JAIPUR V. INCOME TAX OFFICER, WARD-2-2, JAIPUR

ITA 1182/JPR/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 1444 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 11-10-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A K MAHALA
• Section: 43B; 37(1); 250

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENC HE A JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRA M SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 1182 & 1183/JP/2018 FU/KZKJ.K O'K Z @ ASSESSMENT YEAR :2013-14 & 2014-15 M/S K.S.CARS PVT. LTD., NATIONAL MOTORS BUILDING, M.I. ROAD, JAIPUR CUKE VS. ITO, WARD-2(2), JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACK7953K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P. C. PARWAL (CA) JKTLO DH VKSJ LS @ REVENUE BY : SHRI A. K. MAHALA (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 05/03/2019 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 18/03/2019 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THESE ARE TWO APPEALS FILED BY THE ASSESSEE AGAINST THE ORDER OF LD. CIT(A)-1, JAIPUR DATED 06.08.2018 FOR AY 2013-14 & 2014-15 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GROUNDS OF APPEAL: - ITA NO. 1182/JP/2018 FOR AY 2013-14 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE DISALLOWANCE OF EMPLOYEES CONTRIBUTION OF PF OF RS. 2,57,722/- AND ESI OF RS. 1,08,361/- BY INVOKING PROVISIONS OF SECTION 2(24)(X) R.W.S 36(1) (VA). ITA NO. 1183/JP/2018 FOR AY 2014-15 THE LD. CIT(A) HAS ERRED ON FACTS AND IN LAW IN CO NFIRMING THE DISALLOWANCE OF EMPLOYEES CONTRIBUTION OF PF OF RS. 9,52,468/- AND ESI OF RS. 94,463/- BY INVOKING PROVISIONS OF SECTION 2(24)(X) R.W.S 36(1) (VA). ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 2 2. BRIEFLY STATED, THE FACTS OF CASE ARE THAT DURIN G THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO OBSERVED THAT EMPLOYEES CONTRIB UTION TOWARDS PF OF RS.2,57,722/- AND ESI OF RS.1,08,361/- FOR AY 2013- 14 AND PF OF RS.9,52,468/- AND ESI OF RS.94,463/- FOR AY 2014-15 HAVE BEEN DEP OSITED BEYOND THE STIPULATED TIME AS ALLOWED U/S 36(1) R.W.S. 2(24)(X ). THE ASSESSEE RELIED ON VARIOUS CASE LAWS WHERE IT HAS BEEN HELD THAT WHERE THE EMPLOYEES CONTRIBUTION TO PF/ESI IS DEPOSITED BEFORE DUE DATE OF FILING OF RETURN, THE SAME CANNOT BE DISALLOWED U/S 36(1)(VA). THE AO, HOWEVER , DID NOT FIND THE CONTENTION OF THE ASSESSEE ACCEPTABLE BY STATING TH AT A DISTINCTION IS REQUIRED TO BE MADE BETWEEN 'EMPLOYER'S CONTRIBUTION' AND 'EMPL OYEES CONTRIBUTION' WHICH ARE DEDUCTIBLE UNDER SEPARATE PROVISIONS OF S ECTION 43B AND 36(1)(VA) RESPECTIVELY. HE FURTHER STATED THAT THE HON'BLE RA JASTHAN HIGH COURT WHILE DISMISSING THE DEPARTMENTAL APPEAL IN CASE OF CIT V S. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 131 HAS NOT CORRECTLY APPRECIATED THAT THE PROVISIONS O F SECTION 43B ARE NOT RELEVANT IN RESPECT OF 'EMPLOYE E'S CONTRIBUTION' TO PF AND THE SAME HAS BEEN CONTESTED BEFORE THE HON'BLE SUPR EME COURT THROUGH SLP. AFTER PLACING RELIANCE ON THE DECISION OF HON'BLE G UJARAT HIGH COURT IN CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION AN D THE CONTESTED DECISION OF THE HON'BLE RAJASTHAN HIGH COURT, HE HELD THAT THE LATE PAYMENT OF EMPLOYEES' CONTRIBUTION TOWARDS PF AND ESI IS NOT ALLOWABLE EX PENDITURE AND ACCORDINGLY, HE MADE DISALLOWANCE OF THE SAME. 3. ON APPEAL, THE LD. CIT(A) PLACED RELIANCE ON THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN CASE OF PCIT VS. M/S RAJAST HAN RENEWABLE ENERGY CORPORATION LIMITED (DB ITA NO.10, 11 & 12/2018 IN ORDER DATED 13.03.20 18) WHERE IT WAS HELD THAT: 'WITH REGARDS TO ISSUE NOS. 2 & 3, THE CONTROVERSY IS PENDING BEFORE THE SUPREME COURT IN CIT VS. STATE BANK OF BIKANER & JA IPUR IN SLP(C) NO. ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 3 16249/2014, THEREFORE, SUBJECT TO THE DECISION OF S LP, FOR THE PRESENT, THESE ISSUES ARE DECIDED IN THE FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSE. IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOU NT IF THE DECISION IS IN THEIR FAVOUR'. RELYING ON THE SAID DECISION, THE LD CIT(A) CONFIRM ED THE DISALLOWANCE MADE BY THE AO. AGAINST THE SAID FINDINGS, THE ASSE SSEE IS NOW IN APPEAL BEFORE US. 4. DURING THE COURSE OF HEARING, THE LD AR SUBMITT ED THAT THE ASSESSEE DEPOSITED THE EMPLOYEES' CONTRIBUTION TOWARDS PF/ES I BEFORE THE DUE DATE OF FILING OF RETURN. THE HON'BLE JURISDICTIONAL HIGH C OURT IN VARIOUS CASES I.E., CIT VS. STATE BANK OF BIKANER & JAIPUR (2014) 99 DTR 13 1, CIT VS. JAIPUR VIDYUT VITRAN NIGAM LTD., 363 ITR 307, CIT VS. UDAIPUR DUG DH UTPADAK SAHAKARI SANGH LTD. (2013) 366 ITR 163, PCIT VS. RAJASTHAN S TATE BEVERAGES CORPORATION LTD., AND CIT VS. M/S RAJASTHAN STATE G ANGANAGAR SUGAR MILLS LTD.,(2017) 393 ITR 0421 HAS HELD THAT WHERE THE EM PLOYEES CONTRIBUTION TO PF/ESI IS DEPOSITED BEFORE DUE DATE OF FILING OF RE TURN, THE SAME CANNOT BE DISALLOWED U/S 36(1)(VA). THE HON'BLE SUPREME COURT HAS DISMISSED THE SLP OF THE DEPARTMENT IN CASE OF CIT VS. RAJASTHAN STATE B EVERAGES CORPORATION LTD. (2017) 250 TAXMAN 16. 5. IT WAS FURTHER SUBMITTED THAT THE. LD. CIT(A) H AS INCORRECTLY INTERPRETED THE DECISION OF THE HON'BLE RAJASTHAN HIGH COURT IN CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED (SUP RA). IN THAT CASE, THE HON'BLE HIGH COURT HAS HELD THAT 'SUBJECT TO THE DECISION OF SLP, FOR THE PRESENT, THESE ISSUES ARE DECIDED IN THE FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSE. IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF THE DECISION IS IN THEIR FAVOUR'. THUS, WHAT THE HON'BLE COURT HAS STATED IN THE ORD ER IS THAT THE HON'BLE SUPREME COURT HAS ADMITTED THE SLP IN CASE OF STATE BANK OF BIKANER & JAIPUR (WHICH WAS DECIDED IN FAVOUR OF AS SESSEE), THE APPEAL IN CASE ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 4 OF RREC IS DECIDED IN FAVOUR OF ASSESSEE AND AGAINS T THE DEPARTMENT AND IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF THE DECISION OF SLP IS IN THEIR FAVOUR BUT BY MISTAKE HAS MENTIONED THAT ISSU E IS DECIDED IN FAVOUR OF DEPARTMENT AND AGAINST THE ASSESSEE. IF THE ISSUE I S TO BE DECIDED IN FAVOUR OF DEPARTMENT, THEN THERE IS NO NEED OF THE SUBSEQUENT SENTENCE THAT 'IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF TH E DECISION IS IN THEIR FAVOUR'. THEREFORE, THE DECISION SHOULD BE READ IN WHOLE AND NOT BY PICKING SOME WORDS OF THE ORDER. IT WAS FURTHER SUBMITTED T HAT OTHERWISE ALSO MOST OF THE PAYMENTS ARE MADE WITHIN THE GRACE PERIOD OF 5 DAYS AND THEREFORE, TO THAT EXTENT, NO DISALLOWANCE CAN BE MADE. IN VIEW OF THE ABOVE, THE DISALLOWANCE CONFIRMED BY THE LD. CIT(A) BE DELETED. 6. THE LD DR IS HEARD WHO HAS RELIED ON THE ORDER OF THE LOWER AUTHORITIES. 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. UNDISPUTEDLY, THE EMPLOYEES CONTRIBUTION TOWARDS PF/ESI HAVE BEEN DEPOSITED WELL BEFORE THE DUE DATE OF FILING OF RET URN OF INCOME AND THE ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY VARIO US DECISIONS OF THE RAJASTHAN HIGH COURT. REGARDING THE LATEST DECISION OF THE RAJASTHAN HIGH COURT IN CASE OF RAJASTHAN RENEWAL ENERGY CORPORATI ON LIMITED (SUPRA), WE ARE OF THE CONSIDERED BELIEF THAT HAVING READ THE SAID DECISION IN WHOLE, THE DECISION INFACT SUPPORTS THE CASE OF THE ASSESSEE R ATHER THAN THE REVENUE. WE HAVE RECENTLY DEALT WITH AN IDENTICAL ISSUE AND THE SAID DECISION HAS BEEN EXAMINED IN DETAIL IN CASE OF M/S K.S. AUTOMOBILES PVT. LTD VS ITO (ITA NO. 1184 &1185/JP/18 DATED 08/03/2019) WHEREIN THE RELEVANT FINDINGS ARE AS UNDER: 3. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. AT THE OUTSET, WE NOTE THAT THIS ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE VARIOUS DE CISIONS OF THE HONBLE ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 5 JURISDICTIONAL HIGH COURT INCLUDING THE DECISION IN CASE OF CIT VS. STATE BANK OF BIKANER & JAIPUR 99 DTR 131 AS WELL AS DECI SION IN CASE OF CIT VS. JAIPUR VIDYUT VITRAN NIGAM LTD. 363 ITR 307 AND IN CASE OF CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. 366 ITR 163. WE FURTHER NOTE THAT THE LD. CIT(A) THOUGH HAS NOT DISPUTED TH E VARIOUS DECISIONS OF HONBLE HIGH COURT HOWEVER, DISALLOWANCE MADE BY TH E AO ARE SUSTAINED AS HE MISUNDERSTOOD THE DECISION OF HONBLE JURISDI CTIONAL HIGH COURT IN CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY COR PORATION LIMITED IN DB ITA NO. 10,11 & 12/2018 DATED 13.03.2018. IN THE CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED (SUPRA) THE HONBLE HIGH COURT HAS CONSIDERED THIS ISSUE IN PA RA 4 TO 6 AS UNDER:- 4. SO FAR AS QUESTION NO. 1 IS CONCERNED, THE SAME IS NOW COVERED BY THE DECISIONS OF THIS COURT IN PRINCIPAL COMMISS IONER OF INCOME- TAX V/S RAJASTHAN STATE SEED CORPORATION LTD. [2016 ] 386 ITR 267 (RAJ) WHEREIN IT HAS BEEN HELD AS UNDER:- IN SO FAR AS THE EXPENDITURE INCURRED ON STATE REN EWAL FUND IS CONCERNED, THE SAID EXPENDITURE ALSO GOES TO SHOW T HAT THE RENEWAL FUND WAS SET UP BY THE STATE GOVERNMENT AND WAS CREATED WITH THE OBJECT OF PROVIDING A SAFETY NET F OR THE WORKERS LIKELY TO BE EFFECTED BY RESTRICTING IN THE STATE P UBLIC ENTERPRISE AND THAT A FINDING OF FACT HAS BEEN RECORDED THAT T HE CONTRIBUTION MADE TO THE STATE RENEWAL FUND IS SOLELY FOR THE PU RPOSES OF THE WELFARE AND BENEFIT OF THE EMPLOYEES. IN OUR VIEW, IT IS FOR THE ASSESSEE TO DECIDE WHETHER ANY EXPENDITURE SHOULD B E INCURRED IN THE COURSE OF BUSINESS AND EXPENDITURE OF THIS NATU RE BEING FOR BUSINESS EXPEDIENCY IS CERTAINLY ALLOWABLE DEDUCTIO N UNDER SECTION 37(1) OF THE ACT. IN OUR VIEW ANY NORMAL EXPENDITUR E FOR THE WELFARE AND BENEFIT OF THE EMPLOYEES IS ALLOWABLE E XPENDITURE ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 6 UNDER SECTION 37(1), THE TRIBUNAL HAS COME TO A FIN DING OF FACT THAT IT WAS A LEGAL OBLIGATION OF THE RESPONDENT-ASSESSE E TOWARDS CONTRIBUTION OF THE SAID AMOUNT TO THE STATE RENEWA L FUND AND THERE BEING A LEGAL OBLIGATION AS WELL IN OUR VIEW THE TRIBUNAL HAS COME TO A CORRECT CONCLUSION. IN VIEW OF THE ABOVE, QUESTION NO. 1 IS ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE DEPARTMENT. 6. WITH REGARD TO ISSUE NO. 2 AND 3 THE CONTROVERSY IS PENDING BEFORE THE SUPREME COURT IN C.I.T., JAIPUR VS/ MS S TATE BANK OF BIKANER AND JAIPUR IN SLP NO. 16249/2014, THEREFOR E, SUBJECT TO DECISION OF SLP, FOR THE PRESENT, THESE ISSUES ARE DECIDED ON IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF THE DEC ISION IS IN THEIR FAVOUR. THUS, IT IS CLEAR THAT THE HONBLE JURISDICTIONAL H IGH COURT HAS FOLLOWED THE EARLIER DECISIONS IN CASE OF PCIT VS. RAJASTHAN STA TE SEED CORPORATION LIMITED 386 ITR 267 AS WELL AS DECISION IN CASE OF CIT VS. STATE BANK OF BIKANER & JAIPUR (SUPRA). ALL THESE DECISIONS WHICH WERE ALLO WED BY THE HONBLE JURISDICTIONAL HIGH COURT ARE IN FAVOUR OF THE ASSE SSEE HOWEVER, IN THE CONCLUSION IN PARA 6 THERE IS A TYPOGRAPHICAL MISTA KE WHEREIN IT IS STATED THESE ISSUES DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAI NST THE ASSESSEE. THE WHOLE DECISION OF THE HONBLE HIGH COURT HAS TO BE CONSIDERED IN THE CONTEXT OF THE DECISION FOLLOWED AND THE SUBSEQUENT LINE WH ICH SAYS IT WILL BE OPENED FOR THE DEPARTMENT TO RECOVER THE AMOUNT IF THE DEC ISION IN THEIR FAVOUR WHICH MEANS THAT IN CASE OF FURTHER APPEAL BEFORE HONBLE SUPREME COURT IF DECISION IS DELIVERED IN FAVOUR OF THE DEPARTMENT IT CAN REC OVER THE AMOUNT. THEREFORE, EVEN THE DECISION WHICH IS RELIED UPON THE LD. CIT( A) THE SAME IS IN FAVOUR OF THE ASSESSEE THOUGH DUE TO TYPOGRAPHICAL MISTAKE IT WAS MISUNDERSTOOD BY THE ITA NO. 1182 & 1183/JP/2018 M/S K.S.CARS PRIVATE LIMITED. JAIPUR VS . ITO, WARD-2(2), JAIPUR 7 LD. CIT(A) AS IN FAVOUR OF THE REVENUE. ACCORDINGLY , IN VIEW OF A SERIES OF DECISIONS OF THE HONBLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE AND FURTHER HONBLE SUPREME COURT IN CASE OF PCIT VS. R AJASTHAN STATE BEVERAGES CORPORATION LTD. 250 TAXMANN 16 HAS DISMISSED THE S LP FILED BY THE DEPARTMENT THIS ISSUE IS DECIDED IN FAVOUR OF THE A SSESSEE AND AGAINST THE REVENUE. HENCE, DISALLOWANCES/ADDITIONS MADE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF & ESI ARE DELETED. 8. IN LIGHT OF ABOVE DISCUSSIONS, DISALLOWANCES/ADD ITIONS MADE BY THE AO ON ACCOUNT OF EMPLOYEESS CONTRIBUTION TO PF & ESI IS HEREBY DIRECTED TO BE DELETED AND THE GROUND OF APPEAL TAKEN IN BOTH THE YEARS ARE ALLOWED. IN THE RESULT, APPEALS OF THE ASSESSEE ARE ALLOWED. PRONOUNCED IN THE OPEN COURT ON 18/03/2019. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 18/03/2019 * GANESH KR. VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S K. S. CARS PVT. LTD., JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD-2(2), JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 1182 & 1183/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR