M/s. Minority Credit Co-operative Society Limited, Bagalkot V. Income Tax Officer, Ward - 1, Bagalkot

ITA 1188/BANG/2019

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 9330 (ITAT-BANGALORE)
• Duration Of Justice: 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 27-05-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH ES : B , BANGALORE BEFORE SHRI B.R. B ASKARAN, ACCOUNTANT MEMBER AND SHRI PAVAN KUMAR GADALE , JUDICAL MEMBER ITA NO. 1188 (BANG)/ 201 8 ( ASSESSMENT YEAR : 201 4 - 15 ) THE ASST. COMMISSIONER OF INCOME TAX, CIRCLE - 5(1)(1), ROOM NO .233, 2 ND FLOOR, BMTC COMPLEX, KORAMANGALA, BANGALORE - 560 095 APPELLANT VS M/S N ET CONNECT PVT. LTD., NO.2728, ADJACENT TO ADE COMPOUND, CMH ROAD, 80 FT. ROAD, HAL II STAGE, INDIRANAGAR, BANGALORE - 560 038. RESPONDENT RE VENUE BY : SHRI R.N.SIDD A P PAJI, ADDL.CIT APPELLANT BY : SHRI V.SRIDHAR, CA DATE OF HEARING : 1 8 - 0 6 - 2019 DATE OF PRONOUNCEMENT : 21 - 06 - 2019 O R D E R PER B.R.BAS K ARAN, ACCOUNANT MEMBER THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 5, BENGALURU , VIDE ORDER DATED 22 - 1 - 2017 AND IT RELATES TO ASSESSMENT YEAR 2014 - 15 . 2. THE REVENUE IS AGGRIEVED BY THE DECISION OF THE LD. CIT(A) IN D ELE TING THE DISALLOWANCE M A DE BY THE AO U/S 43B OF THE IT ACT, 1961 FOR DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI BEYOND THE DUE DATE S PRESCRIBED UNDER THE RESPECTIVE ACTS. 2 3. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THE AO NOTICED THAT THE ASSESSEE HAS REMITTED THE EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI BEYOND THE DUE DATE PRESCRIBED UNDER THE ACT. ACCORDINGLY, BY INVOKING PROVISIONS OF SEC.36(1)(VA) O F THE ACT, THE AO DISALLOWED A S UM OF RS.83 . 11 LAKHS . THE LD. C IT(A) , HOWEVER, ALLOWED THE SAME BY FOLLOWING THE DECISION RENDERED BY THE HON'BLE KARNATAKA HIGH COURT IN THE C A SE OF M/S ESSAE TERAOKA PVT.LTD., VS DCIT ( IN ITA NO.480/2013) DATED 04 - 02 - 2014 . THE REVENUE IS AGGRIEVED BY THE SAID DECISION. 4. WE HAVE NOTICED T HAT AN IDENTICAL ISSUE WAS CONSIDERED BY THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF M/S ESSAE TERAOKA PVT.LTD., VS DCIT ( IN ITA NO.480/2013) (SUPRA), WHEREIN THE H ONBLE JURISDICTIONAL HIGH C OURT HAS HELD THAT THE EMPLOYEES CONTRIBUTION IS ALSO NOT LIABLE TO BE DISALLOWED U/S 43B OF THE ACT, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE PRESCRIBED FOR FILING THE RETURN OF INCOME U/S 139(1) O F THE IT ACT, 1961. FOR THE SAKE OF CONVENIENCE , WE EXTRACT BELOW THE RELEVANT PORTION OF THE ORDER PASSED BY THE HON'BLE KARNATAKA HIGH COURT AS UNDER; 14. SECTION 43 - B OF THE IT ACT PROVIDES FOR CERTAIN DEDUCTIONS TO BE ALLOWABLE ONLY ON ACTUAL PAYMENT. WE HAVE PERUSED SECTION 43 - B OF THE IT ACT VERY CAREFULLY. THE RELEVANT PORTION OF THE SAID SECTION, FOR OUR PURPOSE, READS THUS: '43 - B. NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISION OF THIS ACT, A DEDUCTION OTH ERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF - 3 (A)XXXXXX (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF EMPLOYEES, (C) XXXXXX (D) XXXXXX (E) XXXXXX (F) XXXXXX SHALL BE ALLOWED (IRRESPECTIVE OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED BY THE ASSESSEE ACCORDING TO THE METHOD OF ACCOUNTING REGULARLY EMPLOYED BY HIM) ONLY IN COMPUTING THE INCOME REFERRED TO I N SECTION 28 OF THAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM: PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION(1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AF ORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN.' 15. FROM BARE PERUSAL OF THIS PROVISION, IT IS CLEAR THAT UNDER THE PROVISION, FOR IT ACT , AN EXTENSION IS GIV EN TO THE EMPLOYER TO MAKE PAYMENT OF CONTRIBUTION TO PROVIDENT FUND OR ANY OTHER FUND TILL 4 THE 'DUE DATE' APPLICABLE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION(1) OF SECTION 139 OF THE IT ACT IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN. IN SHORT, THIS PROVISION STATES, NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVI SION CONTAINED IN THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE IN THIS ACT IN RESPECT OF ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY FUND SUCH AS PROVIDENT FUND SHALL BE ALLOWED IF IT IS PAID ON OR BEFORE THE DUE DATE AS CONTE MPLATED UNDER SECTION 139(1) OF THE IT ACT. THIS PROVISION HAS NOTHING TO DO WITH THE CONSEQUENCES, PROVIDED FOR UNDER THE PF ACT/PF SCHEME/ESI ACT, FOR NOT DEPOSITING THE 'CONTRIBUTION' ON OR BEFORE THE D UE DATES THEREIN. 16. IN THE PRESENT CASE, ADMITTEDLY, THOUGH THE EMPLOYER DID NOT DEPOSIT THE CONTRIBUTION, WITHIN THE STIPULATED TIME, AS CONTEMPLATED BY PARAGRAPH - 30 OF THE PF SCHEME OR BEFORE THE DUE DATE UNDER THE PROVISIONS OF THE PF SCHEME/ACT, HE D EPOSITED THE CONTRIBUTION TO THE PF/ESI FUND BEFORE THE DUE DATE CONTEMPLATED UNDER SECTION 139(1) OF THE ACT. 17. SECTION 6 OF THE PF ACT PROVIDES FOR CONTRIBUTIONS AND MATTERS WHICH MAY BE PROVIDED FOR I N SCHEMES. PARAGRAPH - 29 OF THE PF SCHEME STATES WHAT IS 'CONTRIBUTION'. THE EXPRESSION 5 'CONTRIBUTION' IS ALSO DEFINED UNDER THE PF ACT BY SECTION 2(C) OF THE PF ACT, WHICH MEANS A CONTRIBUTION PAYABLE IN RESPECT OF A MEMBER UNDER THE SCHEME OR THE CONTRIBU TION PAYABLE IN RESPECT OF AN EMPLOYEE TO WHOM THE INSURANCE SCHEME APPLIES. IF THIS DEFINITION IS READ WITH SUB - PARA(1) OF PARAGRAPH - 29 IN CHAPTER - V OF THE PF SCHEME, IT WOULD MEAN THAT THE CONTRIBUTIONS PAYABLE BY THE EMPLOYER UNDER THE SCHEME SHALL BE A T A PARTICULAR RATE AND THE CONTRIBUTION PAYABLE BY THE ASSESSEE SHALL BE EQUAL TO THE CONTRIBUTION PAYABLE BY THE EMPLOYER. 18. PARAGRAPH - 30 OF THE PF SCHEME PROVIDES FOR PAYMENT OF CONTRIBUTIONS. SUB - PARA(1) OF PARAGRAPH - 30 STATES THAT THE EMPLOYER SHALL , IN THE FIRST INSTANCE, PAY BOTH THE CONTRIBUTION PAYABLE BY HIMSELF (IN THIS SCHEME REFERRED TO AS THE EMPLOYER'S CONTRIBUTION) AND ALSO, ON BEHALF OF THE MEMBER EMPLOYED BY HIM DIRECTLY OR BY OR THROUGH A CONTRACTOR, THE CONTRIBUTION PAYABLE BY SUCH MEM BER (IN THIS SCHEME REFERRED TO AS THE MEMBER'S CONTRIBUTION). 19. FROM BARE PERUSAL OF SUB - PARA(1) OF PARAGRAPH - 30, IT IS CLEAR THAT THE WORD 'CONTRIBUTION' IS USED NOT ONLY TO MEAN CONTRIBUTION OF THE EMPLOYER BUT ALSO CONTRIBUTION TO BE MADE ON BEHALF O F THE MEMBER EMPLOYED BY THE EMPLOYER DIRECTLY. 6 20. PARAGRAPH - 38 OF THE PF SCHEME PROVIDES FOR MODE OF PAYMENT OF CONTRIBUTIONS. AS PROVIDED IN SUB - PARA(1), THE EMPLOYER SHALL, BEFORE PAYING THE MEMBER, HIS WAGES, DEDUCT HIS CONTRIBUTION FROM HIS WAGES AND DEPOSIT THE SAME TOGETHER WITH HIS OWN CONTRIBUTION AND OTHER CHARGES AS STIPULATED THEREIN WITH THE PROVIDENT FUND OR THE FUND UNDER THE ESI ACT WITHIN FIFTEEN DAYS OF THE CLOSURE OF EVERY MONTH PAY. IT IS CLEAR THAT THE WORD 'CONTRIBUTION' USED IN CLAUS E(B) OF SECTION 43 - B OF THE IT ACT MEANS THE CONTRIBUTION OF THE EMPLOYER AND THE EMPLOYEE. THAT BEING SO, IF THE CONTRIBUTION IS MADE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION(1) OF SECTION 139 OF THE IT ACT IS MADE, THE EMPLOYER IS ENTITLED FOR DEDUCTION. 21. THE SUBMISSION OF MR.ARAVIND, LEARNED COUNSEL FOR THE REVENUE THAT IF THE EMPLOYER FAILS TO DEDUCT THE EMPLO YEES' CONTRIBUTION ON OR BEFORE THE DUE DATE, CONTEMPLATED UNDER THE PROVISIONS OF THE PF ACT AND THE PF SCHEME, THAT WOULD HAVE TO BE TREATED AS INCOME WITHIN THE MEANING OF SECTION 2(24)(X) OF THE IT AC T AND IN WHICH CASE, THE ASSESSEE IS LIABLE TO PAY TAX ON THE SAID AMOUNT TREATING THAT AS HIS INCOME, DESERVES TO BE REJECTED. 5. WE NOTICE THAT THE HONBLE JURISDICTIONAL KARNATAKA HIGH COURT HAS HELD THAT THE EMPLOYEES CONTRIBUTION ALSO WOULD BE C OVERED BY THE 7 RELAXATION GIVEN IN SEC.43B OF THE ACT, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT FOR FILING RETURN OF INCOME. IN THE INSTANT CASE, THERE IS NO DISPUTE WITH REGARD TO THE FACT THAT THE IMPUGNED AMOUNTS WE RE PAID BY THE ASSESSEE BEFORE THE DUE DATE PRESCRIBED U/S 139(1) OF THE ACT FOR FILING RETURN OF INCOME. FURTHER WE NOTICE THAT THE LD. CIT(A) HAS FOLLOWED THE ABOVE SAID DECISION RENDERED BY THE JURISDICTIONAL HIGH COURT , WHICH IS BINDING ON ALL AUTHORI TIES BELOW THE HIGH COURT. ACCORDINGLY, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE ORDER PASSED BY LD CIT(A) ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL FILED B Y THE REVENUE IS DISMISSED. PRONOUNCED ON 21 ST DAY OF JUNE, 2019. SD/ - SD/ - ( PAVAN KUMAR GADALE , ) ( B.R.BA S KARA N ) JUDICIAL MEMBER ACCOUNTANT ME MBER DATED: 21 - 06 - 2019 * AM C OPY OF THE ORDER FORWARDED TO: 1.APPELLANT; 2.RESPONDENT; 3.CIT; 4.CIT(A); 5.DR; 6.GUARD FILE BY ORDER ASST. REGISTRAR