Deputy Commissioner of Income TAx Circle-5(1)(2), Bangalore V. M/s Page Industries Limited , Bangalore

ITA 1209/BANG/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1357 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-06-2019
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 10-06-2019
• Assessment Year: 2014-2015
• Appeal Filed On: 11-04-2018
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI N.V. VASUDEVAN, VICE PRESIDENT AND SHRI B.R. BASKARAN , ACCOUNTANT MEMBER ITA NO. 1209/BANG/2018 ASSESSMENT YEAR : 2014 - 15 THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 5(1)(2), BANGALORE. VS. PAGE INDUSTRIES LTD., 3 RD FLOOR, UMIYA BUILDING, ABBAIAH REDDY INDUSTRIAL AREA, JOCKEY CAMPUS, NO.6/2 & 6/4, HONGASANDRA, BEGUR HOBLI, BENGALURU 560 068. PAN: AABCP 2630D APPELLANT RESPONDENT APP ELLANT BY : DR. SHANKAR PRASAD , ADD L.CIT(DR)(ITAT), BENGALURU. RESPONDENT BY : SMT. SUMAN LUNKAR, CA DATE OF HEARING : 10 .0 6 .2019 DATE OF PRONOUNCEMENT : 14. 0 6 .201 9 O R D E R PER N.V. VASUDEVAN, VICE PRESIDENT THIS APPEAL BY THE REVENUE IS AGAINST THE ORDER DATED 10.1.2018 OF THE CIT(APPEALS)-V, BENGALURU RELATING TO ASSESSMEN T YEAR 2014-15 ON THE FOLLOWING GROUNDS OF APPEAL:- 1. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE C ASES AND IN LAW, CIT (A) WAS RIGHT IN DELETING THE DISALLOWANCE /ADDITION MADE ON ACCOUNT DELAYED PAYMENT OF EMPLOYEES CONTRI BUTION TO PROVIDENT FUNDS AND ESI BEYOND DUE DATES PRESCRI BED UNDER PF ACT AND ESI ACT RESPECTIVELY ? ITA NO.1209/BANG/2018. PAGE 2 OF 6 2. WHETHER ON THE FACTS AND CIRCUMSTANCES OF THE CA SES AND IN LAW, CIT (A) WAS RIGHT IN ALLOWING THE ASSEESSE'S C LAIM IN FULL FOR DEDUCTION U/S 115JJAA WITHOUT APPRECIATING THE PURPORT AND MEANING OF THE SECTION, WHICH DOES NOT ALLOW DE DUCTION FOR WAGES PAID FOR EARLIER PREVIOUS YEARS OTHER THA N THE ONE RELEVANT TO THE ASSESSMENT YEAR ? 3. THE APPELLANT CRAVES LEAVE TO ALTER, AMEND OR DE LETE THE ABOVE GROUNDS OF APPEAL OR ADD ANY OTHER GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF THE APPEAL? 2. AS FAR AS GROUND NO.1 RAISED BY THE REVENUE IN THIS APPEAL IS CONCERNED, THE FACTS ARE THAT THE ASSESSEE WHICH IS A COMPANY ENGAGED IN THE BUSINESS OF MANUFACTURE AND DISTRIBUTION OF JOC KEY BRAND INNER GARMENTS CLAIMED DEDUCTION OF RS.46,97,203 WHICH WA S EMPLOYEES CONTRIBUTION TO ESI & PF, WHICH WAS PAID BEYOND THE DUE DATE AS PER THE RELEVANT GOVERNING CONTRIBUTION TO PF & ESI, BUT WA S NEVERTHELESS PAID ON OR BEFORE THE DUE DATE FOR FILING OF RETURN OF INCO ME U/S. 139(1) OF THE INCOME-TAX ACT, 1961 [THE ACT]. THERE IS NO DISP UTE THAT IF THE EMPLOYEES CONTRIBUTION TO PF & ESI IS PAID ON OR BEFORE DUE D ATE U/S. 139(1) OF THE ACT, THEN THERE CAN BE NO DISALLOWANCE U/S. 43B OF THE ACT AND IT WAS SO HELD BY THE HONBLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V. SABARI INDUSTRIES [2008] 298 ITR 141 (KAR) . 3. THE LD. DR, HOWEVER, PLACED RELIANCE ON A CONTRA RY DECISION RENDERED BY THE HONBLE GUJARAT HIGH COURT IN THE C ASE OF CIT V. GUJARAT STATE ROAD TRANSPORT CORPORATION, 366 ITR 170 (GUJ) . 4. THE DECISION OF THE HONBLE HIGH COURT OF KARNAT AKA WHICH IS THE JURISDICTIONAL HIGH COURT IS TO BE FOLLOWED BY THE TRIBUNAL. CONSEQUENTLY, WE FIND NO MERIT IN THE RELEVANT GROUND NO.1 OF APP EAL OF THE REVENUE. ITA NO.1209/BANG/2018. PAGE 3 OF 6 5. AS FAR AS GROUND NO. 2 IS CONCERNED, IT PERTAINS TO DEDUCTION U/S. 80JJAA OF THE ACT WHICH HAS BEEN WRONGLY REFERRED T O AS 115JJAA OF THE ACT IN GROUND NO.2 RAISED BY THE REVENUE. AS FAR A S THIS GROUND IS CONCERNED, THE FACTS ARE THAT THE ASSESSEE COMPANY HAD CLAIMED DEDUCTION AT 30% U/S.80JJAA AMOUNTING TO RS.8,81,46,102/- IN RESPECT OF ADDITIONAL WAGES PAID FOR EMPLOYMENT OF NEW WORKMEN DURING THE PREVIOUS YEAR 2013- 14 RELEVANT TO AY 2014-15 AND HAD ALSO CLAIMED DEDU CTION @ 30% IN RESPECT OF ADDITIONAL WAGES PAID FOR EARLIER PREVIO US YEARS 2012-2013 OF RS.1,63,67,148/- AND 2013-2014 OF RS.1,56,86,134/- TOTALING TO RS.3,20,53,282/-. THE AO REFERRED TO THE PROVISIONS OF THE SECTION 80JJAA AND OBSERVED THAT THE DEDUCTION IS AVAILABLE ON THE ADDITIONAL WAGES PAID TO THE NEW REGULAR WORKMEN EMPLOYED IN THE PREVIOUS YE AR FOR THE THREE ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR RELE VANT TO THE PREVIOUS YEAR IN WHICH SUCH EMPLOYMENT IS PROVIDED AND FOUND THAT THE DEDUCTION CLAIMED IN RESPECT OF THE ADDITIONAL WAGES PAID FOR THE EARLIER PREVIOUS YEARS, IF ALLOWED, WOULD AMOUNT TO ALLOWING WEIGHTE D DEDUCTION WHICH IS NOT SUGGESTIVE IN THE PROVISIONS AND THEREFORE, DISALLO WED THE EXCESS DEDUCTION CLAIMED OF RS.3,20,53,282/-. 6. THE ASSESSEE BEFORE THE CIT(APPEALS) SUBMITTED THAT THE DEDUCTION FOR THE WAGES WERE PAID TO THE NEW EMPLOYEES FOR AS SESSMENT YEAR 2012- 13 AND 2013-14 ALSO. HOWEVER, THE SAME HAS BEEN DIS ALLOWED BY THE AO ON THE GROUND THAT THE ASSESSEE HAVING CLAIMED THE DEDUCTION U/S.80JJAA IN THE RESPECTIVE YEARS, THE CLAIM MADE THEREOF IN SUBSEQUENT YEARS WOULD AMOUNT TO WEIGHTED DEDUCTION. IT WAS SUBMITTED THAT THE RELEVANT PORTION OF THE SECTION WHICH NEEDS TO BE UNDERSTOOD IS 'BE ALLOWED THE DEDUCTION OF AN AMOUNT EQUAL TO 30% OF ADDITIONAL WAGES PAID TO NEW REGULAR WORKMEN EMPLOYED BY THE ASSESSEE IN THE PREVIOUS YE AR FOR 3 ASSESSMENT YEARS INCLUDING THE ASSESSMENT YEAR RELE VANT TO THE PREVIOUS YEAR IN WHICH SUCH EMPLOYMENT IS PROVIDED . THE WORDS ITA NO.1209/BANG/2018. PAGE 4 OF 6 USED ARE AN AMOUNT EQUIVALENT TO 30% OF THE WAGES P AID IN THE PREVIOUS YEAR WHICH CAN BE CLAIMED FOR 3 YEARS INCLUDING THE FIRST PREVIOUS YEAR. FURTHER IT WAS SUBMITTED THAT THERE WAS NO WEIGHTED DEDUCTION AND THE CLAIM WAS MADE RIGHTLY U/S 80JJAA. RELIANCE WAS PLA CED ON THE ORDER OF THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE AY 2004-05 WHEREIN THE ORDERS OF TRIBUNAL IN ASSESSEES OWN CASE FOR AY 20 10-11 AND 2007-08 TO 2009-10 WAS FOLLOWED. 7. THE CIT(APPEALS) ALLOWED THE APPEAL OF ASSESSEE HOLDING AS FOLLOWS:- FURTHER THE JURISDICTIONAL HONBLE TRIBUNAL IN THE APPELLANTS OWN CASE FOR THE ASSESSMENT YEAR 2004-05 HAS HELD THAT WHEN THE MATTER WAS TAKEN UP FOR HEARING AND ORDER OF THE TR IBUNAL IN ITA NOS. 273 & 274/BANG/2005 DATED 21/12/06 FOR THE ASS ESSMENT YEARS 2001-02 AND 2002-03 IN ACIT VS. TEXAS INSTRUM ENTS (INDIA) PVT. LTD WAS PRODUCED BEFORE US IN WHICH THE TRIBUN AL ON EXACTLY IDENTICAL ISSUE HAD DECIDED IN ASSESSEE'S FAVOUR. F OLLOWING THE SAME WE ALLOW THE APPEAL BY THE ASSESSEE'. FURTHER, DURING THE APPELLATE PROCEEDINGS, THE APPELLANT FURNISHED COPI ES OF FORM 10DA GIVING THE DETAILS OF NUMBER OF WORKMEN ON THE ROLES. ON PERUSAL OF THE SAME IT WAS FOUND THAT THE REPORT U/ S.80JJAA IS IN ORDER. FURTHER, IN MY EARLIER ORDER PASSED FOR ASSE SSMENT YEARS 2006-07 AND 2011-12 IN THE APPELLANTS OWN CASE I H AVE ALLOWED THE DEDUCTION CLAIMED U/S.80JJAA AND IN THE YEAR UN DER CONSIDERATION THE FACTS ARE SIMILAR TO THAT OF ASSE SSMENT YEARS 2006- 07 AND 2011-12 AND FOLLOWING THE HON'BLE JURISDICTI ONAL TRIBUNAL'S DECISION GIVEN IN FAVOUR OF THE APPELLANT, THE CLAI M MADE U/S.80JJAA IN THIS YEAR ALSO IS HEREBY ALLOWED. 8. BEFORE US, COPIES OF TRIBUNAL ORDERS REFERRED TO BY THE CIT(A) WERE FILED. WE FIND THAT IN AY 2007-08 IDENTICAL ISSUE CAME UP FOR CONSIDERATION BEFORE THE TRIBUNAL IN ITA NO.1231/BANG/2014 AND TH E TRIBUNAL IN ITS ORDER DATED 24.7.2015 ALLOWED SIMILAR CLAIM OF THE ASSESS EE. THE TRIBUNAL VIDE ITA NO.1209/BANG/2018. PAGE 5 OF 6 PARAGRAPH-8 OF THE AFORESAID ORDER HELD THAT ONCE A NEW WORKMEN IS EMPLOYED IN A PREVIOUS YEAR AND WORKS FOR 300 DAYS IN THAT YEAR THE ADDITIONAL WAGES PAID TO HIM IS TO BE ALLOWED AS DE DUCTION AT 30% OF THE ADDITIONAL WAGES PAID TO HIM IN THAT YEAR SHOULD BE ALLOWED AS DEDUCTION FOR THREE ASSESSMENT YEARS AND THAT HE NEED NOT BE IN EMPLOYMENT FOR THE SUBSEQUENT PERIOD FOR CLAIMING DEDUCTION U/S.80JJAA OF THE ACT. IT WAS HELD THAT ONCE THE DEDUCTION IS ALLOWED IN THE FIRS T YEAR THEN, 30% OF SUCH ADDITIONAL WAGES IS ALLOWABLE AS DEDUCTION IN EACH OF THE SUBSEQUENT TWO YEARS. HOWEVER IN ASSESSEES OWN CASE FOR AY 2005- 06 & 2006-07, IN ITA NO.151 & 152/BANG/2016 ORDER DATED 16.12.2016 THE T RIBUNAL REMANDED IDENTICAL ISSUE TO THE AO FOR FRESH CONSIDERATION. SIMILAR ORDER WAS PASSED IN AY 2010-11 IN IT(TP) A.NO.163/BANG/2015 ORDER D ATED 24.6.2016. SINCE IN THE LATER ORDERS ON IDENTICAL ISSUE, THE T RIBUNAL HAS REMANDED TO THE AO FOR FRESH CONSIDERATION OF THE ISSUE, WE DEE M IT FIT TO RESTORE THIS ISSUE TO THE AO FOR FRESH CONSIDERATION IN ACCORDAN CE WITH LAW. CONSEQUENTLY, GR.NO.2 IS TREATED AS ALLOWED FOR STA TISTICAL PURPOSE. 9. IN THE RESULT, THE APPEAL BY THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSE. PRONOUNCED IN THE OPEN COURT ON THIS 14 TH DAY OF JUNE, 2019. SD/- SD/- ( B.R. BASKARAN ) ( N.V. VASUDEVAN ) ACCOUNTANT MEMBER VICE PRESIDENT BANGALORE, DATED, THE 14 TH JUNE, 2019. / D ESAI S MURTHY / ITA NO.1209/BANG/2018. PAGE 6 OF 6 COPY TO: 1. APP ELL ANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE.