Veljan Denison Ltd., Hyd, Hyderabad V. Addl. CIT, Range-3, Hyd, Hyderabad

ITA 1251/HYD/2015

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1883 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-12-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: B KURMI NAIDU
• Assessee Lawyers: V SIVA KUMAR

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D.MANMOHAN, VICE PRESIDENT AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ITA NO.1251/HYD/2015 : ASSESSMENT YEARS 2011- 12 M/S. VELJAN DENISON LIMITED, HYDERABAD (PAN - AAACFL 6114 P ) V/S ADDL. COMMISSIONER OF INCOME - TAX RANGE 3, HYDERABAD (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI V.SIVAKUMAR RESPONDENT BY : SHRI B.KURMI NAIDU DR DATE OF HEARING 16 .1 2 .2015 DATE OF PRONOUNCEMENT 16.12.2015 O R D E R PER D.MANMOHAN, VICE PRESIDENT : THIS APPEAL FILED BY THE ASSESSEE COMPANY IS DIRE CTED AGAINST THE ORDER PASSED BY THE COMMISSIONER OF INC OME- TAX(APPEALS)-5, HYDERABAD AND IT PERTAINS TO ASSESS MENT YEAR 2011- 12. 2. FOLLOWING GROUNDS ARE URGE BEFORE US. 1. THE ORDER OF THE COMMISSIONER OF INCOME-TAX(APP EALS)-- 5 , HYDERABAD DATED 31.08.2015 IS ERRONEOUS, CONTRA RY TO LAW AND FACTS OF THE CASE. 2. (A) COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT J USTIFIED IN CONFORMING THE DISALLOWANCE OF PROVISION FOR LEA VE ENCASHMENT OF RS.6,45,609/- PAYABLE TO ITS EMPLOYEES CLAIMED AS DEDUCTION BY THE APPELLANT BASED ON THE DECISION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LIMITED V/S. UNION OF INDIA (292 ITR 470). (B) COMMISSIONER OF INCOME-TAX(APPEALS) OUGHT TO HA VE SEEN HAT AS HELD BY THE HON'BLE CALCUTTA HIGH COURT , THE LIABILITY TO PAY LEAVE ENCASHMENT IS A TRADING AND ASCERTAINED LIABILITY AND NOT A CONTINGENT LIABILIT Y. THEREFORE COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF ITA NO.1251/HYD/2015 M/S. VELJAN DENISON LIMITED, HYDERABAD 2 EXPENDITURE ON LEAVE ENCASHMENT WHILE COMPUTING THE INCOME. 3. COMMISSIONER OF INCOME-TAX(APPEALS) IS NOT JUSTI FIED IN CONFIRMING THE DISALLOWANCE OF RS.18,47,120/- (COMPRISING OF RS.17,03.850/- TOWARDS EMPLOYEES SHA RE OF PF AND RS.1,43,270/- TOWARDS EMPLOYEE SHARE OF E SI) U/S. 36(1)(VA) ON THE GROUND THAT SUCH PAYMENTS WER E MADE BEYOND THE DUE DATES UNDER THE RESPECTIVE ACTS . COMMISSIONER OF INCOME-TAX(APPEALS) IN THIS REGARD OUGHT TO HAVE SEEN THAT HON'BLE APEX COURT HELD IN THE CASE OF ALOM EXCLUSIONS LTD. (SUPRA) THAT EVEN PAYM ENTS MADE ON ACCOUNT OF PF AND ESI BEFORE DUE DATE FOR F ILING OF RETURN ARE ALLOWABLE AS DEDUCTION. HENCE THE COMMISSIONER OF INCOME-TAX(APPEALS) SHOULD NOT HAVE CONFIRMED THE DISALLOWANCE RS.18,47,120/-. 4. FOR ALL OF THE ABOVE AND SUCH OTHER GROUNDS AS M AY BE URGED AT THE TIME OF HEARING IT IS MOST RESPECTFULL Y PRAYED THAT THE HON'BLE TRIBUNAL BE PLEASED TO DIRE CT THE ASSESSING OFFICER TO DELETE DISALLOWANCES MADE TOWA RDS PROVISION FOR LEAVE ENCASHMENT AND EMPLOYEES SHARE OF PF AND ESI U/S. 36(1)(VA) IN THE INTEREST OF JUSTI CE. 3. AT THE TIME OF HEARING, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT GROUNDS NO.1 AND 4 ARE GENE RAL IN NATURE AND NEED NO SPECIFIC ADJUDICATION. 4. IN SO FAR AS GROUND NO.2 IS CONCERNED, LEARNED COUNSEL ADVERTED OUR ATTENTION TO THE ORDER OF THIS TRIBUNA L IN THE CASE OF SURYAVANSHI SPINNING MILLS LTD.(ITA NO.224/HYD/2012 FOR ASSESSMENT YEAR 2008-09) DATED 23.9.2015, WHEREIN ON IDENTICAL ISSUE, THE MATTER WAS SET ASIDE TO THE FILE OF THE ASSESSING OFFICER WITH THE FOLLOWING OBSERVATIONS- 3. AFTER CONSIDERING THE RIVAL CONTENTIONS, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE LD. C IT(A). EVEN THOUGH IT IS A FACT THAT HON'BLE CALCUTTA HIGH COUR T IN THE CASE OF EXIDE INDUSTRIES LTD. V/S. UNION OF INDIA (292 I TR 470) SUPRA HAS STRUCK DOWN PROVISIONS OF SECTION 43B(F), THE HON'BLE SUPREME COURT STAYED THAT ORDER. CONSEQUENTLY, THE PROVISIONS OF SECTION 43B(F) ARE APPLICABLE. CIT(A)S ORDER I S IN ACCORDANCE WITH THE PRINCIPLES ON THE SUBJECT. WE HOWEVER, DIRECT THE ASSESSING OFFICER (AO) TO GIVE RELIEF TO ASSESSEE IN CASE HON'BLE SUPREME COURT ALSO CONCURS WITH THE OP INION ITA NO.1251/HYD/2015 M/S. VELJAN DENISON LIMITED, HYDERABAD 3 EXPRESSED BY THE HON'BLE CALCUTTA HIGH COURT. THE G ROUND FOR THE TIME BEING IS CONSIDERED ALLOWED FOR STATISTICA L PURPOSES. LEARNED COUNSEL EXPRESSED NO OBJECTION IF SIMILAR D IRECTION IS GIVEN IN THIS CASE ALSO. 5. THE LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND, RELIED UPON THE ORDERS OF THE REVENUE AUTHORI TIES. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN THE LIGHT OF THE DECISION OF THE HYDERABAD BENCH OF THE TRIBUNAL IN THE CASE OF SURYAVANSHI SPINNING MILLS, CITED SUPRA, WE SET ASIDE THE ORDER OF THE CIT(A) ON THIS ISSUE AND DIRECT THE ASSESSING O FFICER TO RECONSIDER THE MATTER IN THE LIGHT OF THE DIRECTIONS OF THE TR IBUNAL IN PARA-3 THEREOF EXTRACTED HEREINABOVE. THIS GROUND OF THE A SSESSEE IS ACCORDINGLY ALLOWED FOR STATISTICAL PURPOSES. 7. AS REGARDS GROUND NO.3, LEARNED COUNSEL SUBMIT TED THAT THE DISALLOWANCE REFERABLE TO EMPLOYEES SHARE OF P ROVIDENT FUND AND ESI PAID BEYOND THE DUE DATE UNDER THE RESPECTIVE S TATUTES IS NOT IN ACCORDANCE WITH LAW, IN THE LIGHT OF THE DECISION O F THE APEX COURT IN THE CASE OF CIT V/S. ALOM EXTRUSIONS LTD. (319 ITR 366). HE ALSO SUBMITTED THAT UNDER IDENTICAL CIRCUMSTANCES, ITAT A BENCH, HYDERABAD IN THE CASE OF VBC INDUSTRIES LTD., HYDER ABAD V/S. DY. CIT AND OTHERS (ITA NOS.18/HYD/2014 FOR ASSESSMENT YEAR 2010-11 AND OTHERS), VIDE ITS ORDER DATED 8.5.2015, AFTER CONSI DERING VARIOUS DECISIONS ON THE POINT AT ISSUE, HAS UPHELD THE ACT ION OF CIT(A) IN DELETING THE DISALLOWANCE MADE UNDER S.43B, OBSERVI NG THAT IF THE PAYMENT IS MADE BEFORE THE DUE DATE FOR FILING OF T HE RETURN UNDER S.139(1) OF THE ACT, IT MAY BE ALLOWED AS DEDUCTION , IRRESPECTIVE OF THE ITA NO.1251/HYD/2015 M/S. VELJAN DENISON LIMITED, HYDERABAD 4 FACT THAT THE PAYMENTS ARE MADE BEYOND THE DUE DAT E SPECIFIED UNDER THE RESPECTIVE ENACTMENTS. 8. ON THIS ISSUE ALSO, THOUGH LEARNED DEPARTMENTA L REPRESENTATIVE SUBMITTED THAT DIVERGENT VIEW HAS BE EN EXPRESSED BY HON'BLE KERALA HIGH COURT, HE FAIRLY ADMITTED THAT INSOFAR AS HYDERABAD BENCHES OF THE TRIBUNAL ARE CONCERNED, A VIEW FAVOURABLE TO THE ASSESSEE WAS CONSISTENTLY ADOPTED. 9. HAVING REGARD TO THE VIEW TAKEN BY THE HYDERABA D BENCH OF THE TRIBUNAL, WE SET ASIDE THE IMPUGNED ORDER OF THE CIT(A) ON THIS ISSUE, AND SET ASIDE THE MATTER TO THE FILE OF THE ASSESSING OFFICER FOR RECONSIDERATION OF THE DISALLOWANCE UNDER S.43B, IN THE LIGHT OF THE ABOVE DECISION OF THE TRIBUNAL IN THE CASE OF VBC INDUSTRIES, NOTED ABOVE, AND WITH A DIRECTION THAT INSOFAR AS THE PA YMENTS MADE BEFORE THE DUE DATE FOR THE FILING OF THE RETURN UNDER S.1 39(1), NO DISALLOWANCE MAY BE MADE UNDER S.43B. THE ASSESSIN G OFFICER IS ACCORDINGLY DIRECTED TO VERIFY THE ACTUAL DATE OF R EMITTANCE OF THE EMPLOYEES CONTRIBUTION TO PF LAND ESI AND REDECIDE THIS ISSUE ACCORDINGLY AFTER GIVING REASONABLE OPPORTUNITY OF HEARING TO THE ASSESSEE. THIS GROUND OF THE ASSESSEE IS ALSO TREAT ED AS ALLOWED FOR STATISTICAL PURPOSES. 10. AS PRONOUNCED IN THE OPEN COURT, APPEAL OF TH E ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES . SD/- SD/- (INTURI RAMA RAO) (D.MANMOHAN) ACCOUNTANT MEMBER. VICE PRESIDENT DT/- 16 TH DECEMBER, 2015 ITA NO.1251/HYD/2015 M/S. VELJAN DENISON LIMITED, HYDERABAD 5 COPY FORWARDED TO: 1. M/S. VELJAN DENISON LIMITED, PLOT NO.44, HCL TOW ERS, CHIKOTI GARDENS, BEGUMPET, HYDERABAD 500 016. 2. ADDL. COMMISSIONER OF INCOME - TAX RAGE 3, HYDERABAD 3. 4. COMMISSIONER OF INCOME - TAX(APPEALS) 5 , HYDERABAD PR. COMMISSIONER OF INCOME - TAX 5 , HYDERABAD 5. DEPARTMENTAL REPRESENTATIVE ITAT, HYDERABAD B.V.S.