DCIT, Bangalore V. M/s Duster Total Solutions Services Pvt. Ltd., Bangalore

ITA 1266/BANG/2015

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 5491 (ITAT-BANGALORE)
• Duration Of Justice: 1 year(s) 6 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-04-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 09-02-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 08-10-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 139

Judgement Text

ITA.1266/BANG/2015 PAGE - 1 IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH 'C', BANGALORE BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER AND SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER I.T.A NO.1266/BANG/2015 (ASSESSMENT YEAR : 2012-13) DEPUTY COMMISSIONER OF INCOME-TAX, CIRCLE - 2(1) (2), BENGALURU .. APPELLANT V. M/S. DUSTER TOTAL SOLUTIONS SERVICES P. LTD, NO.40, 4 TH FLOOR, ZAKAKIA CENTRE, 100 FT.ROAD, INDIRANAGAR, BENGALURU 560 038 .. RESPONDENT PAN : AACCD5989Q ASSESSEE BY : SHRI. SAROJ KUMAR PARIDA, CA REVENUE BY : SHRI. M. K. BIJU, JCIT HEARD ON : 09.02.2017 PRONOUNCED ON : 21.04.2017 O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER : THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT (A), BENGALURU-2, BENGALURU, DT.09.07.2015, FOR A. Y. 2012-13. 02. THE ASSESSEE, A PRIVATE LIMITED COMPANY, ENGAGE D IN RENDERING FACILITY MANAGEMENT SERVICES. WHILE DOING THE ASSE SSMENT, THE AO NOTED THAT THOUGH IT HAD MADE DEDUCTIONS FROM THE SALARY PAYMENTS OF ITS EMPLOYEES TOWARDS CONTRIBUTIONS TO PF AND ESI AGG REGATING TO RS.4,28,54,679/-, IT HAD REMITTED THE SAME TO THE G OVERNMENT ACCOUNT ITA.1266/BANG/2015 PAGE - 2 BEYOND THE DATES PRESCRIBED BY THE RESPECTIVE LAWS AND THEREFORE, HE DISALLOWED THE DEDUCTION CLAIMED U/S 43B (B) ON TH E GROUND THAT THE RETENTION OF THE AMOUNTS WITH IT BEYOND THE DATES DUE FOR THEIR REMITTANCE TO THE GOVERNMENT ACCOUNT CONSTITUTED ITS INCOME F OR THE RESPECTIVE ASSESSMENT YEARS IN TERMS OF SECTION 2(24)(X) READ WITH SECTION 36(1)(VA) AS IT IS INDEPENDENT OF SECTION 43B. IN DOING SO, THE AO REJECTED THE ASSESSEE'S CONTENTION THAT IRRESPECTIVE OF WH ETHER THE BELATED REMITTANCE OF PF /ESI CONTRIBUTIONS INCLUDED THE CO NTRIBUTIONS MADE BY THE EMPLOYEES OF THE ASSESSEE, THE DEDUCTION CLAIMED WA S ALLOWABLE IF THE DEDUCTIONS HAD BEEN REMITTED TO THE GOVERNMENT ACCOUNT WITHIN THE TIME ALLOWED FOR FILING THE RETURN OF INCOME U /S 139(1) OF THE ACT. THUS, ACCORDING TO THE AO, ONLY THE DELAY IN REMITTING TH E CONTRIBUTIONS OF THE EMPLOYER TO THE GOVERNMENT ACCOUNT WITHIN THE T IME PRESCRIBED FOR FILING THE RETURN U/S 139(1) WAS ALL OWABLE AND NOT THE CONTRIBUTIONS MADE BY THE EMPLOYEES WITHHELD BY THE EMPLOYER UNTIL THE DATE DUE FOR FILING THE RETURN OF INCOME U/S 139(1) . ACCORDINGLY, HE DISALLOWED RS.4,28,54,679/- REPRESENTING THE AMOUNT CONSISTING OF THE CONTRIBUTION OF BOTH THE EMPLOYER AND THE EMPLOYEES , WHICH HAD BEEN BELATEDLY REMITTED TO THE GOVERNMENT ACCOUNT. AGGR IEVED, THE ASSESSEE FILED AN APPEAL BEFORE THE CIT (A), BENGALURU-2. TH E CIT (A), INTER ALIA, RELYING THE JURISDICTIONAL HIGH COURT DECISION IN T HE CASE OF M/S. ESSAE TERAOKA P. LTD V. DCIT (ITA NO.480/2012), REPORTED IN [2014] 43 TAXMANN.COM 33 (KAR) HELD THAT THE DISALLOWANCE IS UNWARRANTED. AGGRIEVED, THE REVENUE FILED THIS APPEAL MAINLY WIT H FOLLOWING GROUND : ITA.1266/BANG/2015 PAGE - 3 THE CIT (A) HAS ERRED IN RELYING ON THE JURISDICT IONAL HIGH COURT IN THE CASE OF M/S. ESSAE TERAKA P. LTD V. DCIT (ITA N O.480/2012), BY HOLDING THAT THE DISALLOWANCE MADE BY THE AO IS UNW ARRANTED AND BY DELETING THE DISALLOWANCE OF RS.1,45,12,672/- *( SUBSEQUENTLY THE CIT (A) CORRECTED IT AT RS. RS.4,28,54,679/- BY HER ORDER IN ITA NO 248/DC-11(1)/CIT(A)-2/14-15 DT 24.9.2015) MADE BY THE AO SINCE THE SAME CASE HAS ALSO NOT REACHED ITS FINAL STATE. *SUPPLIED BY US 03. THE RELEVANT PORTION OF THE JURISDICTIONAL HIGH COURTS DECISION IN THE CASE OF M/S. ESSAE TERAOKA P. LTD V. DCIT, REPORTED IN [2014] 266 CTR 0246 IS EXTRACTED AS UNDER: 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 CONTR IBUTION TO BE MADE ON BEHALF OF THE MEMBER EMPLOYED BY THE EMPLOYER DIRECTLY. 20. PARAGRAPH-38 OF THE PF SCHEME PROVIDES FOR MODE OF PAYMENT OF CONTRIBUTIONS. AS PROVIDED IN SUB-PAR A(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 PROVID ENT FUND OR THE FUND UNDER THE ESI ACT WITHIN FIFTEEN DAYS O F THE CLOSURE OF EVERY MONTH PAY. IT IS CLEAR THAT THE WO RD CONTRIBUTION' USED IN CLAUSE (B) OF SECTION 43-B OF THE IT ACT MEANS THE CONTRIBUTION OF THE EMPLOYER AND T HE EMPLOYEE. THAT BEING SO, IF THE CONTRIBUTION IS MAD E ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF IN COME UNDER SUB-SECTION(1) OF SECTION 139 OF THE IT ACT I S 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 TH E ITA.1266/BANG/2015 PAGE - 4 EMPLOYEES' 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 WIT HIN THE MEANING OF SECTION 2(24)(X) OF THE IT ACT AND IN WH ICH CASE, THE ASSESSEE IS LIABLE TO PAY TAX ON THE SAID AMOUNT TREATING THAT AS HIS INCOME, DESERVES TO BE REJECTE D. FROM THE ABOVE, IT IS CLEAR THAT THE ORDER OF THE C IT (A) DESERVE NO INTERFERENCE AS THE JURISDICTIONAL HIGH COURTS AB OVE DECISION IS IN OPERATION. 04. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT ON 21 ST APRIL, 2017. SD/- SD/- (VIJAY PAL RAO) (S. JAYARAMAN) JUDICIAL MEMBER A CCOUNTANT MEMBER MCN* COPY TO: 1. THE ASSESSEE 2. THE ASSESSING OFFICER 3. THE COMMISSIONER OF INCOME TAX 4. THE COMMISSIONER OF INCOME TAX (A) 5. DR 6. GF, ITAT, BANGALORE BY ORDER ASSISTANT REGISTRAR.