STARS MULTIPURPOSE CO-OPERATIVE SOCIETY LIMITED, HYDERABAD V. DCIT., Circle-5(1), Hyderabad

ITA 13/Hyd/2024

• Counselvise Citation: [2024] 100 COUNSELVISE.COM (IT) 2689 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-04-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-A
• Next Hearing Date: 28-04-2024
• Assessment Year: 2018-2019
• Appeal Filed On: 05-01-2024
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 32; 143(1); 72

Judgement Text

आयकर अपीलीय अधिकरण, हैदराबाद पीठ में IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES “A”, HYDERABAD BEFORE SHRI LALIET KUMAR, JUDICIAL MEMBER & SHRI MADHUSUDAN SAWDIA, ACCOUNTANT MEMBER आ.अपी.सं/ITA No. 13/Hyd/2024 (नििाारण वर्ा/Assessment Year: 2018-19) Stars Multipurpose Co-Operative Society Limited, Hyderabad [PAN No. AAKAS6153R] Vs. Deputy Commissioner of Income Tax, Circle-5(1), Hyderabad अपीलार्थी/Appellant प्रत् यर्थी/Respondent नििााररती द्वारा/Assessee by: Shri P. Murali Mohan Rao, AR राजस् व द्वारा/Revenue by: Shri Shakeer Ahamed, DR स ु िवाई की तारीख/Date of hearing: 29/04/2024 घोर्णा की तारीख/Pronouncement on: 30/04/2024 आदेश / ORDER PER MADHUSUDAN SAWDIA, A.M: The captioned appeal filed by the assessee is directed against the order dated 23/11/2023 passed by the learned Addl/JCIT(A)-4, Mumbai, (“Ld. First Appellate Authority”), relating to the assessment year (AY) 2018-19. 2. Brief facts of the case are that the assessee is a Co- Operative society, filed its return of income for the year under consideration on 29/10/2018 admitting ‘NIL’ income. The ITA No. 13/Hyd/2024 Page 2 of 7 CPC Bengaluru (“CPC”) in the intimation u/s 143(1) of the income tax Act,1961(“ the Act”), dated 22/10/2019 disallowed the provident fund payment and ESI Fund payment of Rs. 14,56,847/- on the reason that the said payments are not allowable u/s. 36(1)(va) of the Act and determined the total income of the assessee at Rs. 14,56,847/- and finally raised a demand of Rs.5,59,053/-. 3. Aggrieved, assessee preferred appeal before the First Appellate Authority. 4. Considering the facts of the case, following the decision of Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd., Vs. CIT [2022] 143 taxmann.com 178 (SC), learned First Appellate Authority upheld the addition made by the CPC , by giving a finding vide para No. 6.3 of the order that ‘in the present appeal, the facts indicate that the sum of Rs. 14,56,847/- being employee’s contribution to PF/ESI has been paid after the due date under the Act’. 5. Aggrieved by the said order of the Ld. First Appellate Authority, assessee is in appeal before the Tribunal, raising as many as nine grounds. But at the time of hearing of the appeal before the Tribunal, the learned AR appearing on behalf of the assessee submitted that Ground No. 1 and 9 are general in nature and not pressing Grounds No. 7 & 8, hence these grounds did not require any specific adjudication. Grounds No. 2 to 5 relates to the disallowance of Rs. 14,56,847/- towards employee’s contribution to PF/ESI and ITA No. 13/Hyd/2024 Page 3 of 7 Ground No. 6 relates to set off of the disallowance made on account of employee’s contribution to PF/ESI from brought forward business losses of Rs. 2,88,80,12,064/-. 6. With regard to Grounds No. 2 to 5, learned AR submitted that all the payments corresponding to the addition of Rs. 14,56,847/- towards employee’s contribution to PF/ESI, have been paid before filing of return of income. Hence, the same should have been allowed by the Ld. First Appellate Authority u/s. 36(1)(v) of the Act. 7. Learned DR, on the other hand, while placing heavy reliance on the orders of the Revenue authorities, vehemently opposed the submission made on behalf of the assessee and argued that the impugned order is a well reasoned order and the same may be upheld. 8. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. It is an undisputed fact that Rs. 14,56,847/- towards employee’s contribution to PF/ESI, has been paid after the due date prescribed under respective PF/ESI Act. Similar issues came up before the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd., Vs. CIT [2022] 143 taxmann.com 178 (SC). Following the said decision of the Hon’ble Supreme Court (supra), the addition of Rs. 14,56,847/- towards employee’s contribution to PF/ESI was upheld and dismissed the claim of the assessee. ITA No. 13/Hyd/2024 Page 4 of 7 9. Now coming to Ground No. 6, relating to set off of the disallowance made on account of employee’s contribution to PF/ESI, which resulted in increase of income of the assessee from brought forward business losses, this ground has been raised for the first time before the ITAT as an additional ground. Learned AR submitted that this is legal ground, which goes to the root of the matter and requires no verification of facts from the records. Hence learned AR requested to accept the additional ground. Learned AR further submitted that the disallowance made on account of PF/ESI would result in increase of income under the head ‘business and profession’ and hence would be eligible for set off said disallowance against the brought forward business losses, as per the provisions of Section 72(2) of the Act. Hence, he requested the Bench to allow set off of the said addition made on account of PF/ESI from the brought forward business losses. 10. Per contra, learned DR, agitated to accept the contention raised by the learned AR. It was submitted that the eligibility of assessee needs to be verified by the learned AO. 11. We have heard the rival contentions, perused the material available on record and gone through the orders of the Revenue authorities. As far as the additional ground raised by the learned AR, we entertain the same, relying on the decision of Hon'ble Supreme Court in the case of National Thermal Power Co. Ltd., Vs., CIT [229 ITR 383] (SC) as considered in Tribunal’s Special Bench’s decision in All Cargo ITA No. 13/Hyd/2024 Page 5 of 7 Global Logistics Ltd., Vs. DCIT (2012) [137 ITD 217](SB) (Mumbai), holds that ‘tribunal can very well entertain a new ground going to root of the matter so as to determine correct tax liability of a taxpayer’. 11.1. On a careful consideration of the facts of the present case, we deem it necessary to re-produce the provisions of Section 72, as under: “Carry forward and set off of business losses. 72. (1) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and— (i) it shall be set off against the profits and gains, if any, of any business or profession carried on by him and assessable for that assessment year; (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on: Provided that where the whole or any part of such loss is sustained in any such business as is referred to in section 33B which is discontinued in the circumstances specified in that section, and, thereafter, at any time before the expiry of the period of three years referred to in that section, such business is re- established, reconstructed or revived by the assessee, so much of the loss as is attributable to such business shall be carried forward to the assessment year relevant to the previous year in which the business is so re-established, reconstructed or revived, and— (a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding. (2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub-section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section. ITA No. 13/Hyd/2024 Page 6 of 7 (3) No loss (other than the loss referred to in the proviso to sub-section (1) of this section) shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.” 11.2. From a perusal of provisions of Section 72 of the Act reproduced above, in our opinion, the assessee is eligible for set off of additional income resulted on account of disallowances made on account of PF/ESI from the brought forward business loss. Accordingly, we direct the learned Assessing Officer to verify the brought forward business losses and allow the set off to the tune of Rs. 14,56,847/-, being the amount of addition made on account of disallowance of ESI/PF subject to assessee fulfilling all the other requisite conditions. Accordingly, the ground of the assessee in this regard is treated as allowed for statistical purposes. 12. In the result, appeal of the assessee is treated as partly allowed for statistical purposes. Order pronounced in the open court on 30 th day of April, 2024. Sd/- Sd/- (LALIET KUMAR) (MADHUSUDAN SAWDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER Hyderabad, Dated: 30/04/2024 TNMM ITA No. 13/Hyd/2024 Page 7 of 7 Copy forwarded to: 1. Stars Multipurpose Co-operative Society Limited, C/o. P. Murali & Co., Chartered Accountants, 6-3-655/2/3, Somajiguda,Hyderabad. 2. The DCIT, Circle-5(1), Hyderabad. 3. The Pr.CIT-Hyderabad. 4. DR, ITAT, Hyderabad. 5. GUARD FILE TRUE COPY ASSISTANT REGISTRAR ITAT, HYDERABAD