Venkateswara Electrical Industries (P) Ltd., CHENNAI V. DCIT, CHENNAI

ITA 1344/CHNY/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 81141 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2014
• Appeal Filed By: Assessee
• Bench Allotted: D
• Next Hearing Date: 26-08-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 15-05-2014
• Court: TRIBUNAL
• Department Lawyers: A SASI KUMARJCIT
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNALD BENCH, CHEN NAI . . . , ! , ' # $ BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER I.T.A. NO. ASSESSMENT YEAR !% APPELLANT &'!% RESPONDENT 1344/MDS/2014 2008-09 M/S.VENKATESWARA ELECTRICAL INDUSTRIES (P) LTD., NEW NO.75, OLD NO.74, KUNDRATHUR ROAD, PORUR, CHENNAI-600 116 [PAN: AAACV 0717 C] THE DY. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(4), CHENNAI-600 034 1345/MDS/2014 2009-10 1636/MDS/2014 2008-09 THE ASST. COMMISSIONER OF INCOME TAX, COMPANY CIRCLE-III(4), NEW BLOCK, 4 TH FLOOR, 121, MAHATMA GANDHI ROAD, NUNGAMBAKKAM, CHENNAI-34 M/S.VENKATESWARA ELECTRICAL INDUSTRIES (P) LTD., NEW NO.75, OLD NO.74, KUNDRATHUR ROAD, PORUR, CHENNAI-600 116 [PAN: AAACV 0717 C] / APPELLANT BY : MR. SAROJ KUMAR PARIDA , ADVOCATE / RESPONDENT BY : MR. A.SASI KUMAR,JCIT / DATE OF HEARING : 26-08-2014 !' / DATE OF PRONOUNCEMENT : 28-08-2014 #( / O R D E R PER VIKAS AWASTHY, J.M: ITA NOS.1344/2014 & 1345/2014 HAVE BEEN FILED BY TH E ASSESSEE AGAINST THE ORDER OF COMMISSIONER OF INCOM E TAX(APPEALS)-III, CHENNAI FOR THE ASSESSMENT YEAR ( AY) 2008-09 DT.20-01-2014 & AY.2009-10 DT.13-02-2014, RESPECTIV ELY. THE ITA. NOS. 1344, 1345 & 1636/MDS/2014 2 REVENUE HAS FILED ITA NO.1636/2014 ASSAILING THE OR DER OF CIT(APPEALS) FOR THE AY.2008-09. IN BOTH THE APPEALS, THE ASSESSEE HAS IMPUGNED THE FINDINGS OF CIT(APPEALS) IN CONFIRMING DIS-ALLOWANCE OF CONT RIBUTION TOWARDS EMPLOYEES PROVIDENT FUND AND ESI. THE REVENUE IN ITS APPEAL HAS ASSAILED THE ORDER OF CIT(APPEALS) IN DELETING THE DIS- ALLOWANCE MADE U/S.40(A)(IA) OF THE INCOME TAX ACT, 1961 (HEREIN AFTER REFERRED TO AS THE ACT) ON ACCOUNT OF DELAY IN DEPOSIT OF TDS AMOUNT. 2. THE BRIEF FACTS OF THE CASE ARE: THE ASSESSEES I S ENGAGED IN MANUFACTURING OF POWER DISTRIBUTION TRANSFORMERS AN D ALLIED EQUIPMENTS. FOR THE AY.2008-09, THE ASSESSEE FILED ITS RETURN OF INCOME ON 29-10-2008 DECLARING INCOME OF ` 4,86,85,103/-. DURING SCRUTINY ASSESSMENT PROCEEDINGS, THE ASSESSING OFFI CER OBSERVED THAT THERE IS DELAY IN REMITTING EMPLOYEES CONTRIB UTION OF ESI AND PF. THE ASSESSING OFFICER DIS-ALLOWED ` 1,04,226/- CLAIMED U/S.36(1)(VA). THE ASSESSING OFFICER FURTHER OBSER VED THAT THE ASSESSEE HAD DEDUCTED TAX AT SOURCE U/S.194C ON PAY MENT OF LABOUR CHARGES AND U/S.194-I ON MONTHLY PAYMENT OF RENT. HOWEVER, THE TAX DEDUCTED AT SOURCE IN THE MONTH OF MARCH, 2008 WAS REMITTED TO GOVERNMENT EXCHEQUER IN THE MONTH O F JULY, 2008. ITA. NOS. 1344, 1345 & 1636/MDS/2014 3 THE ASSESSING OFFICER MADE ADDITION OF ` 99,90,441/- U/S.40(A)(IA) FOR NON-COMPLIANCE OF TDS PROVISIONS. 3. SIMILARLY FOR THE AY.2009-10, THE ASSESSING OFFI CER MADE DIS-ALLOWANCE OF ` 6,43,754/- FOR DELAY IN PAYMENT OF EMPLOYEES CONTRIBUTION TO EMPLOYEES PROVIDENT FUND AND ESI. AGGRIEVED BY THE ASSESSMENT ORDERS FOR BOTH THE AYS , THE ASSESSEE FILED APPEALS BEFORE THE CIT(APPEALS). TH E CIT(APPEALS) VIDE IMPUGNED ORDERS, UPHELD THE FINDI NGS OF ASSESSING OFFICER IN RESPECT OF DIS-ALLOWANCE OF PA YMENT OF PROVIDENT FUND AND ESI. WHEREAS, ON THE ISSUE OF D IS-ALLOWANCE U/S.40(A)(IA) FOR DELAYED PAYMENT OF TDS, THE CIT(A PPEALS) FOLLOWED THE DECISION OF THE HON'BLE CALCUTTA HIGH C OURT IN THE CASE OF CIT VS. VIRGIN CREATIONS REPORTED AS TIOL 181 HC KOL AND THE ORDER OF CO-ORDINATE BENCH OF THE TRIBUNAL IN ITA NO.325/MDS/2012 IN CASE TITLED ACIT VS. M/S.TRV GLOBAL TRADING DECIDED ON 14-05-2012 AND DELETED THE DIS-ALLOWANCE . IN THE BACKGROUND OF THESE FACTS, BOTH, THE ASSESSEE AND T HE REVENUE HAVE COME IN APPEAL BEFORE THE TRIBUNAL. 4. SHRI SAROJ KUMAR PARIDA, ADVOCATE APPEARING ON BEHALF OF THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAD DEPOSI TED ITA. NOS. 1344, 1345 & 1636/MDS/2014 4 EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI FOR BOTH THE AYS, BEFORE THE DUE DATE OF FILING OF RETURN. THE ASSESSEE HAD COMPLIED WITH THE PROVISIONS OF THE ACT, THUS THE D IS-ALLOWANCE MADE BY THE AUTHORITIES BELOW IS UN-SUSTAINABLE. I N ORDER TO SUPPORT HIS CONTENTIONS, THE LD.COUNSEL FOR THE ASS ESSEE PLACED ON RECORD A COPY OF THE ORDER OF TRIBUNAL IN ITA NO.21 19/MDS/2011IN THE CASE OF JCIT VS. M/S.S.M.APPARELS(P) LTD., DECIDED ON 05-04- 2013. ON THE ISSUE RAISED BY THE REVENUE IN ITS AP PEAL, THE LD.COUNSEL SUPPORTED THE FINDINGS OF THE CIT(APPEAL S) ON THE ISSUE OF DIS-ALLOWANCE U/S.40(A)(IA). FURTHER TO BUTTRES S HIS ARGUMENTS, THE LD.COUNSEL PLACED RELIANCE ON THE DECISION OF C O-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S.TRV GLOBAL TRADING (SUPRA). 5. ON THE OTHER HAND, SHRI A.SASI KUMAR, JCIT APPEARING ON BEHALF OF THE REVENUE DEFENDED THE FINDINGS OF CIT( APPEALS) IN CONFIRMING DIS-ALLOWANCE MADE ON ACCOUNT OF DELAYED CONTRIBUTION OF PROVIDENT FUND & ESI BY THE ASSESSEE. THE LD.DR SUBMITTED THAT THE ASSESSEE HAS NOT COMPLIED WITH THE PROVISI ONS OF SECTION 36(1)(VA). HOWEVER, ON THE ISSUE OF DELAYED DEPOSI T OF TDS, THE LD.DR SUBMITTED THAT THE ASSESSEE HAS DELIBERATELY CAUSED DELAY IN DEPOSIT OF TAX DEDUCTED AT SOURCE. THE ASSESSEE SHOULD HAVE ITA. NOS. 1344, 1345 & 1636/MDS/2014 5 REMITTED THE TAX DEDUCTED ON OR BEFORE 31 ST MARCH, WHEREAS THE SAME WAS DEPOSITED IN JULY 2008 I.E., AFTER THE DEL AY OF MORE THAN THREE MONTHS. THE DR PRAYED FOR RESTORING THE FIND INGS OF ASSESSING OFFICER ON THE ISSUE. 6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPRESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW, AS WELL AS THE JUDGMENTS/DEC ISIONS RELIED ON BY THE LD.COUNSEL FOR THE ASSESSEE. IT IS AN UN-DI SPUTED FACT THAT THERE HAS BEEN DELAY IN REMITTANCE OF EMPLOYEES CON TRIBUTION OF ESI AND PROVIDENT FUND IN BOTH THE AYS I.E., 2008-0 9 & 2009-10. IT IS EQUALLY UN-DISPUTED THAT THE ASSESSEE HAS DEP OSITED THE AMOUNT TOWARDS EMPLOYEES CONTRIBUTION OF ESI AND PR OVIDENT FUND BEFORE THE DUE DATE OF FILING OF RETURN. THE HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMIL LTD., REPORTED AS 321 ITR 508 HAS HELD THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYE ES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER D UE DATE AS PRESCRIBED UNDER THE RELEVANT ACT BUT BEFORE THE DU E DATE OF FILING OF RETURN UNDER THE INCOME TAX ACT, NO DIS-ALLOWANC E COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS AM ENDED BY THE FINANCE ACT, 2003. THE DECISION OF THE HON'BLE DEL HI HIGH COURT HAS BEEN FOLLOWED BY THE CO-ORDINATE BENCH OF THE T RIBUNAL IN THE ITA. NOS. 1344, 1345 & 1636/MDS/2014 6 CASE OF JCIT VS. M/S.S.M.APPARELS(P) LTD., (SUPRA). THE TRIBUNAL HAS BEEN CONSISTENTLY FOLLOWING THE VIEW TAKEN BY T HE HON'BLE DELHI HIGH COURT. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM EXPENDITURE ON EMPLOYEES CONTRIBUTION TOWARD S ESI AND PROVIDENT FUND FOR BOTH THE AYS. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED. 7. THE REVENUE IN ITS APPEAL HAS ASSAILED THE FINDI NGS OF CIT(APPEALS) IN DELETING DIS-ALLOWANCE MADE U/S.40( A)(IA) FOR DELAYED REMITTANCE OF TAX DEDUCTED AT SOURCE. THE ASSESSEE HAD DEDUCTED TAX AT SOURCE ON VARIOUS DATES STARTING FR OM MARCH, 2008 TO JULY, 2008 FOR THE PERIOD RELEVANT TO AY.2008-09 ON PAYMENT OF RENT AND LABOUR CHARGES. BUT THE SAME WAS DEPOSITE D WITH THE DEPARTMENT DURING THE PERIOD STARTING FROM 11 TH MARCH, 2008 TO 23 RD JULY, 2008 I.E., MUCH BEFORE THE DUE DATE OF FILING OF RETURN SPECIFIED IN SECTION 139(1) OF THE ACT. THIS FACT HAS NOT BEEN DISPUTED BY THE REVENUE. THE CO-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF ACIT VS. M/S.TRV GLOBAL TRADING (SUPRA), AFTER CONSIDERING THE DECISION OF THE HON'BLE CALCUTTA HIG H COURT IN THE CASE OF CIT VS. VIRGIN CREATIONS (SUPRA) AND THE DECISION OF SPECIAL BENCH OF THE TRIBUNAL IN THE CASE OF BHARTI SHIPYARD LTD., VS. DCIT REPORTED AS 132 ITD 53 UPHELD THE FINDINGS OF ITA. NOS. 1344, 1345 & 1636/MDS/2014 7 CIT(APPEALS) IN DELETING DIS-ALLOWANCE MADE BY ASSE SSING OFFICER U/S.40(A)(IA). THE HON'BLE CALCUTTA HIGH COURT HAS HELD THAT ALL PAYMENTS OF TDS MADE BEFORE DUE DATE OF FILING OF R ETURN WOULD BE OUTSIDE THE PURVIEW OF SECTION 40(A)(IA). THE TRIB UNAL IN THE CASE OF ACIT VS. M/S.TRV GLOBAL TRADING (SUPRA) HAS FOLLOWED THE JUDGMENT OF THE HON'BLE CALCUTTA HIGH COURT. WE DO NOT FIND ANY REASON TO DEFER WITH THE VIEW CONSISTENTLY BEING FO LLOWED. ACCORDINGLY, THE APPEAL OF THE REVENUE IS DISMISSED BEING DEVOID OF MERIT. ORDER PRONOUNCED ON THURSDAY, THE 28 TH AUGUST, 2014 AT CHENNAI. SD/- SD/- ( . . . ) ( ! ) (DR. O.K. NARAYANAN) (VIKAS AWAS THY) #$% / VICE PRESIDENT & '( / JUDICIAL MEMBER )& /CHENNAI, *' /DATED: 28 TH AUGUST, 2014 TNMM '+ ,-.- /COPY TO: 1. /APPELLANT 2. /RESPONDENT 3. /01 /CIT(A) 4. / /CIT 5. -23 4 /DR 6. 356 /GF