Charchit Apparels Pvt. Ltd., Ahmedabad V. The Income tax Officer, Ward-1(3), Ahmedabad

ITA 1446/AHD/2005

• Counselvise Citation: [2009] 114 COUNSELVISE.COM (IT) 9243 (ITAT-AHMEDABAD)
• Duration Of Justice: 4 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-08-2009
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 30-06-2009
• Assessment Year: 2002-2003
• Appeal Filed On: 19-05-2005
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: REKHA SUKLA
• Keywords: Question of law
• Section: 43B; 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH A AHMEDABAD BEFORE SHRI MAHAVIR SINGH, JUDICIAL MEMBER, AND SHRI D. C. AGRAWAL, ACCOUNTANT MEMBER ITA NO.1446/AHD/2005 ASSESSMENT YEAR:2002-03 DATE OF HEARING:30.6.09 DRAFTED:1.7.09 CHARCHIT APPARELS PVT. LTD. MEHTA LODHA & CO. CHARTERED ACCOUNTANTS, 105,SAKAR-I, ASHRAM ROAD, AHMEDABAD PAN NO.AAACC6361K V/S . INCOME TAX OFFICER, WARD-1(3), AHMEDABAD (APPELLANT) .. (RESPONDENT) APPELLANT BY :- NONE RESPONDENT BY:- SMT. REKHA SUKLA, SR. DR O R D E R PER MAHAVIR SINGH, JUDICIAL MEMBER:- THIS APPEAL BY THE ASSESSEE IS ARISING OUT OF THE O RDER OF COMMISSIONER OF INCOME-TAX (APPEALS)-V, AHMEDABAD I N APPEAL NO. CIT(A)-V/WD.1(3)/189/2004-05 DATED 28-01-2005. THE ASSESSMENT WAS FRAMED BY THE ITO, WARD-1(3), AHMEDABAD U/S.143(3) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT) FO R THE ASSESSMENT YEAR 2002-03 VIDE HIS ORDER DATED 29-11-2004. ITA NO. 1446/AHD/2005 A.Y. 2002-03 CHARCHIT APPARELS P.LTD. V.ITO WD-1(3) ABD PAGE 2 2. THE ONLY ISSUE IN THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) IN CONFIRMING THE DISALLOWANCE OF PROVIDE NT FUND AMOUNTING TO RS.1,85,108/- ON ACCOUNT OF EMPLOYEES CONTRIBUTION AND EMPLOYEES STATE INSURANCE (ESI) AMOUNTING TO RS.15,797/-. FOR THIS, THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE TWO GROUNDS:- 1. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FA CTS BY NOT ALLOWING THE PROVIDENT FUND AMOUNTING TO RS.185108/ -. SAID STATUTORY EXPENDITURE HAD BEEN PAID AS ASSESSMENT D UES DURING THE YEAR UNDER CONSIDERATION AND IS ALLOWABLE UNDER SECTION 43B ON PAYMENT BASIS AND ACCORDINGLY THE LEARNED AO BE DIRECTED TO ALLOW THE SAME IN FULL. 2. THAT THE LEARNED CIT(A) HAS ERRED IN LAW AND FAC TS BY NOT ALLOWING THE COLLECTION OF PROVIDENT FUND AND EMPLO YEES STATE INSURANCE AMOUNT OF RS.15797/- AS DEDUCTION 36(1)(V A). SINCE THE PAYMENT OF THE SAID AMOUNT HAS BEEN MADE DURING THE YEAR, IT SHOULD BE ALLOWED IN FULL AND IN THIS REGARD RELIAN CE IS PLACED ON THE JUDGMENTS IN THE ASSESSEE OF (A) JCIT VS. DEIVD AYAL (SALES) PVT. LTD. MUMBAI ITA NO.778/MUM/1999 AND (B) ADDL. CIT VS. VESTAS RRB INDIA LTD. (93 TTJ 144 DELHI). IN VIEW O F THE SAID FACTS AND LAW, THE LEARNED AO BE DIRECTED TO ALLOW THE SA ME IN FULL. 3. AT THE OUTSET, IT IS NOTICED THAT NONE PRESENT O N BEHALF OF THE ASSESSEE BUT IT IS SEEN FROM THE RECORDS, THAT THE ISSUE IS COVERED, HENCE, WE TOOK UP THIS APPEAL FOR HEARING, IN THE A BSENCE OF THE ASSESSEE. 4. THE LD. DEPARTMENTAL REPRESENTATIVE STATED THAT THIS LIABILITY OF PF WAS OF EARLIER YEARS AND THE ASSESSEE HAS PAID IN T HE RELEVANT ASSESSMENT YEAR, WHICH IS NOT ALLOWABLE IN VIEW OF THE FACT THAT THE SAME IS NOT ACCRUED OR CRYSTALLIZED DURING THE YEAR UNDE R CONSIDERATION. ACCORDINGLY SHE SUPPORTED THE ORDER OF THE LOWER AU THORITIES. ITA NO. 1446/AHD/2005 A.Y. 2002-03 CHARCHIT APPARELS P.LTD. V.ITO WD-1(3) ABD PAGE 3 5. AFTER HEARING THE LD. DR AND GOING THROUGH THE C ASE RECORDS, WE FIND THAT PF LIABILITY FOR EARLIER YEAR WAS PAID IN VIEW OF THE ORDER OF THE PF AUTHORITIES VIDE DATED 26-08-2001. SINCE THE LIABILITY HAS BEEN DETERMINED BY THE PF AUTHORITIES IN THE RELEVANT YE AR AND THE COMPANY HAS PAID THE SAID AMOUNT IN PURSUANCE OF THE ORDER OF THE PF AUTHORITIES, THE SAME IS ALLOWABLE U/S.43B OF THE ACT. EVEN OTH ERWISE, THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE AND AGAI NST THE REVENUE BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CAS E OF CIT V. P.M. ELECTRONICS LTD. (2008) 220 CTR 635 (DEL), WHEREIN THE HON'BLE DELHI HIGH COURT HAS DISCUSSED IN PARA-4 AS UNDER:- 4. ON 27 TH NOV., 1998 THE ASSESSEE HAD FILED A RETURN OF INCO ME DECLARING A LOSS OF RS.8,92,888. ON 11 TH MAY, 1999 THE RETURN WAS PROCESSED UNDER S. 143(1)(A) OF THE ACT. THE CASE O F THE ASSESSEE WAS SELECTED FOR SCRUTINY. ACCORDINGLY, A NOTICE DT . 27 TH SEPT., 1999 UNDER S. 143(2) OF THE ACT WAS ISSUED TO THE ASSESS EE. IN RESPONSE TO THE NOTICE AND ON EXAMINATION OF THE DETAILS SUB MITTED BY THE ASSESSEE WITH RESPECT TO PROVIDENT FUND PAYMENTS MA DE BOTH ON ACCOUNT OF EMPLOYERS AND EMPLOYEES SHARE REVEALED THAT PAYMENTS IN THE SUM OF RS.17,94,042 WERE LATE AS PE R THE PROVISIONS OF S. 36(1)(VA) R.W S. 2(24)(X) AND S. 4 3B. CONSEQUENTLY, THE AO DISALLOWED THE DEDUCTION AND A DDED A SUM OF RS.17,94,042 TOWARDS EPF CONTRIBUTION. AND SUBSEQUENTLY DECIDE THIS ISSUE IN PARA-10 TO 14 OF HON'BLE DELHI HIGH COURT, WHICH READ AS UNDER:- 10. IN VIEW OF THE ABOVE, IT IS QUITE EVIDENT THAT THE SPECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER AND WHIL E DOING SO THE SUPREME COURT HAD NOTICED THE FACT THAT THE MATTER IN APPEAL BEFORE IT PERTAINS TO A PERIOD PRIOR TO THE AMENDME NT BROUGHT ABOUT IN S. 43B OF THE ACT. THE AFORESAID POSITION AS REG ARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO S. 4 3B HAS BEEN NOTICED BY A DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMA (SUPRA). APPLYING THE RATIO OF THE DECISION OF THE SUPREME COURT IN VINAY CEMENT (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED T HE APPEALS OF THE REVENUE. IN THE PASSING WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. ITA NO. 1446/AHD/2005 A.Y. 2002-03 CHARCHIT APPARELS P.LTD. V.ITO WD-1(3) ABD PAGE 4 NEXUS COMPUTER (P) LTD. BY A JUDGMENT DT. 19 TH AUG., 2008, PASSED IN TAX CASE (APPEAL) NO.1192/2008 [REPORTED AT (2008) 219 CTR (MAD.) 54 ED.] DISCUSSED THE IMPACT OF BO TH THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD. (SUPRA) AND VINAY CEMENT (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGE (SUPRA). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAINED THE EFFECT OF THE D ISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYI NG UPON THE JUDGMENT OF THE SUPREME COURT IN THE CASE OF KUNHAYAMMED & ORS.VS. STATE OF KERALA & ANR. (2000) 162 CTR (SC) 97: 119 STC 505 AT P. 526 IN PARA 40 AND NOTED THE FOLLOWING OB SERVATIONS : IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEAKIN G ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE, THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY THE SUPREME COURT WITHIN THE MEANING OF ART. 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLARATION OF LAW, WHATEVER IS STAT ED IN THE ORDER ARE THE FINDINGS RECORDED BY THE SUPREME COUR T WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT. TRIBUNAL OR AUTHORITY IN ANY PROCEEDINGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE AP EX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING THAT THE ORDER OF THE COURT. TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUPREME COU RT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES. 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COU RT IN KUNHAYAMMED & ORS. (SUPRA) THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P) LTD. (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREM E COURT IN VINAY CEMENT (SUPRA) WOULD BIND THE HIGH COURT AS IT WAS LAW DECLARED BY THE SUPREME COURT UNDER ART. 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P) LTD. (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SU PREME COURT IN VINAY CEMENT (SUPRA) AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN I DHARMENDRA SHARMA (SUPRA). ITA NO. 1446/AHD/2005 A.Y. 2002-03 CHARCHIT APPARELS P.LTD. V.ITO WD-1(3) ABD PAGE 5 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGRE E WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COURT IN PAMWI TISSUES LTD. (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 6. WE FIND THAT THE HON'BLE DELHI HIGH COURT IN THE CASE OF P.M. ELECTRONICS LTD. (SUPRA) HAS DECIDED THIS ISSUE OF PAYMENT OF EMPLOY EES CONTRIBUTION TOWARDS PROVIDENT FUND AFTER CONSIDERI NG THE DECISION OF HON'BLE APEX COURT IN THE CASE OF VINAY CEMENT (SUPRA) AND ALSO DISTINGUISHED THE CASE LAW REFERRED BY THE LD. DR O F BOMBAY HIGH COURT IN PAMWI TISSUES LTD. (SUPRA) . ACCORDINGLY, FOLLOWING DELHI HIGH COURT IN P.M. ELECTRONICS LTD. (SUPRA), WE ALLOW THE CLAIM OF THE ASSESSEE. ACCORDINGLY THIS ISSUE OF THE ASSESSEES APPEAL IS ALLOWED. 7. COMING TO SECOND ISSUE IN THIS APPEAL OF THE ASS ESSEE, WHICH IS AS REGARDS TO EMPLOYEES STATE INSURANCE AMOUNTING TO R S.15,797/-. WE FIND THAT THE LOWER AUTHORITIES HAVE RECORDED A FIN DING THAT THE PAYMENT OF RS.15,797/- RELATING TO EMPLOYEES CONTRIBUTION O F ESI IS MADE AFTER DUE DATE SPECIFIED IN EXPLANATION TO SECTION 36(1)( VA) OF THE ACT AND ACCORDINGLY THE SAME WAS DISALLOWED. BUT BOTH THE AUTHORITIES BELOW HAVE RECORDED A FINDING THAT THIS WAS PAID BEFORE T HE DUE DATE OF FILING OF RETURN BY THE ASSESSEE. IT IS SEEN THAT THIS ISSUE IS ALSO COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF P.M. ELECTRONICS LTD. (SUPRA). RESPECTFULLY FOLLOWING THE DECISION OF HON BLE DELHI HIGH COURT, WE ALLOW BOTH THE CLAIM OF THE ASSESSEE. 8. HOWEVER, ITAT AHMEDABAD A BENCH IN APPEAL NO.1990- 1991/AHD/2006 IN THE CASE OF ITO V. SAKET PROJECT LTD. DATED 30-06- 2009 HAS TAKEN A VIEW THAT ASSESSING OFFICER SHOULD VERIFY WHETHER THERE ITA NO. 1446/AHD/2005 A.Y. 2002-03 CHARCHIT APPARELS P.LTD. V.ITO WD-1(3) ABD PAGE 6 IS A DOUBLE DEDUCTION IN THE CASE OF EMPLOYEES CONT RIBUTION, ONCE AS SALARY AND OTHER AS PAYMENT MADE TO THE PROVIDE NT FUND AUTHORITIES AND CLAIM AS DEDUCTION U/S.43B OF THE ACT, THE AO W ILL VERIFY THAT ASSESSEE DOES NOT GET DOUBLE DEDUCTION FOR THE SAME AMOUNT. TO THAT EXTENT, ONLY, THE MATTER IS RESTORED TO THE FILE OF ASSESSING OFFICER FOR VERIFICATION. THIS ISSUE IN THE ASSESSEES APPEAL I S ALLOWED FOR STATISTICAL PURPOSES AS INDICATED ABOVE. 9. IN THE RESULT, ASSESSEES APPEAL IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN OPEN COURT ON 28/08/2009 SD/- SD/- (D.C.AGRAWAL) (MAHAVIR SINGH) (ACCOUNTANT MEMBER) (JUDICIAL MEMBER) AHMEDABAD, DATED : 28/08/2009 *DKP COPY OF THE ORDER FORWARDED TO :- 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT(APPEALS)- VII, AHMEDABAD 4. THE CIT CONCERNS. 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER, /TRUE COPY/ DEPUTY / ASSTT.REGISTRAR ITAT, AHMEDABAD