I.T.O., Ward -2(1), Patna V. M/s Bihar State Food & Civil Supplies Corporation Ltd., Patna

ITA 145/PAT/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 9625 (ITAT-PATNA)
• Duration Of Justice: 5 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-03-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2005-2006
• Appeal Filed On: 05-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ARCHNA SINHA
• Assessee Lawyers: MANISH RASTOGI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PATNA BENCH, PATNA BEFORE SH. N. K. SAINI, AM AND SH. AMIT SHUKLA , JM ITA NO. 144 /PAT. /2017 : ASSTT. YEAR : 2003 - 04 ITA NO. 145/PAT./2017 : ASSTT. YEAR : 2005 - 06 INCOME TAX OFFICER, WARD - 2(1), PATNA VS M/S BIHAR STATE FOOD AND CIVIL SUPPLIES CORPORATION LTD., SONE BHAWAN, 5 TH FLOOR, BIRCHAND PATEL MARG, PATNA (APPELLANT) (RESPONDENT) PAN NO. A ACCB0679F ASSESSEE BY : SH. MANISH RASTOGI, ADV. REVENUE BY : SMT. ARCHNA SINHA , SR. DR DATE OF HEARING : 09 .03 .201 8 DATE OF PRONOUNCE MENT : 09 .0 3 .201 8 ORDER PER N. K. SAINI, AM : THESE TWO APPEALS BY THE DEPARTMENT ARE DIRECTE D AGAINST THE SEPARATE ORDER EACH DATED 21.07.2017 OF THE LD. CIT(A) - 1, PATNA 2 . SINCE, THE ISSUE INVOLVED IS COMMON IN BOTH THESE APPEALS WHICH WERE HEARD TOGETHER SO THESE ARE BEING DISPOSED OFF BY THIS CONSOLIDATED ORDER FOR THE SAKE OF CONVENIENCE AND BREVITY. 3. COMMON GROUNDS RAISED IN THESE APPEALS READS AS UNDER: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LD. CIT(A) ERRED IN HOLDING THAT THE EMPLOYEES CONTRIBUTION TOWARDS THE PROVIDENT FUND STANDS ON THE SAME FOOTING AS OF EMPLOYER S CONTRIBUTION IN VIEW OF DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE TRANSPORT CORPORATION. ITA NO . 144 & 145 /PAT. /2017 BIHAR STATE FOOD AND CIVIL CORPORATION LTD. 2 4 . FACTS OF THE CASE IN BRIEF ARE THAT THE AO MADE THE DISALLOWANCE U/S 36(1)(VA) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO A S THE ACT) FOR THE REASONS THAT THE CONTRIBUTION OF THE EMPLOYER S & EMPLOYEES TO THE ESI AND EPF WAS NOT PAID BY DUE DATES. 5 . BEING AGGRIEVED THE ASSESSEE CARRIED THE MATTER TO THE LD. CIT(A) WHO DELETED THE DISALLOWANCE MADE BY THE AO BY OBSERVING IN P ARAS 5.3 & 5.4 OF THE IMPUGNED ORDER AS UNDER: 5.3 I HAVE GONE THROUGH THE ASSESSMENT ORDER, FACTS OF THE CASE AND SUBMISSION MADE BY THE APPELLANT. SECTION 2(24 )(X) OF THE ACT PROVIDES THAT IF ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTR IBUTIONS TO ANY PROVIDENT FUND OR ANY OTHER SUPERANNUATION FUND ETC. REMAINS UNPAID ON OR BEFORE DUE DATE OF SUCH PAYMENT, THE CONTRIBUTION SO RECEIVED WOULD BE INCOME OF THE ASSESSEE FOR THE YEAR THIS PROVISION OF THE ACT IS INDEPENDENT OF SECTION 36(1)(V A) AS WELL AS SECTION 438 OF THE ACT WHICH DEAL WITH DEDUCTIONS OR EXPENDITURE TO BE ALLOWED ON PAYMENTS MADE BY THE ASSESSEE. IF ANY CONTRIBUTION MADE BY THE EMPLOYEES TOWARDS PF OR SUCH SIMILAR FUNDS, SUCH CONTRIBUTION IS IN THE NATURE OF RECEIPT IN THE HANDS OF THE ASSESSEE AND THUS GOVERNED BY SECTION 2(24)(X) OF THE ACT. IT CLEARLY FOLLOWS THEREFROM THAT IF, THE APPELLANT HAD NOT DEPOSITED THE CONTRIBUTIONS RECEIVED FROM THE EMPLOYEES' BEFORE THE DATE OF FILING OF THE RETURN, IT WOULD HAVE BECOME INCOM E HIS HANDS. HOWEVER, ON MAKING DEPOSIT WITH THE CONCERNED AUTHORITIES THE APPELLANT BECOMES ENTITLED TO DEDUCTION UNDER PROVISIONS OF SECTION 36(1)(VA) OF THE ACT AND ALSO SECTION 438 OF THE ACT ALLOWS FOR DEDUCTION ON ACTUAL PAYMENT. THUS THE SCHEME OF T E ACT IS THAT THE ASSESSEE IS ENTITLED FOR DEDUCTION, IF PAYMENT HAVE MADE OF THE CONTRIBUTIONS RECEIPT FROM EMPLOYEES' BEFORE THE DATE OF FILING OF RETURN OF INCOME. THIS PRINCIPAL WAS LAID DOWN BY THE HON'BLE APEX COURT IN THE CASE OF VINAY CEMENTS LIMI TED REPORTED IN 166 TAXMAN 62. FURTHER, SEC ION 438 OF THE ACT PROVIDES THAT IF, STATUTORY DUES ARE NOT PAID, THE SAME IS NOT ENTITLED FOR DEDUCTION AS EXPENSES FOR THE YEAR. HOWEVER, IT HAS BEEN SUBMITTED BY THE APPELLANT THAT THE STATUTORY DUES AS MENTIO NED ABOVE HAS BEEN PAID WELL BEFORE THE DATE OF FILING OF RETURNS OF INCOME. ITA NO . 144 & 145 /PAT. /2017 BIHAR STATE FOOD AND CIVIL CORPORATION LTD. 3 5.4 MOREOVER, THE HON'BLE HIGH COURT OF P ATNA IN THE CASE OF M/S BIHAR STATE WAREHOUSING CORPORATION LTD. IN MA NO.302 OF 2008 HAD REVERSED THE DECISION OF HON'BLE ITAT PATNA AND HAD ALLOWED APPEAL FOR THE AY 2003 - 04 ON THE SIMILAR ISSUE. RESPECTFULLY FOLLOWING DECISION OF THE APEX COURT AS WELL AS JURISDICTIONAL H IGH COURT M/S BIHAR STATE WAREHOUSING CORPORAT ION LTD. IS HELD THAT CONTRIBUTION MADE BY EMPLOYEES AND STATUTORY DUES PAID BEFORE DA O OF FILING OF RETURN OF INCOME HAS TO BE NOT INCLUDED AS INCOME FOR THE YEAR UNDER APPEAL IN THE HANDS OF APPELLANT. 6 . NOW THE ASSESSEE IS IN APPEAL. 7 . WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE PARTIES AND CAREFULLY GONE THROUGH THE MATERIAL AVAILABLE ON THE RECORD. IN THE PRESENT CASE, THE LD. CIT(A) HAS GIVEN A CATEGORICAL FINDING THAT THE ASSESSE E MADE THE PAYMENTS OF EMPLOYERS AND EMPLOYEES CONTRIBUTION TO ESI AND EPF BEFORE FILING THE RETURN OF INCOME AND BY FOLLOWING THE RA TIO LAID DOWN BY THE HONBLE APEX COURT IN THE CASE OF VINAY CEMENT S LTD. REPORTED AT 166 TAXMAN 62 DELETED THE DISALLOWANCE. WE, THEREFORE, DO NOT SEE MERIT IN THESE APPEALS OF THE DEPARTMENT. 7. IN THE RESULT, THE APPEAL S OF THE DEPARTMENT ARE DISMISSE D. (ORDER PRONOUNCED IN THE COURT ON 09/ 03/2018) SD/ - SD/ - ( AMIT SHUKLA ) (N. K. SAINI) JUDICIAL MEMBER ACCOUNTANT MEMBER DAT ED: 09 /0 3 /2018 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RE SPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR