The ITO, Ward-8(1), Ahmedabad V. SCI International Securities Ltd, Baroda

ITA 1474/AHD/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63266 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 08-12-2012
• Assessment Year: 2008-2009
• Appeal Filed On: 03-07-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T SHANKAR
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AT AHMEDABAD D BENCH BEFORE: SHRI MUKUL KR. SHRAWAT JUDICIAL MEMBER AND SHRI ANIL CHAT URVEDI, ACCOUNTANT MEMBER ITO, WARD-8(1), AHMEDABAD (APPELLANT) VS. SCI, INTERNATIONAL SECURITIES LTD. 501, WINDSOR PLAZA, R.C. DUTT ROAD, ALKAPURI, BARODA (RESPONDENT) PAN NO. AAGCS2303F REVENUE BY : SRI T. SHANKAR, SR. D.R. ASSESSEE BY : MS. URVASHI SHODHAN, A.R. DATE OF HEARING : 18-12-2012 DATE OF PRONOUNCEMENT : 28-12-2012 / ORDER PER : MUKUL KR. SHRAWAT, JUDICIAL MEMBER:- THIS IS AN APPEAL FILED BY THE REVENUE ARISING FROM THE ORDER OF LD. CIT(A)XV AHMEDABAD DATED 04-04-2012. 2. GROUND NO. 1 FROM THE SIDE OF THE REVENUE IS AS UNDER:- 1). THE LD. COMMISSIONER OF INCOME-TAX (A)-XIV, AH MEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDITION OF RS.1,01,840/- ITA NO. 1474/AHD/2012 A.Y.:-2008-09 ITA NO.1474 /AHD/2012 A.Y. 2008-09 PAGE NO ITO VS. SCI INTERNATIONAL SECURITIES LTD. 2 MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CESSATI ON OF LIABILITY U/S 41(1) OF THE ACT. 3. IN RESPECT OF THIS ISSUE, THE AO HAS NOTED AS PE R THE ORDER PASSED U/S 143(3) DATED 23-12-2010 THAT THE ASSESSEE IS IN THE BUSINESS OF PROVIDING SECURITY SYSTEM. THE AO HAS NOTED THAT SINCE PAST SEVEN YEARS CERTAIN OLD CREDITORS WERE REGULARLY APPEARING IN THE ACCOUNTS OF THE ASSESSEE. THE ASSESSEE WAS ASKED TO FURNISH THE CONFIRMATION FROM THOSE CREDITORS. THE ASSESSEE HAS REPLIED THAT THERE WAS NO REMISSION OF LIABILITY DURING THE YEAR UNDER CONSIDERATION. DETAILS OF THOSE CREDITORS WIT H NAMES AND ADDRESSES WERE ALSO FURNISHED. THE AO WAS NOT CONVINCED BY A PPLYING THE RATIO OF CIT VS. T.V. SUNDARAM IYENGAR & SONS LTD (1996) 136 CTR 444 (S.C) HAS INVOKED THE PROVISIONS OF SECTION 41(1) OF IT ACT A ND HELD THAT THE IMPUGNED AMOUNT HAD CEASED TO EXIST, THEREFORE, TAX ED THE SAME IN THE CASE OF THE ASSESSEE. THE MATTER WAS CARRIED BEFORE THE FIRST APPELLATE AUTHORITY. 4. BEFORE LD. CIT(A) DETAILS OF THOSE CREDITORS HAV E BEEN FURNISHED AND IT WAS ALSO INTIMATED THAT EVEN OUT OF THE OUTSTAND ING AMOUNT THE ASSESSEE HAD MADE THE PAYMENT IN THE SUBSEQUENT YEARS AS UND ER:- I. D D ADMIN AMOUNTING TO RS. 3200/- II. N D ADMIN AMOUNTING TO RS. 800/- III. KESHAV G AGARWAL & CO. AMOUNTING TO RS. 640 00/- IV. STAY COOL APPLIANCES RS. 4900/- V. TRADE PVT. LTD. 28940/- 5. CONSIDERING THE FACT AS ALSO LEGAL ASPECT IT WAS HELD THAT THE ASSESSEE HAD NOT PASSED ANY ACCOUNTING ENTRY REGARDING THE R EMISSION OF THE LIABILITY. ITA NO.1474 /AHD/2012 A.Y. 2008-09 PAGE NO ITO VS. SCI INTERNATIONAL SECURITIES LTD. 3 HENCE, IN THE ABSENCE OF ANY EVIDENCE THE ORDER OF THE AO WAS NOT TO BE SUSTAINED. ACCORDINGLY, THE IMPUGNED ADDITION WAS DELETED. 6. WITH THIS BRIEF FACTUAL AS ALSO LEGAL BACKGROUND , WE HEARD BOTH SIDES. WE HAVE BEEN INFORMED THAT ALMOST UNDER IDENTICAL C IRCUMSTANCES THE ITAT D BENCH, AHMEDABAD IN VIEW WITH THE CASE OF SHRI NARENDRASINGH C. SAINI FOR A.Y. 07-08 ITA NO. 1985/AHD/2010 VIDE AN ORDER DATED 23.11.2012 BEING HELD AS UNDER:- 4 . HAVING HEARD THE SUBMISSIONS OF BOTH THE SIDES, WE ARE OF THE CONSIDERED VIEW THAT IN THE ABSENCE OF ANY COGENT E VIDENCE TO BELIEVE THAT THE LIABILITIES IN QUESTION HAVE ACTUALLY CEAS ED TO EXIST, IT WAS UNJUSTIFIABLE ON THE PART OF THE AO TO ASSUME ON HI S OWN THAT THE SAME HAVE BECOME BARRED BY LIMITATION BEING APPEARING I N THE BOOKS OF ACCOUNTS FOR MORE THAN THREE YEARS. RATHER, IN THE CASE OF CIT VS. SILVER COTTON MILLS COMPANY 125 TAXMAN 741(GUJ.), T HE HON'BLE COURT HAS HELD THAT THE LIABILITIES IF APPEARING IN THE BOOKS OF ACCOUNTS SHOULD SUBSIST ALTHOUGH IT MIGHT NOT BE EN FORCEABLE ON ACCOUNT OF SOME PROVISIONS OF LAW OF LIMITATION UNL ESS AND UNTIL IT WAS LEGALLY HELD SO. WE THEREFORE HOLD THAT UNPAID LIAB ILITY CANNOT BE ADDED IN THE TOTAL INCOME OF THE ASSESSEE BY INVOKI NG SECTION 41(1) OF IT MERELY BECAUSE THE LIABILITY REMAINED UNPAID FOR FEW YEARS UNLESS AND UNTIL THERE IS AN EVIDENCE TO SHOW THAT EITHER BY OPERATION OF LAW OR THE CREDITOR HAD REMITTED THE DEBT. CONSIDERING THE FACTS OF THE CASE, WE HEREBY APPROVE THE VIEW TAKEN BY THE ID.CI T(A) AND DISMISS THIS GROUND OF THE REVENUE. 7. HAVING HEARD THE SUBMISSIONS AND ON PERUSAL OF T HE ORDERS OF THE AUTHORITIES BELOW SINCE ADMITTED FACTUAL POSITION W AS THAT THE ASSESSEE HAS HONOURED THE LIABILITY IN PART IN SUBSEQUENT YEARS AND INFORMED THAT THE LIABILITIES HAVE NOT CEASED TO EXIST, THEREFORE, IT WAS NOT LEGALLY PERMISSIBLE ON THE PART OF THE AO TO PRESUME THAT THOSE LIABILI TIES IN QUESTION HAVE CEASED TO EXIST DURING THE YEAR UNDER CONSIDERATION . RESPECTFULLY FOLLOWING ITA NO.1474 /AHD/2012 A.Y. 2008-09 PAGE NO ITO VS. SCI INTERNATIONAL SECURITIES LTD. 4 THE VIEW TAKEN BY THE RESPECTED CO-ORDINATE BENCH W E HEREBY UPHOLD THE DECISION OF LD. CIT(A) AND DISMISS THIS GROUND OF T HE REVENUE. 8. GROUND NO.2 IS AS BELOW:- 2). THE LD. COMMISSIONER OF INCOME TAX (A) XIV, A HMEDABAD HAS ERRED IN LAW AND ON FACTS IN DELETING THE ADDIT ION OF RS. 8,44,539/- MADE BY THE ASSESSING OFFICER ON ACCOUNT OF CONTRIB UTION TO P.F. AND E.S.I. U/S 36(A)(VA) OF THE ACT. 9. GOING THROUGH THE TAX AUDIT REPORT U/S 44AB IT W AS NOTED BY THE AO THAT ALTHOUGH IT RECEIVED CONTRIBUTIONS FROM THE EM PLOYEES TOWARDS PROVIDENT FUND AND ESI BUT IT WAS NOT DEPOSITED WIT HIN THE PRESCRIBED TIME. THE AO HAD MADE OUT A LIST OF DETAILS OF THE CONTRI BUTION OF PF FROM EMPLOYEES FOR THE YEAR UNDER CONSIDERATION AND AS P ER THE LIST NOTED THAT THE SAME WAS NOT PAID WITHIN THE DUE DATE. HOWEVER, TH E PAYMENTS WERE MADE AFTER DELAY OF FEW DAYS. LIKEWISE THE AO HAD MADE OUT A LIST OF CONTRIBUTION OF ESI FROM EMPLOYEES AND AFTER REPRODUCING THE ACT UAL DATE OF PAYMENT HE HAD DENOTED THAT THERE WERE A FEW DAYS DELAY IN THE PAYMENT. RESULTANTLY, HE HAS INVOKED THE PROVISIONS OF SECTION 36(1)(VA) R.W.S 2(24)(X) AND TAXED THE IMPUGNED AMOUNT BEING NOT ELIGIBLE FOR DEDUCTIO N U/S.43B OF I.T. ACT. THE FIRST APPELLATE AUTHORITY HAS FOLLOWED THE ORDE RS OF HIS PREDECESSORS FOR A.Y. 05-06 AND 06-07 AND HELD THAT THE ISSUE BEING COVERED BY THOSE DECISIONS, THEREFORE, DIRECTED THE AO TO ALLOW THE CLAIM. 9. NOW, BEFORE US, THE ASSESSEE HAS FURNISHED TWO D ECISIONS OF ITAT, AHMEDABAD PRONOUNCED IN ASSESSEES OWN CASE RELEVAN T FOR A.YS. 2006-07 AND 2007-08 RESPECTFULLY DATED 18-11-2011 AND 24-09 -2010. IN BOTH THESE DECISIONS IN IDENTICAL MANNER IT WAS HELD AS UNDER: - WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. THE ISS UE IS NOW COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF HON. SUPRE ME COURT IN CIT ITA NO.1474 /AHD/2012 A.Y. 2008-09 PAGE NO ITO VS. SCI INTERNATIONAL SECURITIES LTD. 5 VS. ALOM EXTRUSIONS LTD. (2009 319 ITR 306 (SC) WHE REIN IT IS HELD THAT CONTRIBUTION TO PF MADE BEFORE THE DUE DATE OF FILING OF RETURN IS ALLOWABLE AS DEDUCTION. THE DELETION OF THE SECOND PROVISO TO SECTION 43B AND THE AMENDMENT TO THE FIRST PROVISO BY THE F INANCE ACT 2002 WAS TO OVERCOME IMPLEMENTATION OF THE PROVISION AND , THEREFORE, ITS AMENDMENTS ARE CURATIVE IN NATURE AND WOULD APPLY R ETROSPECTIVELY WITH EFFECT FROM 1.4.1988. SIMILAR VIEW WAS FURTHE R TAKEN BY HON. DELHI HIGH COURT IN CIT VS. AIMIL LTD. & SONS (2010 ) 229 CTR (DEL) 418. ACCORDINGLY THIS GROUND OF REVENUE IS REJECTE D. 10. SINCE THE RESPECTED CO-ORDINATE BENCHES HAVE TA KEN DECISIONS AS AMENDED PROVISIONS OF THE ACT IN THE LIGHT OF THE O RDER OF THE HONBLE COURT, WHEREIN IT WAS HELD THAT THE PAYMENT IF MADE BEFORE THE DUE DATE OF FILING OF RETURN IS ALLOWABLE AS DEDUCTION, HENCE RESPECTFULL Y FOLLOWING THE SAID VERDICT, WE HEREBY AFFIRM THE FINDING OF THE CIT(A) AND DISMISS THIS GROUND OF THE REVENUE. 11. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. SD/- SD/- (ANIL CHATURVEDI) (MUKUL KR. SHRAWAT) ACCOUNTANT MEMBER J UDICIAL MEMBER AHMEDABAD : DATED 28/12/2012 AK / COPY OF ORDER FORWARDED TO:- 1. / APPELLANT 2. / RESPONDENT 3. / CONCERNED CIT 4. - / CIT (A)-XIV, AHMEDABAD 5. , ! , '# / DR, ITAT, AHMEDABAD 6. $% &' / GUARD FILE. BY ORDER/ , //TRUE COPY// ( / ' ) ! , '#