DCIT, Circle-16(2), Hyderabad, Hyderabad V. Midwest Granite Private Limited, Hyderabad, Hyderabad

ITA 151/HYD/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 2683 (ITAT-HYDERABAD)
• Duration Of Justice: 6 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 17-08-2017
• Assessment Year: 2012-2013
• Appeal Filed On: 31-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Assessee Lawyers: MURALIMOHANA RAO
• Keywords: Earning of tax free income
• Section: 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B : HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI S. RIFAUR RAHAMAN , ACCOUNTANT MEMBER ITA.NO. 151 /HYD/2017 ASSESSMENT YEAR 2012 - 2013 DCIT, CIRCLE 16(2), HYDERABAD. VS. M/S. MIDWEST GRANITE PRIVATE LIMITED., HYDERABAD. PAN: AAACM9486D (APPELLANT) (RESPONDENT) FOR ASSESSEE: SHRI MURALI MOHANA RAO, FOR REVENUE : SHRI L. RAMJI RAO, DR DATE OF HEARING : 17 .08.2017 DATE OF PRONOUNCEMENT : 17 .08.2017 ORDER PER D. MANMOHAN , VP. THE FOLLOWING GROUNDS WERE URGED BY THE REVENUE AGAINST THE ORDER PASSED BY THE LD. CIT(A) - 4, HYDERABAD. 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE U/S 14A BY HOLDING THAT ASSESSEE DID NOT EARN ANY EXEMPT INCOME. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 36(1)(VA) R.W.S. 24(X). 3. THE APPELLANT PRAYS THAT THE ORDER OF THE LD. CIT(A) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO AMEND OR LATER ANY GROUNDS OR AD A NEW GROUND WHICH MAY BE NECESSARY. 5. ANY OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING. 2. WE HA VE HEARD THE LD DR AS WELL AS THE LD COUNSEL FOR THE ASSESSEE AND CAREFULLY PERUSED THE RECORD. AS REGARDS THE FIRST ISSUE I.E., APPLICABILITY OF SECTION 14A OF THE ACT AND CON SEQUENT DISALLOWANCE THEREOF, T HE ITAT, HYDERABAD BENCH HAD CONSISTENTLY TAKEN A STAND, IN THE LIGHT OF THE DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CHEMINVEST LTD [2015] 378 ITR 33 (DEL.) THAT NO DISALLOWANCE CAN BE 2 MADE BY INVOKING THE PROVISIONS OF SECTION 14A WHEN THERE IS NO EXEMPT INCOME IN THE CURRENT YEAR. SINC E THERE IS NO DISPUTE WITH REGARD TO THE FACTS, WE ARE OF THE OPINION THAT THE ORDER PASSED BY THE LD. CIT(A), WHICH IS IN CONFORMITY WITH THE DECISION OF THE TRIBUNAL AS WELL AS THE HONBLE HIGH COURT OF DELHI (SUPRA) , DOES NOT CALL FOR ANY INTERFERENCE. ACCORDINGLY, GROUND NO.1 IS DISMISSED. 3. WITH REGARD TO GROUND NO.2, THE FACTS OF THE CASE ARE THAT THE EMPLOYEES CONTRIBUTION TO PF AND ESI WERE NOT REMITTED WITHIN THE TIME PRESCRIBED U/S 36(1)(VA) OF THE ACT BUT PAID BEFORE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT. THE A.O. WAS OF THE OPINION THAT IN CASE OF NON - PAYMENT BY THE ASSESSEE WITHIN THE PERIOD PRESCRIBED U/S 36(1)(VA) OF THE ACT, THE CONTRIBUTION SO RETAINED HAS TO BE TREATED AS INCOME U/S 2(24)(X) OF AND THE ACT AND IT IS NOT ALLOWABLE U/S 36(1)(VA) OF THE ACT. ON AN APPEAL BEFORE THE LD. CIT(A) IT WAS CONTENDED THAT ON AN IDENTICAL ISSUE, THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. MAGUS CUSTOMERS DIALOG PVT LTD [2015] 57 TAXMANN.COM 94 AS WELL AS TH E ITAT, HYDERABAD BENCH IN THE CASE OF DCIT VS. VBC INDUSTRIES LTD (ITA NO.120,121/HYD/2013) HAD TAKEN A VIEW THAT IN THE EVENT OF PAYMENT OF EMPLOYEES CONTRIBUTION BEFORE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT, THERE IS NO ROOM FOR DISALLOWANC E AND THE SAME DESERVES TO BE ALLOWED AS DEDUCTION. CONSISTENT TO THE VIEW TAKEN THEREIN, LD. CIT(A) ACCEPTED THE CONTENTION OF THE ASSESSEE. AGGRIEVED BY HIS ORDER, THE REVENUE IS IN APPEAL BEFORE US. HOWEVER, LD. CIT(A) DR COULD NOT PLACE ANY DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT OR HYDERABAD BENCH OF THE TRIBUNAL WHEREIN A CONTRARY VIEW IS TAKEN ON THE ISSUE. 4. ON THE OTHER HAND, LD COUNSEL FOR THE ASSESSEE PLACED BEFORE US THE FOLLOWING DECISIONS WHEREIN A CONSISTENT VIEW IS TAKEN THAT I N THE EVENT OF PAYMENT OF EMPLOYEES PF AND ESI WITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME, THE SAME HAS TO BE ALLOWED AS DEDUCTION FOR INCOME TAX PURPOSES. (I) DECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AIMIL LTD [2010] 188 TAXMA N 265 (DELHI); (II) DECISION OF THE HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABARI ENTERPRISES [2008] 298 ITR 141 (KARNATAKA) AND (III) DECISION OF THE HONBLE MADRAS HIGH COURT IN THE CASE OF MADRAS RADIATORS & PRESSINGS LTD VS. DCIT [1996] 59 ITD 515 ( MAD.). 5. SINCE THE VIEW TAKEN BY THE LD. CIT(A) IS CONSISTENT WITH THE DECISIONS CITED (SUPRA), WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A). THEREFORE, 3 GROUND NO .2 OF THE REVENUE IS DISMISSED. GROUND S NO.3 TO 5 ARE GENERAL IN NATURE AND THEREFORE NEED NO ADJUDICATION. 6. IN THE RESULT, AS PRONOUNCED IN THE OPEN COURT THE APPEAL FILED BY THE REVENUE IS DISMISSED. S D / - S D / - (S. RIFAUR RAHMAN ) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT HYDERABAD, DATED: 17 TH AUGUST , 2017 OKK, SR.PS COPY TO 1. M/S. MIDWEST GRANITE PRIVATE LIMITED, 8 - 2 - 684/3/25 & 26, ROAD NO.12, BANJARA HILLS, HYDERABAD. 2. DCIT, CIRCLE 16(2), 2 ND FLOOR, B BLOCK, IT TOWERS, A.C. GUARDS, MASAB TANK, HYDERABAD. 3. CIT (A) - 4 , HYDERABAD. 4. PR. CIT - 4 , HYDERABAD. 5. D.R. ITAT B BENCH, HYDERABAD. 6. GUARD FILE