VOLTAS LTD, MUMBAI V. ADDL CIT RG 7(3), MUMBAI

ITA 1667/MUM/2012

• Counselvise Citation: [2016] 132 COUNSELVISE.COM (IT) 2751 (ITAT-MUMBAI)
• Duration Of Justice: 4 year(s) 3 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-07-2016
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 16-06-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 09-03-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: NEIL PHILIP
• Keywords: Earning of tax free income; Question of law; Initiation of penalty proceedings; Revised return
• Section: 43B; 143(3); 14A; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL ' F ' BENCH, MUMBAI BEFORE SHRI JASON P. BOAZ, ACCOUNTANT MEMBER AND SHRI SANDEEP GOSAIN , JUDICIAL MEMBER ITA NO. 1667 /MUM/201 2 (ASSESSMENT YEAR: 2008 - 09 ) M/S. VOLTAS LIMITED VS. ADDL. CIT, RANGE 7(3) VOLTAS HOUSE - A DR. BABASAHED AMBEDKAR ROAD CHINCHPOKLI, MUMBAI 400033 AAYAKAR BHAVAN M.K. ROAD MUMBAI 400020 PAN - AAACV2809D APPELLANT RESPONDENT APPELLANT BY: SHRI NITESH JOSHI RESPONDENT BY: SHRI NEIL PHILIP DATE OF HEARING: 26.05 .2016 DATE OF PRONOUNCEMENT: 08 . 07 .2016 O R D E R PER JASON P. BOAZ, A.M . THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 13 , MUMBAI DATED 16 . 11 .201 1 FOR A.Y. 2008 - 09 . 2 . THE FACTS OF THE CASE, BRIEFLY, ARE AS UNDER: - 2.1 THE ASSESSEE IS A COMPANY ENGAGED IN THE BUSINESS OF ENGINEERING, MANUFACTURING AIR CONDITIONING AND REFRIGERATION EQUIPMENT, AIR CONDITIONERS FOR SPECIALISED APPLICATIONS, MATERIAL HANDLING EQUIPMENT, CONSTRUCTION AND MINING EQUIPMENT, EXECUTION OF ELECTR O MECHANICAL PROJECTS, UNDERTAKING OF TURNKEY PROJECTS FOR SUPPLY AND INSTALLATION OF AIR - CONDITIONING PLANTS, PROJECT EXPORT AND CIVIL CONSTRUCTION. FOR A.Y. 2008 - 09, THE ASSESSEE FILED ITS RETURN OF INCOME ON 30.09.2008 DECLARING TOTAL INCOME OF ` 2,58,85 ,46,954/ - AFTER SET OFF OF BROUGHT FORWARD LONG TERM CAPITAL LOSSES. A REVISED RETURN WAS FILED ON 31.03.2010, DECLARING THE SAME INCOME AS ORIGINALLY RETURNED, FOR CLAIMING CREDIT FOR ADDITIONAL TDS CERTIFICATES ENCLOSED WITH THE REVISED RETURN. THE RETURN WAS PROCESSED AND THE CASE WAS SUBSEQUENTLY TAKEN UP FOR SCRUTINY. THE ASSESSMENT WAS IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 2 COMPLETED UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT 'THE ACT') VIDE ORDER DATED 22.12.2010, WHEREIN THE ASSESSEES INCOME WAS DETERMINED AT ` 2,59,79,8 8,020/ - IN VIEW OF THE FOLLOWING DISALLOWANCES: - I) DISALLOWANCE UNDER SECTION 14A OF THE ACT ` 93,94,550/ - II) DISALLOWANCE UNDER SECTION 43B ` 46,519/ - 2.2 AGGRIEVED BY THE ORDER OF ASSESSMENT FOR A.Y. 2008 - 09 DATED 22.12.2010, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A) - 13, MUMBAI. THE LEARNED CIT(A) DISPOSED THE ASSESSEES APPEAL VIDE THE IMPUGNED ORDER DATED 16.11.2011, ALLOWING THE ASSESSEE PARTIAL RELIEF. 3 . AGGRIEVED BY THE ORDER OF THE CIT(A) - 13, MUMBAI DATED 16.11.2011, THE ASSESSEE HAS P REFERRED THIS APPEAL RAISING THE FOLLOWING GROUNDS: - GROUND NO I: DISALLOWANCE U/S 14A THE LEARNED COMMISSIONER OF INCOME - TAX OFFICER (APPEALS) THEREINAFTER REFERRED TO AS THE C!T(A)I ERRED IN UPHOLDING THE ACTION OF THE ASSESSING OFFICER [HEREINAFTER RE FERRED TO AS THE AO] FOR DISALLOWANCE U/S.14A AS PER RULE 8D IN RESPECT OF EXEMPT DIVIDEND INCOME. THE AO AND CIT(A) FAILED TO APPRECIATE THAT THE DISALLOWANCE AS PER RULE 8D WAS NOT APPLICABLE AS THE APPELLANT COMPANY HAD ON ITS OWN, OFFERED AS A DISALLOW ANCE U/S.14A, AN AMOUNT OF RS.12.50 LAKHS, BEING A REASONABLE AND FAIR APPORTIONMENT OF THE OVERALL OPERATING & ADMINISTRATIVE EXPENSES AND ESTABLISHMENT/GENERAL EXPENSES OF THE MIS (TREASURY) DEPARTMENT OF THE APPELLANT COMPANY, WHICH COULD HE CONSIDERED AS ATTRIBUTABLE TOWARDS EARNING EXEMPT DIVIDEND INCOME. THE CIT(A) HAS DISALLOWED 0.5% OF AVERAGE INVESTMENTS (EXCLUDING FOREIGN INVESTMENTS) FMPS OF MUTUAL FUNDS U/S. 14A. THE APPELLANT COMPANY THEREFORE PRAYS THAT THE ADDITIONAL DISALLOWANCE MADE BY THE CIT(A), OVER AND ABOVE THE DISALLOWANCE OF RS. 12.50 LAKHS VOLUNTARILY OFFERED BY THE APPELLANT COMPANY BE DELETED AS THE SAME IS UNWARRANTED. [REFER PAGE NOS.2 TO 4, POINT NO. I OF THE ASSESSMENT ORDER AND PAGE 2 TO 4, POINT NO. 2 OF CIT(A) ORDER]. GROUND NO 2: DISALLOWANCE U/S 43B THE CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO BY DISALLOWING EMPLOYEES' CONTRIBUTION TO ESIC AGGREGATING RS.46,519/ - U/S 43B AS THE SAME WERE DEPOSITED AFTER THE DUE DATE. THE APPELLANT COMPANY SUBMITS THAT THE EMPLOYEES CONTRIBUTION TO ES1C WERE DEPOSITED WITHIN THE PERMISSIBLE GRACE PERIOD AND MUCH IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 3 BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. ON SIMILAR GROUND IN THE APPELLANT COMPA NY'S OWN CASE, THE CIT(A) HAS FOR A.Y.2007 - 08, RELYING ON THE DECISION OF APEX COURT IN CASE OF CIT VS. ALOM EXTRUSIONS LIMITED (CIVIL APPEAL NO.7771 OF 2009 AND IN THE CASE OF C1T VS. VINAY CEMENT (ITA NO.2/2005, ITA NO.56/2006 & ITA NO.80/2007), DECIDED THE MATTER IN FAVOUR OF THE APPELLANT COMPANY. THE APPELLANT COMPANY THEREFORE PRAYS THAT THE AO BE DIRECTED TO DELETE THE ADDITION OF 46.519/ - . 4 . GROUND NO. 1 - DISALLOWANCE UNDER SECTION 14 R.W. RULE 8D(2)(III) 4.1 IN THIS GROUND, THE ASSESSEE ASSAILS TH E IMPUGNED ORDER OF THE LEARNED CIT(A) AS BEING ERRONEOUS IN PARTIALLY UPHOLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER (AO) UNDER SECTION 14A R.W. RULE 9D IN RESPECT OF EXEMPT DIVIDEND INCOME AMOUNTING TO ` 10,41,37,067/ - . ACCORDING TO THE LEARNED A.R. FOR THE ASSESSEE, THE ASSESSEE ITSELF HAD SUO MOTO DISALLOWED AN AMOUNT OF ` 12,50,000/ - AS BEING THE EXPENDITURE ATTRIBUTABLE TO THE EARNING OF EXEMPT INCOME, ON ACCOUNT A PERCENTAGE OF STAFF COST, OPERATING AND ADMINISTRATIVE, ESTABLISHMENT AND GENERAL EXPENSES P ERTAINING TO THE MIS DEPARTMENT, WHICH WAS REASONABLE AND NO FURTHER DISALLOWANCE OUGHT TO HAVE BEEN MADE. HOWEVER, AFTER CONSIDERING THE ASSESSEES SUBMISSION IN THE MATTER, THE AO WAS OF THE VIEW THAT THE PROVISIONS OF SECTION 14A R.W. RULE 8D(2)(III) WE RE ATTRACTED IN THE CASE ON HAND AND PROCEEDED TO COMPUTE DISALLOWANCE THEREUNDER OF ` 1,06,44,550/ - , @0.5% OF THE AVERAGE INVESTMENT ON ACCOUNT OF ADMINISTRATIVE EXPENSES. ON APPEAL, THE LEARNED A.R. FOR THE ASSESSEE SUBMITS THAT THE LEARNED CIT(A) RESTRIC TED THE DISALLOWANCE UNDER RULE 8D(2)(III) TO ` 66,42 ,000/ - BY EXCLUDING THE INVESTMENTS MADE BY THE ASSESSEE IN FOREIGN COMPANIES, FMPS AND OTHER INVESTMENTS, THE INCOME OF WHICH IS EXIGIBLE TO TAX. 4.1.1 ACCORDING TO THE LEARNED A.R. FOR THE ASSESSEE, AS PER THE PROVISIONS OF SECTION 14A(2) OF THE ACT, THE AO IS REQUIRED TO EXAMINE THE ACCOUNTS OF THE ASSESSEE AND ONLY WHEN HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM/DISALLOWANCE MADE BY THE ASSESSEE AFTER MAKING REFERENCE TO THE ASSESSEES ACCOU NTS, THAT HE IS ENTITLED TO ADOPT THE METHOD AS PRESCRIBED IN RULE 8D OF THE I.T. RULES, 1962. IT IS SUBMITTED THAT IN THE CASE ON HAND IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 4 IT IS EVIDENT FROM THE ORDER OF ASSESSMENT THAT THE AO HAS NOT RECORDED REASONS AS TO WHY HE IS NOT SATISFIED WITH THE S UO MOTO DISALLOWANCE OF ` 12,50,000/ - MADE BY THE ASSESSEE OUT OF MIS EXPENDITURE INCURRED ON STAFF COSTS, ADMINISTRATIVE, OPERATING AND ESTABLISHMENT EXPENSES AMOUNTING TO ` 66.75 LAKHS. IT IS CONTENDED THAT SINCE NO SATISFACTION HAS BEEN RECORDED BY THE AO IN RESPECT OF THE CORRECTNESS OR OTHERWISE OF THE ASSESSEES CLAIM THAT ITS SUO MOTO DISALLOWANCE OF ADMINISTRATIVE EXPENSES UNDER SECTION 14A R.W. RULE 8D AS REQUIRED UNDER SECTION 14A(2) OF THE ACT R.W. RULE 8D( 1 ) OF THE RULES BEFORE INVOKING RULE 8D(2 ), THE DISALLOWANCE MADE AND SUSTAINED BY THE AO/CIT(A) OUGHT TO BE DELETED. IN SUPPORT OF THE PROPOSITION, THE LEARNED A.R. FOR THE ASSESSEE PLACED RELIANCE ON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GODRAJ & BOYCE MFG. CO. LTD. (328 ITR 81), MAXOPP INVESTMENT LTD. (2012) 347 ITR 272 /203 (DELHI) AND TAIKISHA ENGINEERING INDIA LTD. (2015) 370 ITR 338 (DELHI). 4.2 PER CONTRA, THE LEARNED D.R. PLACED STRONG SUPPORT ON THE FINDING OF THE LEARNED CIT(A) IN THE IMPUGNED ORDER ON THE ISSUE OF DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D(2)(III). 4.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL ON RECORD, INCLUDING THE JUDICIAL DECISIONS CITED. ADMITTEDLY, IN THIS YEAR THE ASSESSEE S UO MOTO DISALLOWED AN AMOUNT OF ` 12,50,000/ - UNDER SECTION 14A R.W. RULE 8D IN RESPECT OF EXEMPT DIVIDEND INCOME EARNED TO THE TUNE OF ` 10,41,37,067/ - . THE AFORESAID DISALLOWANCE MADE ON ACCOUNT OF ADMINISTRATIVE EXPENSES WERE FROM OUT OF MIS DEPARTMENT EX PENDITURE OF ` 66.75 LAKHS INCURRED IN RESPECT OF STAFF COSTS, OPERATIONAL, ADMINISTRATIVE, ESTABLISHMENT AND GENERAL EXPENSES AND WORKING THEREOF WAS GIVEN. 4.3.2 SECTION 14A OF THE ACT PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED IN RESPECT OF EXPENDITURE INCURRED BY AN ASSESSEE IN RELATION TO INCOME WHICH DOES NOT FORM PART OF THE TOTAL INCOME. AS PER SECTION 14A(2), THE AO IS REQUIRED TO EXAMINE THE ACCOUNTS OF THE ASSESSEE AND ONLY WHEN HE IS NOT SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE ASSESSE E IN RESPECT OF IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 5 EXPENDITURE IN RELATION TO EXEMPT INCOME, CAN THE AO DETERMINE THE AMOUNT OF EXPENDITURE WHICH SHOULD BE DISALLOWANCE IN ACCORDANCE WITH THE METHOD PROVIDED IN RULE 8D OF THE INCOME TAX RULES 1962 (THE RULES). SUB - RULE (1) OF RULE 8D OF THE RULES STIPULATES THAT THE AO HAVING REGARD TO THE ACCOUNTS OF THE ASSESSEE ON NOT BEING SATISFIED WITH THE CORRECTNESS OF THE CLAIM OF THE EXPENDITURE MADE BY THE ASSESSEE, CAN GO ON TO DETERMINE THE DISALLOWANCE UNDER RULE 8D(2) OF THE RULES. THEREFORE, RULE 8D(2) WILL NOT COME INTO OPERATION UNTIL AND UNLESS THE SPECIFIC PRE - CONDITION IN RULE 8D(1) IS SATISFIED. HENCE, AS PER THE PROVISIONS OF SECTION 14A(2) OF THE ACT AND RULE 8D(1) BOTH AFFIRMATIVELY RECORD THAT THE DISALLOWANCE MADE BY THE ASSESSEE MUST BE EXAMINED WITH REFERENCE TO THE ACCOUNTS AND ONLY WHEN THE EXPLANATION/CLAIM IS FOUND TO BE NOT SATISFACTORY CAN THE COMPUTATION UNDER RULE 8D(2) BE MADE. WE FIND THAT THIS VIEW AND LEGAL RATIO HAVE BEEN EXPRESSED IN MANY JUDICIAL PRONOUNCEMENTS, INTER ALIA, BY THE HON'B LE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MFG. CO. LTD. (2010) 238 ITR 81 (BOM.) AND THE HON'BLE DELHI HIGH COURT IN THE CASE S OF MAXOPP INVESTMENT LTD. (2012) 347 ITR 272/203 AND TAIKISHA ENGINEERING INDIA LTD. (2015) 370 ITR 338 (DEL.) 4.3.3 IN T HE CASE ON HAND, TAKING INTO ACCOUNT THE OBSERVATIONS AND FINDINGS OF THE AFORESAID DECISIONS OF THE HON'BLE HIGH COURTS, WE ARE OF THE VIE W THAT, SINCE THE CONDITIONS MENTIONED IN SECTION 14A(2) OF THE ACT R.W. RULE 8D(1) OF THE RULES HAVE NOT BEEN SATISFI ED, IN AS MUCH AS, THE AO ERRONEOUSLY INVOKED THE PROVISIONS OF RULE 8D(2) OF THE RULES WITHOUT EXPLAINING OR REASONING WHY THE SUO MOTO DISALLOWANCE OF ` 12,50,000/ - MADE BY THE ASSESSEE WAS INCORRECT AND UNSATISFACTORY CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE. FROM A PERUSAL OF THE ORDER OF THE AO, IT IS EVIDENT THAT NO SUCH REASON OR SATISFACTION HAS BEEN RECORDED BY THE AO TO THE EFFECT THAT HE IS NOT SATISFIED WITH THE WORKING OF THE SUO MOTO DISALLOWANCE OF ` ,12,50,000/ - ON ACCOUNT OF A PORTION OF ADMINISTRATIVE EXPENSES AMOUNTING TO ` 66.75 LAKHS BEFORE HE INVOKED THE PROVISIONS OF RULE 8D(2)(III) OF THE RULES AND MADE THE AFORESAID DISALLOWANCE UNDER SECTION 14A R.W. RULE 8D(2)(III) OF THE RULES. IN ALMOST SIMILAR FACTUAL AND LEGAL CIRCUMSTANCE S, THE HON'BLE DELHI HIGH COURT IN IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 6 THE CASE OF JOINT INVESTMENTS P. LTD. (ITA NO. 117/2015) DATED 25.02.2015, FOLLOWING ITS OWN DECISION IN THE CASE OF TAIKISHA ENGINEERING INDIA LTD. (SUPRA) HAS HELD AS UNDER AT PARAS 9 AND 10 THEREOF: - 9. IN THE PRESEN T CASE, THE AO HAS NOT FIRSTLY DISCLOSED WHY THE APPELLANT/ASSESSEES CLAIM FOR ATTRIBUTING ` 2,97,440/ - AS A DISALLOWANCE UNDER SECTION 14A HAD TO BE REJECTED. TAIKISHA SAYS THAT THE JURISDICTION TO PROCEED FURTHER AND DETERMINE AMOUNTS IS DERIVED AFTER EX AMINATION OF THE ACCOUNTS AND REJECTION IF ANY OF THE ASSESSEES CLAIM OR EXPLANATION. THE SECOND ASPECT IS THERE APPEARS TO HAVE BEEN NO SCRUTINY OF THE ACCOUNTS BY THE AO - AN ASPECT WHICH IS COMPLETELY UNNOTICED BY THE CIT (A) AND THE ITAT. THE THIRD, A ND IN THE OPINION OF THIS COURT, IMPORTANT ANOMALY WHICH WE CANNOT BE UNMINDFUL IS THAT WHEREAS THE ENTIRE TAX EXEMPT INCOME IS ` 48,90,000/ - , THE DISALLOWANCE ULTIMATELY DIRECTED WORKS OUT TO NEARLY 110% OF THAT SUM, I.E., ` 52,56,197/ - . BY NO STRETCH OF IM AGINATION CAN SECTION 14A OR RULE 8D BE INTERPRETED SO AS TO MEAN THAT THE ENTIRE TAX EXEMPT INCOME IS TO BE DISALLOWED. THE WINDOW FOR DISALLOWANCE IS INDICATED IN SECTION 14A, AND IS ONLY TO THE EXTENT OF DISALLOWING EXPENDITURE INCURRED BY THE ASSESSEE IN RELATION TO THE TAX EXEMPT INCOME . THIS PROPORTION OR PORTION OF THE TAX EXEMPT INCOME SURELY CANNOT SWALLOW THE ENTIRE AMOUNT AS HAS HAPPENED IN THIS CASE. 10. FOR THE ABOVE REASONS, THE IMPUGNED ORDER OF THE ITAT IS SET ASIDE. THE QUESTION OF LAW I S ANSWERED IN FAVOUR OF THE ASSESSEE. CONSEQUENTLY, ORDER OF THE AO IS SET ASIDE. THE INITIATION OF PENALTY PROCEEDINGS ALSO IS SET ASIDE. THE MATTER IS REMITTED TO THE AO FOR FRESH CONSIDERATION IN ACCOR DANCE WITH THE ABOVE DIRECTIONS . 4.3.4 RESPECTFULL Y FOLLOWING THE RATIO OF THE DECISIONS, INTER ALIA, OF THE HON'BLE DELHI HIGH COURT IN THE CASES OF JOINT INVESTMENTS PVT. LTD. (SUPRA), WE SET ASIDE THE ORDERS OF THE AUTHORITIES BELOW IN RESPECT OF THE DISALLOWANCE MADE AND SUSTAINED BY THEM UNDER SECTIO N 14A R.W. RULE 8D(2)(III). WE, CONSEQUENTLY, RESTORE THE MATTER TO THE FILE OF THE AO FOR FRESH CONSIDERATION IN ACCORDANCE WITH THE PRE - CONDITIONS SET OUT IN THE PROVISIONS OF SECT ION 14A(1) OF THE ACT AND RULE 8 D(1) OF THE RULES; IN RESPECT OF EXAMINATI ON OF THE SUFFICIENCY OR CORRECTNESS OF THE ASSESSEES CLAIM OF SUO MOTO DISALLOWANCE OF ` 12,50,000/ - HAVING REGARD TO THE ASSESSEES ACCOUNTS AND EXPLANATIONS IN THIS REGARD AND TO PR OCEED FURTHER TO CONSIDER RULE 8 D(2)(III) OF THE RULES ONLY IF SPEAKING REASONS FOR NON SATISFACTION ARE RECORDED. NEEDLESS TO ADD, THE AO WILL PROVIDE ADEQUATE O PPORTUNITY TO THE ASSESSEE OF BEING HEARD IN THE MATTER AND TO FURNISH IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 7 SUBMISSIONS/DOCUMENTS IN THIS REGARD. IT IS ACCORDINGLY ORDERED. CONSEQUENTLY, GROUND NO. 1 OF THE ASSESSEES APPEAL IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES. 5 . GROUND NO. 2 - DISAL LOWANCE UNDER SECTION 43B OF ` 46,519/ - 5.1 IN THIS GROUND, THE ASSESSEE CONTENDS THAT THE LEARNED CIT(A) ERRED IN UPHOLDING THE ACTION OF THE AO IN DISALLOWING EMPLOYEES CONTRIBUTION TO ESIC AMOUNTING TO ` 46,519/ - UNDER SECTION 43B OF THE ACT AS THE SAME WERE DEPOSITED AFTER THE DUE DATE. IT IS CONTENDED BY THE LEARNED A.R. FOR THE ASSESSEE THAT THE ASSESSEE HAD DEPOSITED THE SAID AMOUNT WITHIN THE PERMISSIBLE GRACE/PERIOD AND MUCH BEFORE THE DUE DATE FOR F ILING THE RETURN OF INCOME FOR THIS YEAR, I.E. A.Y. 2008 - 09. IT IS CONTENDED THAT THIS ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE DECISION OF THE HON'BLE APEX COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC) AND THE DECISIONS OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. HINDUSTAN ORGANICS CHEMICALS LTD. (2014) 366 ITR 1 (BOM.) AND CIT VS. GHATGE PATIL TRANSPORTS LTD. (2014) 368 ITR 749 (BOM.). IT IS PRAYED THAT IN VIEW OF THE ABOVE, THE DISALLOWANCE OF ` 46,519/ - UNDER SECTION 43B OF THE ACT BE DELETED. 5.2 PER CONTRA, THE LEARNED D.R. SUPPORTED THE DECISION OF THE LEARNED CIT(A) ON THIS ISSUE. 5.3.1 WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED AND CAREFULLY CONSIDERED THE MATERIAL O N RECORD. THE ISSUE BEFORE US IS THE DISALLOWANCE OF ` 46,519/ - MADE AND CONFIRMED BY THE AUTHORITIES BELOW IN RESPECT OF EMPLOYEES CONTRIBUTION TO ESIC UNDER SECTION 43B OF THE ACT AS THE SAME WERE NOT DEPOSITED BEFORE THE DUE DATE AS PER THE CONCERNED ACT . IT IS ALSO NOT DISPUTED THAT THE SAID AMOUNT WAS DEPOSITED BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME OF A.Y. 2008 - 09. THE SIMILAR ISSUE WAS BEFORE THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. GHATGE PATIL TRANSPORTS LTD. (2014) 368 ITR 749 (BOM.). THE HON'BLE COURT, AFTER CONSIDERING THE SUBSTANTIAL QUESTION OF LAW BEFORE IT AT PARA 1 THEREOF, AT PARA 14 TO 16 THEREOF, FOLLOWING THE DECISION OF THE HON'BLE APEX COURT IN ALOM EXTRUSIONS LTD. (SUPRA) HELD AS UNDER: - IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 8 14. FROM A READING OF ABOVE, IT IS CLEAR THAT THE EMPLOYER - ASSESSEE WOULD BE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION TO THE EMPLOYEE'S WELFARE FUND STOOD CREDITED ON OR BEFORE THE DUE DATE AND NOT OTHERWISE. IT TRANSPIRES THAT INDUSTRY ONCE AGAIN MADE REPRESENTATIONS TO THE MINISTRY OF FINANCE TO REMOVE THIS ANOMALY. THE RESULT WAS THAT AN AMENDMENT WAS INSERTED WHICH CAME INTO FORCE WITH EFFECT FROM 1ST APRIL, 2004 AND TWO CHANGES WERE MADE IN SECTION 43B FIRSTLY BY DELETING THE SECOND PROVISO AND FURTHER AMENDMENT IN T HE FIRST PROVISO WHICH READS AS UNDER: - PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SHALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER S UB - SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN. 15. IN THIS MANNER, THE AMENDMENT PROVIDE D BY FINANCE ACT, 2003 PUT ON PAR THE BENEFIT OF DEDUCTIONS OF TAX, DUTY, CESS AND FEE ON THE ONE HAND WITH CONTRIBUTIONS TO VARIOUS EMPLOYEES' WELFARE FUNDS ON THE OTHER. ALL THIS CAME UP FOR CONSIDERATION BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF A LOM EXTRUSIONS LTD. (SUPRA). THE TRIBUNAL IN THE CASE AT HAND RELIED UPON THE SAID JUDGMENT. THERE IS NO REASON TO FAULT THE ORDER PASSED BY THE TRIBUNAL. WE ARE OF THE VIEW THAT THE DECISION OF THE SUPREME COURT IN ALOM EXTRUSIONS LTD. APPLIES TO EMPLOYEE S' CONTRIBUTION AS WELL AS EMPLOYERS' CONTRIBUTION. QUESTION NOS.2, 3 & 4 ARE ACCORDINGLY ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. 16. THE FACTS IN INCOME TAX APPEAL NO.1034 OF 2012 ARE SIMILAR, EXCEPT FOR THE CHANGE IN THE ASSESSMENT Y EAR AND THE QUESTIONS ARISE OUT OF THE COMMON ORDER OF THE TRIBUNAL DATED 29TH JULY, 2011 AND ACCORDINGLY THE QUESTION NOS.2, 3 & 4 ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE HOLD THAT BOTH EMPLOYEES' AND EMPLOYER'S CONTRIBUTIONS AR E COVERED UNDER THE AMENDMENT TO SECTION 43B OF I.T. ACT AND THE ALOM EXTRUSIONS JUDGMENT. 5.3.2 RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF GHATGE PATIL TRANSPORTS LTD. (2014) 368 ITR 749 (BOM.), WE HOLD AND DIREC T THAT THE DISALLOWANCE OF ` 46,519/ - UNDER SECTION 43B OF THE ACT IS TO BE DELETED SINCE THE ASSESSEE IN THE CASE ON HAND HAS ADMITTEDLY PAID THE EMPLOYEES CONTRIBUTION TO ESIC BEFORE THE DUE DATE FOR FURNISHING ITS RETURN UNDER SECTION 139(1) OF THE ACT FOR A.Y. 2008 - 09 WHICH FACT HAS NOT BEEN DISPUTED OR CONTROVERTED BY REVENUE. CONSEQUENTLY, GROUND NO. 2 OF THE ASSESSEES APPEAL IS ALLOWED. IT A NO. 1667/MUM/2012 M/S. VOLTAS LIMITED 9 6 . IN THE RESULT, THE ASSESSEES APPEAL FOR A.Y. 2008 - 09 IS PARTLY ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 8 TH JULY , 2016. SD/ - SD/ - ( SANDEEP GOSAIN ) (JASON P. BOAZ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 8 TH JULY , 2016 COPY TO: 1 . THE APPELLANT 2 . THE RESPONDENT 3 . THE CIT(A) - 13 , MUMBAI 4 . THE CIT - 7 , MUMBAI 5 . THE DR, F BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.