ITO., Ward- 16(2), Hyderabad, Hyderabad V. M/s Prime Access Technologies Limited, Hyderabad

ITA 1677/HYD/2014

• Counselvise Citation: 167722514 RSA 2014
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 22-07-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 13-07-2015
• Assessment Year: 2011-2012
• Appeal Filed On: 03-11-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAMAKRISHNA BANDI
• Section: 43B

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH A, HYDERABAD BEFORE SHRI P.M. JAGTAP, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO. 1677/HYD/2014 ASSESSMENT YEAR: 2011-12 INCOME TAX OFFICER, WARD 16(2), HYDERABAD VS. PRIME ACCESS TECHNOLOGIES LTD., HYDERABAD. PAN AADCP 9367 P (APPELLANT) (RESPONDENT) REVENUE BY : SHRI RAMAKRISHNA BANDI ASSESSEE BY : SHRI MOHD. AFZAL DATE OF HEARING 13-07-2015 DATE OF PRONOUNCEMENT 22-07-2015 O R D E R PER SAKTIJIT DEY: THIS APPEAL BY THE DEPARTMENT IS DIRECTED AGAINST THE ORDER DATED 18/08/2014 OF LD. CIT(A)-V, HYDERABAD FOR THE AY 2011-12. 2. THE ONLY EFFECTIVE GROUND RAISED BY THE DEPARTME NT IS AS UNDER: THE LEARNED CIT(A) ERRED IN DELETING THE ADDITION O N ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF & ESI HOLDING THAT T HEY WERE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN OF INC OME WHILE THERE WAS NO SUCH PROVISION IN THE ACT. 3. BRIEFLY, THE FACTS ARE, ASSESSEE A COMPANY FILED ITS RETURN OF INCOME FOR THE IMPUGNED AY ON 30/09/2011 DECLARING TOTAL INCOME OF RS. 51,45,337. DURING THE ASSESSMENT PROCEEDING, AO ON VERIFYING THE INFORMATION ON RECORD, NOTICED THAT ASSESSEE HA S NOT MADE STATUTORY PAYMENTS RELATING TO EMPLOYERS AND EMPLO YEES CONTRIBUTION TOWARDS PF AND ESI WITHIN THE DUE DATE UNDER THE RE LEVANT STATUTE. HE, THEREFORE, OPINED THAT IN VIEW OF THE PROVISION S CONTAINED UNDER 2 ITA NO. 1677 /HYD/2014 PRIME ACCESS TECHNOLOGIES LTD. EXPLANATION TO SECTION 36(1)(VA) PAYMENTS NOT MADE WITHIN THE DUE DATE OF THE RELEVANT ACTS CANNOT BE ALLOWED AS DEDU CTION. HE QUANTIFIED THE DISALLOWANCE ON ACCOUNT OF DELAYED P AYMENT OF PF & ESI AT RS. 33,45,709 AND RS. 9,47,752 RESPECTIVELY. THUS, THE TOTAL DISALLOWANCE MADE BY AO WAS TO THE TUNE OF RS. 42,9 3,461. BEING AGGRIEVED OF SUCH DISALLOWANCE, ASSESSEE PREFERRED APPEAL BEFORE LD. CIT(A). 4. IN COURSE OF APPEAL HEARING BEFORE LD. CIT(A), I T WAS SUBMITTED BY ASSESSEE THAT SINCE BOTH EMPLOYERS AND EMPLOYEE S CONTRIBUTION TO PF & ESI WERE REMITTED TO THE RESPECTIVE ACCOUNT S BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE ACT, THE SAME IS ALLOWABLE AS DEDUCTION IN VIEW OF THE PROVISION CONTAINED U/S 43 B(B) OF THE ACT. IN SUPPORT OF SUCH CONTENTION, ASSESSEE PLACED RELIANC E UPON DECISIONS OF DIFFERENT HIGH COURTS AS UNDER: 1. CIT VS. NIPSO POLYFABRIKS LTD., 350 ITR 327 2. CIT VS. AIMIL LTD. & ORS, 321 ITR 0508 5. LD. CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF ASSESSEE IN THE LIGHT OF RELEVANT STATUTORY PROVISION AS CONTAINED U/S 36(1)(VA) READ WITH SECTION 43B OF THE ACT AS WELL AS RATIO LAID D OWN IN THE DECISIONS CITED BEFORE HIM, DELETED THE ADDITION BY HOLDING A S UNDER: 6.1 I FULLY AGREE WITH THE CASE-LAWS CITED BY APPEL LANT IN RESPECT OF THE APEX COURT AND OTHER HIGH COURTS HO LDING THAT EVEN IF THE EMPLOYERS/EMPLOYEES CONTRIBUTIONS WER E NOT PAID INTO THE GOVT. ACCOUNT BEFORE THE DUE DATES AS PRE SCRIBED UNDER THOSE ACTS, BUT PAID BEFORE THE DUE DATE FOR FURNI SHING OF THE RETURN OF INCOME U/S 139(1), THEY ARE ELIGIBLE TO BE ALLOWED AS DEDUCTION FROM THE INCOME. SO, RESPECTFULLY FOLLOW ING THE CASE- LAWS CITED BY THE APPELLANT AND SINCE THE APPELLAN T HAS PAID THE EMPLOYEES/EMPLOYERS CONTRIBUTIONS TOWARDS PF & E SI BEFORE THE DUE DATE FOR FURNISHING OF RETURN OF INCOME EV IDENT FROM THE CHALLANS SUBMITTED, I HOLD THAT THE AO WAS NOT JUS TIFIED IN MAKING THE ADDITIONS IN RESPECT OF ESI: RS. 9,47,7 52 AND PF: RS. 33,45,709, AND HENCE, DELETE THE SAME. 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE PARTIE S AND PERUSED THE ORDERS OF REVENUE AUTHORITIES. AT THE OUTSET, L D. COUNSELS FOR BOTH 3 ITA NO. 1677 /HYD/2014 PRIME ACCESS TECHNOLOGIES LTD. THE PARTIES AGREED THAT THIS PARTICULAR ISSUE IS CO VERED BY THE DECISIONS OF THE ITAT, HYDERABAD BENCH IN CASE OF V BC INDUSTRIES LTD VS. DCIT IN ITA NO. 143/HYD/13 AND OTHERS DATED 08/05/15. ON PERUSAL OF THE AFORESAID DECISION OF THE COORDINATE BENCH, IT IS SEEN THAT WHILE CONSIDERING IDENTICAL ISSUE RELATING TO DISALLOWANCE MADE ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEES CONTRIBU TION TO PF & ESI, TRIBUNAL AFTER CONSIDERING THE PRINCIPLE LAID DOWN BY DIFFERENT HIGH COURTS ON THE ISSUE ALLOWED ASSESSEES CLAIM B Y HOLDING AS UNDER: 16. WE HAVE HEARD THE PARTIES AND PERUSED THE ORDER S OF REVENUE AUTHORITIES AS WELL AS THE MATERIALS ON RE CORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIONS P LACED BEFORE US BY THE PARTIES. THERE IS NO DISPUTE AS FAR AS T HE FACTUAL ASPECTS ARE CONCERNED. IT IS A FACT ON RECORD THAT EMPLOYEES CONTRIBUTION TO PF & ESI HAVE NOT BEEN REMITTED TO THE GOVT. ACCOUNT/APPROPRIATE FUND WITHIN THE DUE DATE AS PE R EXPLANATION TO SECTION 36(1)(VA). AT THE SAME TIME, IT IS ALSO NOT DISPUTED THAT ASSESSEE HAS REMITTED THE EMPLOYEES CONTRIBUT ION TO PF & ESI BEFORE THE DUE DATE OF FILING OF RETURN U/S 13 9(1) OF THE ACT. THUS, THE ONLY ISSUE TO BE DECIDED WHETHER SUCH D ELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF & ESI IS AN ALLOWABLE DEDUCTION U/S 43B. AS CAN BE SEEN, THE HONBLE GUJ ARAT HIGH COURT IN CASE OF CIT VS. GUJARAT STATE ROAD TRANSP ORT CORPORATION (SUPRA) HAS DECIDED THE ISSUE AGAINST ASSESSEE BY HOLDING THAT EMPLOYEES CONTRIBUTION TO PF & ESI I S NOT COVERED UNDER THE PROVISIONS OF SECTION 43B. HOWEVER, IT I S WORTH MENTIONING, IN THE VERY SAME DECISION, HONBLE GUJ ARAT HIGH COURT HAS REFERRED TO DECISIONS OF AT LEAST FOUR O THER HIGH COURTS EXPRESSING THE VIEW THAT EMPLOYEES CONTRIBUTION T O PF AND ESI IF DEPOSITED WITHIN THE DUE DATE OF FILING RETURN U/S 139(1), SAME WOULD BE ALLOWABLE AS DEDUCTION. IN FACT, HONBLE HP HIGH COURT IN CASE OF NIPSO POLYFABRIKS LTD. (SUPRA) WHILE C ONSIDERING IDENTICAL ISSUE OF DELAYED REMITTANCE OF EMPLOYEES CONTRIBUTION TO PF AND ESI HAVE HELD THAT BOTH EMPLOYEES AND EM PLOYERS CONTRIBUTION TO PF & ESI STAND AT PAR AND THE PROV ISIONS OF SECTION 43B WOULD APPLY. THUS, AS CAN BE SEEN, WHI LE THERE IS ONLY ONE DECISION IN FAVOUR OF THE DEPARTMENT, THE RE ARE DECISIONS OF AT LEAST FOUR DIFFERENT HIGH COURTS I N FAVOUR OF THE ASSESSEE. MOREOVER, WHEN VIEW EXPRESSED ON A PARTI CULAR ISSUE BY NON JURISDICTIONAL HIGH COURTS ARE CONFLICTING AND THE DECISION OF JURISDICTIONAL HIGH COURT ON THE ISSUE IS NOT A VAILABLE, THE PRINCIPLE TO BE FOLLOWED, AS HELD BY THE HONBLE SUPREME COURT IN CASE OF CIT VS. VEGETABLE PRODUCTS LTD., 88 ITR 192, IS THE VIEW FAVOURABLE TO ASSESSEE HAS TO BE ADOPTED. KEE PING IN VIEW 4 ITA NO. 1677 /HYD/2014 PRIME ACCESS TECHNOLOGIES LTD. THE AFORESAID PROPOSITION OF LAW AND FOLLOWING THE DECISION OF HONBLE HIMACHAL PRADESH HIGH COURT IN CASE OF CIT VS. NIPSO POLYFABRIKS LTD. (SUPRA) WE HOLD THAT EMPLOYEES CO NTRIBUTION TO PF & ESI REMITTED BEFORE THE DUE DATE OF FILING O F RETURN U/S 139(1), WILL BE ALLOWABLE AS DEDUCTION. ACCORDINGL Y, WE UPHOLD THE ORDER OF LD. CIT(A) ON THIS ISSUE BY DISMISSIN G THE GROUND RAISED BY REVENUE. 6.1 IN THE APPEAL BEFORE US, THERE IS NO DISPUTE TH AT THE EMPLOYEES CONTRIBUTION TOWARDS PF & ESI WERE REMITTED TO THE RESPECTIVE ACCOUNTS BEFORE DUE DATE OF FURNISHING OF RETURN U/ S 139(1) OF THE ACT. THAT BEING THE CASE, THE PRINCIPLE LAID DOWN BY THE COORDINATE BENCH (SUPRA) AS WELL AS DIFFERENT HIGH COURTS REFERRED T O THEREIN WILL SQUARELY APPLY TO THE FACTS OF THE PRESENT CASE. AC CORDINGLY, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF LD. CIT(A) I N DELETING THE DISALLOWANCE MADE BY AO. 7. IN THE RESULT, DEPARTMENTS APPEAL IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 22 ND JULY, 2015. SD/- SD/- (P.M. JAGTAP) (SAKTIJIT DEY) ACCOUNTANT MEMBER JUDICIAL MEMBER HYDERABAD, DATED: 22 ND JULY, 2015 KV COPY TO:- 1) ITO, WARD 16(2),ROOM NO. 615, 6 TH FLOOR, AAYAKAR BHAVAN, BASHEERBAGH, HYDERABAD 500 004. 2) M/S PRIME ACCESS TECHNOLOGIES LTD., 102, TRENDSE T PYLA COMPLEX, VENGALARAO NAGAR, HYDERABAD 3 CIT(A)-V, HYDERABAD 4) CIT-IV, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDE RABAD.