ITO, Ward-2(2), Hyderabad, Hyderabad V. Good Health TPA Services Limited, Hyderabad, Secunderabad

ITA 1706/HYD/2016

• Counselvise Citation: [2017] 130 COUNSELVISE.COM (IT) 6089 (ITAT-HYDERABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 15-03-2017
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 19-12-2016
• Court: TRIBUNAL
• Department Lawyers: K J RAO
• Assessee Lawyers: A V RAGHURAM
• Section: 43B; 142(1)

Judgement Text

THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH B, HYDERABAD BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ITA NO. 1706/HYD/2016 ASSESSMENT YEAR: 2013-14 THE INCOME TAX OFFICER, WARD-2(2) HYDERABAD VS. M/S GOOD HEALTH TPA SERVICES LTD., SECUNDERABAD. PAN AABCG8036G (APPELLANT) (RESPONDENT) REVENUE BY : SHRI K.J. RAO ASSESSEE BY : SHRI A.V. RAGHU RAM DATE OF HEARING : 15-03-2017 DATE OF PRONOUNCEMENT : 15-03-2017 ORDER PER G. MANJUNATHA, A.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST ORDER OF THE CIT(A)-2, HYDERABAD DATED 26-07-2016 AND IT PERTAINS TO THE ASSESSMENT YEAR 2013-14. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE, WHETHER THE CIT(A) IS CORRECT IN LAW IN HOLDING THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS EPF & ESI BY THE EMPLOYER ASSESSEE, WHICH IS NOT IN CONSONANCE WITH THE EXPLANATION TO SECTION 36(1)(VA) IS ENTITLED FOR DEDUCTION U/S 43B OF THE IT ACT. 2. ANY OTHER GROUND THAT MAY BE URGED AT THE TIME OF HEARING. 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE M/S GOOD HEALTH TPA SERVICES PVT LTD., FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2013-14 ON 29-09-2013 DECLARING TOTAL INCOME OF RS. 1,00,18,991/-. THE CASE WAS 2 ITA NO. 1706/HYD/2016 M/S GOOD HEALTH TPA SERVICES LTD, SECUNDERABD. SELECTED FOR SCRUTINY UNDER CASS, AND ACCORDINGLY NOTICES U/S 143(2) AND 142(1) OF THE ACT WERE ISSUED. IN RESPONSE TO THE NOTICES, THE AUTHORIZED REPRESENTATIVE OF THE ASSESSEE APPEARED FROM TIME TO TIME AND FURNISHED THE INFORMATION CALLED FOR. DURING THE COURSE OF ASSESSMENT PROCEEDINGS THE A.O NOTICED THAT THE ASSESSEE HAS REMITTED EMPLOYEES CONTRIBUTION TO EPF AND ESI BEYOND THE DUE DATE SPECIFIED UNDER THE RESPECTIVE ACTS. THE A.O FURTHER OBSERVED THAT AS PER THE PROVISIONS OF SEC 36(1)(VA) OF THE IT ACT, DEDUCTION IS ALLOWED ONLY WHEN THE SUMS RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES IS CREDITED TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUNDS ON OR BEFORE THE DUE DATES SPECIFIED UNDER THE RESPECTIVE ACTS. SINCE, THE PAYMENTS ARE MADE BEYOND THE DUE DATE SPECIFIED UNDER ESI AND EPF ACTS, DISALLOWED AN AMOUNT OF RS.15,91,631/- TOWARDS EPF AND AN AMOUNT OF RS. 2,29,576/- TOWARDS ESI AND ADDED BACK TO THE TOTAL INCOME. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE THE A.O. THE ASSESSEE FURTHER SUBMITTED THAT THE ISSUE OF ALLOWABILITY OF DEDUCTION TOWARDS BELATED PAYMENTS OF EMPLOYEES CONTRIBUTION TO EPF AND ESI HAS BEEN CONSIDERED BY VARIOUS HIGH COURTS AND TRIBUNALS AND CONSIDERING THE DELETION OF SECOND PROVISO TO SEC. 43B OF THE ACT, THE HIGH COURTS AND TRIBUNALS HAVE HELD THAT EMPLOYEES CONTRIBUTION TO EPF AND ESI IS ALLOWABLE, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE PRESCRIBED IN SEC. 139(1) OF THE IT ACT. IN SUPPORT OF HIS ARGUMENTS, RELIED 3 ITA NO. 1706/HYD/2016 M/S GOOD HEALTH TPA SERVICES LTD, SECUNDERABD. UPON THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS SAVARI ENTERPRISES 298 ITR 141 AND HONBLE HIMACHAL PRADESH HIGH COURT IN THE CASE OF CIT VS NIPS POLY FABRIKS LTD., 350 ITR 327. THE CIT(A) AFTER CONSIDERING THE RELEVANT SUBMISSIONS OF THE ASSESSEE AND ALSO BY RELIED UPON THE DECISION OF ITAT, HYDERABAD B BENCH IN THE CASE OF M/S. VBC INDUSTRIES LTD. HYDERABAD VS DCIT IN ITA NO. 143/HYD/2013 DATED 08-05-2015, DELETED ADDITIONS MADE BY THE A.O TOWARDS DISALLOWANCE OF BELATED PAYMENT OF EMPLOYEES SHARE OF EPF AND ESI CONTRIBUTIONS. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. WE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD. AT THE TIME OF HEARING, THE LD. COUNSEL FOR THE ASSESSEE AND THE LD. DR ACCEPTED THAT THE ISSUE INVOLVED IN THIS APPEAL IS COVERED BY THE DECISION OF ITAT, HYDERABAD B BENCH IN THE CASE OF ITO VS M/S. GOLDEN STAR FACILITIES AND SERVICES PVT. LTD IN ITA NO. 840/HYD/2016 DATED 01-10-2016, WHEREIN THE ITAT, UNDER SIMILAR CIRCUMSTANCES HELD THAT EMPLOYEES CONTRIBUTION TO EPF AND ESI IS DEDUCTIBLE, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE IT ACT, 1961. WE FIND THAT THE COORDINATE BENCH OF ITAT, BY FOLLOWING THE DECISION OF HONBLE SUPREME COURT, IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD., 319 ITR 36 AND ALSO ITAT, HYDERABAD A BENCH DECISION IN THE CASE OF VBC INDUSTRIES LTD. VS. DCIT IN ITA NO. 143/HYD/2013, OBSERVED THAT EMPLOYEES CONTRIBUTION TO EPF AND ESI IS DEDUCTIBLE, IF THE SAME IS PAID ON OR BEFORE THE DUE DATE OF 4 ITA NO. 1706/HYD/2016 M/S GOOD HEALTH TPA SERVICES LTD, SECUNDERABD. FILING OF THE RETURN U/S 139(1) OF THE IT ACT. THE REVENUE HAS FAILED TO BROUGHT ON RECORD ANY OTHER DECISION CONTRARY TO THE DECISION TAKEN BY THE HONBLE SUPREME COURT, IN THE CASE OF ALOM EXTRUSIONS LTD., (SUPRA) AND FOLLOWED BY THE ITAT, HYDERABAD BENCH IN THE CASE OF ITO VS M/S. GOLDEN STAR FACILITIES AND SERVICES PVT. LTD IN ITA NO. 840/HYD/2016 DATED 01-10-2016. WE THEREFORE, OF THE VIEW THAT DEDUCTION IS AVAILABLE TOWARDS EMPLOYEES SHARE OF CONTRIBUTION TO EPF AND ESI, REMITTED ON OR BEFORE THE DUE DATE OF FILING OF RETURN U/S 139(1) OF THE IT ACT. HENCE, WE UPHELD THE ORDER OF THE CIT(A) AND DISMISSED THE APPEAL FILED BY THE REVENUE. 5. IN THE RESULT, APPEAL FILED BY THE REVENUE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON 15 TH MARCH, 2017. SD/- SD/- (D. MANMOHAN) (G. MANJUNATHA) VICE PRESIDENT ACCOUNTANT MEMBER HYDERABAD, DATED: 15 TH MARCH, 2017 KRK 1) M/S GOOD HEALTH TPA SERVICES LTD., PLOT NO. 75, MADHAVAPURI COLONY, SAINIKPURI POST, SECUNDERABAD- 94. 2) ITO, WARD2(2) HYDERABAD 3) CIT -2, HYDERABAD 4) PCIT-2, HYDERABAD 5) THE DEPARTMENTAL REPRESENTATIVE, I.T.A.T., HYDERABAD. 6) GUARD FILE