RMP Bearings Ltd., Ahmedabad V. The Dy. Commissioner of Income Tax, Circle-3(1)z(2), Ahmedabad

ITA 1715/AHD/2016

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 9683 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-09-2018
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 23-06-2016
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD D BENCH BEFORE: SHRI AMARJIT SINGH, ACCOUNTANT MEMBER AND MS. MADHUMITA ROY, JUDICIAL MEMBER RMP BEARINGS LTD., AHMEDABAD PAN: AABCR0266K (APPELLANT) VS THE D CIT, CIRCLE - 3( 1 )(2) , AHMEDABAD (RESPONDENT) REVENUE BY : S H RI LALIT P. JAIN , SR. D . R. ASSESSEE B Y: SHRI P.M. MEHTA, A.R. DATE OF HEARING : 13 - 08 - 2 018 DATE OF PRONOUNCEMENT : 26 - 09 - 2 018 / ORDER P ER : AMARJIT SINGH, ACCOUNTANT MEMBER : - THIS ASSESSEE S APPEAL FOR A. Y. 2012 - 13 , ARI SES FROM ORDER OF THE CIT(A) - 9, AHMEDABAD DATED 23 - 05 - 2 016 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . 2. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: - 1. IN LAW AND IN THE FACTS AND CIRCUMSTANCE S OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN UPHOLDING THE ADDITION RELATED TO EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND FOR RS.39,91,179/ - WHEN NO SUCH DISALLOWANCE IS CALLED FOR. THE AO MAY BE DIRECTED TO DELETE THE SAME. 2. IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LEARNED CIT(A) HAS GROSSLY ERRED IN NOT CONSIDERING THE WRITTEN SUBMISSION WHEREIN THE APPELLANT CONTENTED THAT FOR THE PURPOSE OF EMPLOYEES CONTRIBUTION TO PF / ESIC, THE DUE DATE IS TO I T A NO . 1715 / A HD/20 16 A SS ESSMENT YEAR 2012 - 13 I.T.A NO. 1715 /AHD/20 16 A.Y. 2012 - 13 PAGE NO RMP BEARINGS LTD. VS. D CIT 2 BE RE CKONED WITH REFERENCE TO THE FIRST DATE OF ACTUAL PAYMENT OF SALARY OR WAGES AND NOT WITH REFERENCE TO CLOSE OF THE CONCERNED MONTH TO WHICH SALARY OR WAGES PERTAINS. 2.1 IN LAW AND IN THE FACTS AND CIRCUMSTANCES OF THE APPELLANT'S CASE, THE LD. CIT(A) O UGHT TO HAVE APPRECIATED THAT THE TIME CONSTRAINT OF 20/21 DAYS FOR DEPOSITING THE EMPLOYEES CONTRIBUTION TO PF / ESI IS TO BE CONSIDERED FROM THE DATE ON WHICH THE ACTUAL PAYMENT OF SALARY OR WAGES IS MADE. HENCE, EVEN IF DISALLOWANCE IS MADE, IN ANY CASE IT CANNOT BE MADE TOWARDS THE DEPOSITS OF.RS. 9,33,114 WHICH ARE MADE WITHIN THE TIME LIMIT OF 20 DAYS FROM THE DATE OF PAYMENT OF SALARY 3 . IN THIS CASE, RETURN OF INCOME DECLARING INCOME OF RS. 5 , 05 , 76 , 660/ - WAS FILED ON 28 TH SEP, 2012. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 23 RD MARCH, 2013. ON SCRUTINY, THE ASSESSING OFFICER HAS NOTICED THAT ASSESSEE HAS RECEIVED AN AMOUNT OF RS. 39 , 91 , 179/ - BY WAY OF EMPLOYEES CONTRIBUTION TO PF. HOWEVER, THE SAME HAS NOT BEEN DEPOSITED WITH THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ON OR BEFORE DUE DATE. THE DETAILS OF SUCH PAYMENT ARE REPRODUCED AS UNDER: - MONTH AMOUNT RS. DUE DATE DT. OF PAYMENT APRIL, 2011 2,78,925 20/05/2011 23/05/2011 MAY, 2011 314,010 20/06/2011 22/06/2011 JUNE, 2011 3,02,923 20/07/2011 28/07/2011 JULY, 2011 3,63,499 20/08/2011 17/10/2011 AUG, 2611 3,36,294 20/09/2011 17/10/2011 SEPT, 2011 3,09,582 20/10/2011 09/11/2011 OCT.2011 3,17,305 20/11/20 11 10/0112011 NOV, 2011 4,09,588 20/12/2011 15/02/2012 DEC, 2011 3,26,868 20/01/2012 19/03/2012 JAN, 2012 3,47,475 20/02/2012 19/03/2012 FEB, 2012 3,44,531 20/03/2012 23/04/2012 MARCH, 2012 3,40,179 20/04/2012 23/04/2012 TOTAL 39,91,179 I.T.A NO. 1715 /AHD/20 16 A.Y. 2012 - 13 PAGE NO RMP BEARINGS LTD. VS. D CIT 3 THE ASSESSEE WAS ASKED TO SHOW CAUSE WHY LATE PAYMENT OF PF COLLECTED FROM EMPLOYEES SHOULD NOT BE DISALLOWED AND ADDED TO THE INCOME OF THE ASSESSEE COMPANY. THE ASSESSEE EXPLAINED THAT THE PAYMENT OF PROVIDENT FUND HAS BEEN MADE BE FORE THE COMPLETION OF FINANCIAL YEAR AND THE SAME IS REQUIRED TO BE ALLOWED. THE ASSESSING OFFICER HAS NOT ACCEPTED THE EXPLANATION OF THE A SSESSEE STATING THAT IN VIEW OF THE SPECIFIC PROVISIONS OF SECTION 36(1)(VA) R.W.S. 2(24) (X) OF THE ACT THE DEDU CTION FOR THE EMPLOYEES CONTRIBUTION IS ALLOWABLE ONLY IF SUCH SUM IS CREDITED BY THE ASSESEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. CONSEQUENTLY, THE ASSESSING OFFICER HAS DISALLOWED THE AMOUNT OF RS. 39 , 91 , 179/ - BEING PF OF EMPLOYEES CONTRIBUTION AND ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 4. THE ASSESSEE HAS FILED APPEAL BEFORE THE LD. CIT(A). THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE BY PLACING RELIANCE ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION REPORTED IN 265 CTR 64 (GUJ). 5. DURING THE COURSE OF APPELLATE PROCEEDINGS BEFORE US, THE LD. COUNSEL HAS FURNISHED PAPER BOOK CONTAINING DETAILS OF SUBMISSION MADE BEFORE THE ASSESSI NG OFFICER AND LD. CIT(A). D URING THE COURSE OF ASSESSMENT PROCEEDIN GS AND APPELLATE PROCEEDINGS, HE HAS ALSO FILED COPIES OF VARIOUS JUDICIAL PRONOUNCEMENTS . HE HAS ALSO CONTENDED REFERRING GROUND OF APPEAL NO.2.1 PERTAINING TO THE PART OF PAYMENT TOWA RDS EMPLOYEES CONTRIBUTION THAT DU E DATE HAS TO BE CONSIDERED FROM THE MONTH OF ACTUAL PAYMENT OF SALARY/WAGES . ON THE OTHER HAND, LD. DEPARTMENTAL REPRESENTATIVE HAS SUPPORTED THE ORDER OF LD. CIT(A) AND ALSO PLACED RELIANCE ON THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE C ASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION. HE HAS CONTENDED THAT IN VIEW OF THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GSRTC IF THE ASSESSEE HAS NOT DEPOSITED THE CONTRIBUTION OF EMPLOYEES CONTRIB UTION TO THE PF/ESIC AS PER THE DATE PRESCRIBED IN THE RELEVANT ACT I.T.A NO. 1715 /AHD/20 16 A.Y. 2012 - 13 PAGE NO RMP BEARINGS LTD. VS. D CIT 4 THE REFORE , SAID DEDUCTION IS NOT AVAILABLE TO THE ASSESSEE EVEN IF THERE IS A DELAY IN DISBURSEMENT OF THE SALARY. 5. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MATERIAL ON RECORD C AREFULLY. WE OBSERVE THAT T O ACHIEVE THE SOCIO - ECONOMIC GOALS PERTAINING TO THE WORKING CLASS THE GOVERNMENT HAS ENACTED BENEFICIAL ENACTMENT FOR THE WELFARE AND PROTECTION OF THE INTEREST OF THE EMPLOYEES AND THE EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIONS ACT, 1 952 IS ONE OF THEM, WHICH HAS BEEN ENACTED WITH THE MAIN OBJECTION OF PROTECTING THE INTEREST OF THE EMPLOYEES. THE PURPOSE OF AN EPF IS TO HELP EMPLOYEES SAVE A PART OF THEIR SALARY EVERY MONTH TO BE USED WHEN THE EMPLOYEES HAS TO RETIR E FROM SERVICE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER HAS NOTICED THAT AMOUNT RECEIVED BY THE ASS ESSEE BY WAY OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND HAS NOT BEEN DEPOSITED BY THE ASSSESSEE IN THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE. BEFORE THE ASSESSING OFFICER , IT WAS CONTENDED THAT IF THE PAYMENT OF PROVIDENT FUND CONTRIBUTION HAS BEEN MADE WITHIN THE DUE DATE OF FILING RETURN OF INCOME THEN THE SAME IS ALLOWABLE AS DEDUCTION U/S. 43B O F THE ACT. THE ASSESSING OFFICER HAD REJECTED THIS CONTENTION OF THE ASSESSE THAT THE NON - ABSTANTE CLAUSE OF SECTION 43B CANNOT OVER RIDE THE SPECIFIC PROVISIONS IN SECTION 36(1)(VA) FOR EMPLOYEES CONTRIBUTION. BEFORE THE LD. CIT(A) , THE ASSESSEE HAS SUBM ITTED THAT FOR THE PURPOSE OF EMPLOYEES CONTRIBUTION TO PF/ESIC, THE DUE DATE IS TO BE RECKONED WITH REFERENCE TO THE FIRST DATE OF ACTUAL PAYMENT OF SALARY AND WAGES AND NOT WITH REFERENCE T O CLOSE OF THE CONCERNED MONTH TO WHICH SALARY OR WAGES P ERTAINS AND THE TIME CONSTRAINT OF 20/21 DAYS FOR DEPOSITING THE EMPLOYEES CONTRIBUTION TO PF/ESI IS T O BE CONSIDERED FROM THE DATE ON WHICH THE ACTUAL PAYMENT OF SALARY OR WAGES IS MADE. THE LD. CIT(A) HAS NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT AS PER SECTION 36(1)(VA) OF THE AC T, ANY AMOUNT NOT DEPOSITED TILL T H E DUE DATE AS SPECIFIED IN THE RESPECTIVE ACT SHOULD BE ADDED TO THE TOTAL INCOME OF THE ASSESSEE. . THE LD. CIT(A) HAS ALSO PLACED RELIANCE ON THE DECISION OF THE HON BLE JURISDICT IONAL HIGH I.T.A NO. 1715 /AHD/20 16 A.Y. 2012 - 13 PAGE NO RMP BEARINGS LTD. VS. D CIT 5 COURT OF GUJARAT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION REPORTED IN 265 CTR 64 (GUJ) THAT WHERE THE EMPLOYER HAS NOT CREDITED THE SUM RECEIVED BY I T AS EMPLOYEES ' CONTRIBUTION TO EMPLOYEES ' ACCOUNT IN RELEVANT FUND ON OR BEFOR E DUE DATE AS PRESCRIBED IN EXPLANATION TO SECTION 36(1)(VA),THE ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMO U NT THOUGH HE DEPOSITS THE SAID SUM BEFORE THE DUE DATE PRESCRIBED U/S 43B,I.E. PRIOR TO FILING OF RETURN U/S 139(1 ) OF THE ACT. HOWEVER, WE CONSIDER THAT THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GSRTC IS MORE RELEVANT TO THE CASE OF THE ASSESSEE. T HE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GSRTC HAS HELD THAT AS PER EXPLAN ATION TO SECTION 36(1)(VA) FOR THE PURPOSE OF THE SAID CLAUSE, DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS A N EMPLOYER TO CREDIT THE EMPLOYEE 'S CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE ACT. THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION OF SUCH AMOUNT IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 IF SUCH SUM IS CREDITED BY THE ASSESSE TO THE EMPLOYEE S ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE I.E. DATE BY WHICH THE ASSESSEE IS REQUIRED AS EMPLOYER TO CREDIT THE EMPLOYEE S CONTRIBUTION TO THE EMPLOYEE S ACCOUN T IN THE RELEVANT FUND, IN THE PRESENT CASE, THE PROVIDENT FUND UNDER THE PROVIDENT FUND ACT. IT IS ALSO HELD THAT ON FULFILLING THE CONDITIONS AS MENTIONED UNDER SECTION 36(1)(VA) THE ASSESSEE SHALL BE ENTITLED DEDUCTION WITH RESPECT TO SUCH EMPLOYEE S CONTRIBUTION. WE CONSIDER THAT EXPLANATION TO SECTION 36(1)(VA) MAKES IT VERY MUCH CLEAR THAT FOR THE PURPOSE OF CLAUSE (VA) OF SUB - SECTION (1) OF SECTION 36 DUE DA T E MEANS THE DAT E BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYE R TO CREDIT THE EMPLOYEE S CONTRIBUTION TO EMPLOYEES ACCOUNT IN T H E RELEVANT FUND UNDER ANY ACT, RULE OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD OR CONTRACT OF SER VICE OR OTHERWISE . THEREFORE, WE ARE OF T HE VIEW THAT DURING TH E RELEVANT ASSESSMENT YEAR, IF THE EMPLOYER HAS NOT DEPOSITED THE ENTIRE AMOUNT TOWARDS EMPLOYEE S CONTRIBUTION ON OR BEFORE THE RELEVANT (DUE DATE) UNDER THE PF ACT/ESI ACT, TO THE EXTENT THERE IS A SHORT FAL L IN I.T.A NO. 1715 /AHD/20 16 A.Y. 2012 - 13 PAGE NO RMP BEARINGS LTD. VS. D CIT 6 DEPOSIT OF THE EMPLOYEE S CONTRIBUTION/ESI CONTRIBUTION THE ASSESSEE SHALL NOT BE ENTITLED TO THE DEDUCTION. IN VIEW OF THE ABOVE LEGAL FINDINGS, WE CONSIDER THAT THE ASSESSEE AS AN EMPLOYEE HAS TO STRICTLY ADHERE TO THE DUE DATE OF PAYMENT AS PRESC RIBED IN THE RELEVANT ACT I.E. PROVIDENT FUND ACT. WE HAVE ALSO PERUSED THE PARA 38 OF CHAPTER VI OF THE EMPLOYEES PROVIDENT FUND ACT 1952 PROVIDE THAT THE EMPLOYER'S AND THE EMPLOYEE'S CONTRIBUTION SHALL BE REMITTED WITHIN 15 DAYS OF THE CLOSE OF EVER Y MONTH REFER TO CLOSE OF THE MONTH TO WHICH THE WAGES PERTAIN BUT NOT TO THE MONTH IN WHICH THE WAGES ARE PAID AND CONTRIBUTION IS DEDUCTED. THEREFORE, AFTER TAKING INTO CONSIDERATION, THE DECISION OF THE HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GSRTC WHEREIN IT IS HELD THAT DEDUCTION TOWARDS EMPLOYEE S CONTRIBUTION IS TO BE MADE AS PER THE DUE DATE PRESCRIBED IN THE RELEVANT ACT WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE. ACCORDINGLY THE APPEAL OF THE ASSESSEE IS DISMISSED. 6 . IN THE RESULT , THE APPEAL OF THE ASSESSEE IS DISMISSED. ORDER PR ONOUNCED IN THE OPEN C OURT ON 26 - 09 - 201 8 SD/ - SD/ - ( MADHUMITA ROY ) ( AMARJIT SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDA BAD : DATED 26 /09 /2018 / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,