STOCK HOLDINGS CORPORATION OF INDIA LTD, MUMBAI V. ACIT 4(2) (1) , MUMBAI

ITA 1722/MUM/2021

• Counselvise Citation: [2022] 107 COUNSELVISE.COM (IT) 0816 (ITAT-MUMBAI)
• Duration Of Justice: 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-08-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: H
• Assessment Year: 2017-2018
• Appeal Filed On: 27-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JACINTA ZIMIK VASHAI
• Keywords: Opportunity of being heard; Deemed to accrue or arise in india; Set aside
• Section: 43B; 115JB; 143(1); 250; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “H”, MUMBAI BEFORE SHRI ABY T VARKEY, JUDICIAL MEMBER AND SHRI GAGAN GOYAL, ACCOUNTANT MEMBER ITA No. 1722/Mum/2021 (A.Y. 2017-18) Stock Holding Corporation of India Ltd. 301, Centre Point, Dr. Babasaheb Ambedkar Road, Parel, Mumbai-400012 PAN: AABCS1429B ...... Appellant Vs. ACIT-4(2)(1), Room No. 642, 6 th Floor, Aayakar Bhavan, M.K. Road, Mumbai-400020. ..... Respondent Appellant by : Sh. Akram Khan with Sh. Raunak Vardhan Respondent by : Smt. Jacinta Zimik Vashai, CIT-DR Date of hearing : 10/05/2022 Date of pronouncement : 03/08/2022 ORDER PER GAGAN GOYAL, A.M: This appeal by the assessee is directed against the order of National Faceless Appeal Centre, Delhi [hereinafter referred to as (‘NFAC’) dated 31.07.2021 under section 250 of the Income Tax Act, 1961 (for short ‘the Act’) for 2 ITA No. 1722/Mum/2021- Stock Holding Corporation of India Ltd. the Assessment Year (AY) 2017-18. The assessee has raised the following grounds of appeal: Sr.No. Grounds of Appeal Tax effect relating to each Ground of Appeal (Rs.) 1 The Commoner of come tax (Appeals) National Faces Appeal Centre erred in passing the order without granting opportunity of being heard to the Appellant. 2 The Appellant submits, had the CITA) granted opportunity of being heard, the Appellant would have demonstrated that the employees contribution to Provident Fund of Rs. 37,59,169/- for the month of December, 2016 was deposited within the extended due date prescribed by EPFO. 3 Both the lower authorities erred in disallowing under Section 36(1)(va) employees' contribution to Provident Fund, late payment of employees' contributions to ESIC and labour welfare fund aggregating to Rs.38,18,955/-. 11,45,686 (Excluding surcharge and education cess) 4 Both the lower authorities erred in making a disallowance under Section 36(1)(va), on a debatable issue, vide intimation under section 143(1)(a). 5 Both the lower authorities failed to consider that the payment of employees' contribution to ESIC and labour welfare fund was made before the due date of filing the Return of Income. 6 Both the lower authorities erred in ignoring the binding decisions of the jurisdictional Bombay High Court. 7 Having regards to the facts and circumstances of the case, the disallowance of Rs 38,18,955/- needs to be deleted. 2. Brief facts of the case are that the assessee has filed its return of income u/s 139(1) on 30-10-2017. Declaring total income at Rs. 103,15,58,200/- under the 3 ITA No. 1722/Mum/2021- Stock Holding Corporation of India Ltd. normal provisions and income of Rs 116,90,32,577/- under the provisions of section 115JB of the I.T. Act, 1961. The said return was processed u/s 143(1) of the Act at C.P.C , Bangalore in which the adjustment of Rs 38,18,960/- was made to the return on account of deemed income u/s 36(1)(va) r.w.s. 2(24)(x) of the act for late deposit of employee’s contribution to P.F. and E.S.I. in accordance with timelines as specified in statutes governing P.F. and E.S.I. respectively. 3. Against this intimation dated 24-03-2019, assessee filed an appeal before the Ld. CIT (A)-14, Mumbai on 23-04-2019. The Ld. CIT (A)(NFAC) also confirmed the intimation processed u/s 143(1). Against this order of NFAC, assessee appellant instituted an appeal before Income Tax Appellant Tribunal. Raising total 7 grounds of appeal. 4. All the grounds are interrelated hence disposed off simultaneously by common finding. We have gone through the intimation processed u/s 143(1)(a) and order passed by the Ld. CIT(A) u/s 250 of the act. While deciding the issue we have gone through the paper book dated 2 ND MAY 2022 filed by the assessee before the ITAT and both the lower authorities. 5. Ld. CIT (A) while deciding this issue has relied upon the reporting of the tax auditor wherein, he simply reported about the due dates of payment under the P.F., E.S.I. and other funds vis-à-vis actual date of payment as per columns 20(b) of form no 3CD. This reporting auditor had done keeping in view the due dates of respective acts and not as per Income Tax Act 1961. This tax audit report nowhere suggests and authorizes the department to make a disallowance, if the payments are made within the due date for filing of return u/s 139(1) of the Income Tax Act 4 ITA No. 1722/Mum/2021- Stock Holding Corporation of India Ltd. 6. We have pursued the details filed by the appellant with reference to amount and actual date of payments under the respective due dates for various employee welfare related acts. 7. On perusal of the order of Ld. CIT (A), he himself admitted that issue is a debatable one. It’s an established position of law, no debatable issue can be considered while doing adjustment u/s 143(1)(a). The Ld. CIT (A) has relied upon the decision of following Hon’ble High Court as under: i) C.I.T vs Gujrat State Road Transport Corporation (2014) 366 ITR 170(GUJ.) 8. In support of assessee’s contention, we placed reliance on the decisions of Hon’ble Jurisdictional High Court in the case of Ghatge Patil Transport (368) ITR 749 and Hindustan Organics Ltd (366) ITR 1 and assessee placed reliance in the case of Hon’ble Delhi High Court in CIT Vs. AIMIL Ltd. (321 ITR 508). 9. We have considered the decisions relied upon by both the parties and facts of the case, in this regard the decision of honourable Supreme Court in the matter of C.I.T vs Raghuvir Synthetics Ltd. (394) ITR 1, is relevant. In this decision honourable apex court held that A.O. is duty bound by the decision of the jurisdictional High Court and any view contrary to the jurisdictional High court is a mistake. 10. Further both the lower authorities relied upon the amendment made by finance act, 2021 to section 36(1)(va) and 43B as per Ld. CIT(A) this amendment is curative in nature and retrospective in application. 11. On this issue jurisdictional ITAT and various coordinated benches held that the amendment made by the finance Act 2021 to sec 36(1)(va) and section 43B are 5 ITA No. 1722/Mum/2021- Stock Holding Corporation of India Ltd. prospective in nature, effective from assessment year 2022-23. We respectfully follow the decision of the Hyderabad Bench of the ITAT in the case of Crescent Roadways Pvt. Ltd. vs DCIT (ITA no 952/Hyd./2018) 12. Following judgements of ITAT be considered while deciding the matter i) PNGS India Pvt Ltd vs I.T.O (ITA no 1409/Mum. /2021) ii) M/s Vishal Enterprises Vs DCIT (ITA no 510 and 511 /Bang. /2021) 13. Considering all the discussions, decisions and submission of the appellant we are of the considered view that A.O. and first appellant authority are duty bound to follow the decisions of jurisdictional high Court otherwise it makes their decision unsustainable in so far as applicability of amendment by the finance act 2021, the same is effective from assessment year 2022-23 thus in the light of above, we hold that the C.P.C and Ld. CIT (A) has erred in applying amended provisions of sec 36(1)(va) r.w.s 43B to disallow assesses claim of deduction. 14. We found merit in the grounds of appeal raised by the Assessee, hence the impugned order of Ld. CIT (A) is set aside and the grounds of the Assessee are allowed. 15. In the result, appeal filed by the assessee is allowed. Order pronounced in the open court on 3 rd day of August, 2022. Sd/- Sd/- ABY T VARKEY) (GAGAN GOYAL) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai, िदनांक/Dated: 03/08/2022 SK, Sr.PS 6 ITA No. 1722/Mum/2021- Stock Holding Corporation of India Ltd. Copy of the Order forwarded to: 1. अपीलाथŎ/The Appellant , 2. Ůितवादी/ The Respondent. 3. आयकर आयुƅ(अ)/ The CIT(A)- 4. आयकर आयुƅ CIT 5. िवभागीय Ůितिनिध, आय.अपी.अिध., मुबंई/DR, ITAT, Mumbai 6. गाडŊ फाइल/Guard file. BY ORDER, //True Copy// (Dy. /Asstt. Registrar) ITAT, Mumbai