M/S. VIRAJ ALLOYS LTD, MUMBAI V. THE DCIT 18 & 19,

ITA 1916/MUM/2008

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 1299 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-06-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: F
• Next Hearing Date: 03-12-2012
• Assessment Year: 2000-2001
• Appeal Filed On: 17-03-2008
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: VIRENDRA OJHA
• Assessee Lawyers: MALATI PILLAI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 43B; 139(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH F MUMBAI BEFORE SHRI R.S. SYAL (AM) AND SMT. ASHA VIJAYARAG HAVAN (JM) ITA NOS.1916 TO 1918/MUM/2008 ASSESSMENT YEARS-2000-01 TO 2002-03 M/S. VIRAJ ALLOYS LTD., 10, IMPERIAL CHAMBERS, WILSON ROAD, BALLARD ESTATE, MUMBAI PAN - AAACV2755L VS. THE DCIT 18 &19, AAYAKAR BHAVAN, MUMBAI (APPELLANT) (RESPONDENT) APPELLANT BY: MS. MALATI PILLAI RESPONDENT BY: SHRI VIRENDRA OJHA O R D E R PER SMT. ASHA VIJAYARAGHAVAN (JM) THESE APPEALS PREFERRED BY THE ASSESSEE ARE DIRECT ED AGAINST THE ORDERS DT. 23.1.2008 PASSED BY THE LD. CIT(A)-C-VI, MUMBAI FOR THE ASSESSMENT YEARS 2000-01 TO 2002-03. AS THESE APP EALS WERE HEARD TOGETHER AND INVOLVED CONNECTED ISSUES, THESE APPEA LS ARE BEING DISPOSED OF BY WAY OF THIS CONSOLIDATED ORDER. THE GROUNDS R AISED BY THE ASSESSEE FOR ALL THE 3 YEARS ARE IDENTICAL. 2. GROUND NO. 1 RAISED BY THE ASSESSEE READS AS FOL LOWS: 1. ON THE FACTS AND CIRCUMSTANCES OF THE APPELLAN TS CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT DIRECTING TH E AO TO ALLOW BELATED PAYMENT OF CONTRIBUTION TO PROVIDENT FUND AND UNPAID INTEREST TO BANKS AND FINANCIAL INSTITUT IONS, WHICH WERE CONSIDERED BY THE APPELLANT AS DISALLOWANCE U/S. 43B IN THE ORIGINAL COMPUTATION O F TOTAL INCOME AND SUBSEQUENT REVISED DURING THE COUR SE OF ASSESSMENT PROCEEDINGS AS PER THE DIRECTIONS GIV EN IN THE BIFRS ORDER. VIRAJ ALLOYS 2 3. THE LD. CIT(A) HELD AS FOLLOWS: A COPY OF THE ADDITION GROUND OF APPEAL WAS SENT T O THE DCIT, CENTRAL CIRCLE 18 & 19 VIDE THIS OFFICE LETTER NO. CIT(A) C.VI/VIRAJ ALLOYS/2007-08 DT. 15.11.2007 SEEKING HI S COMMENTS ON THE ADDITIONAL GROUNDS. THE DCIT HAS COMMUNICATED HIS COMMENTS VIDE HIS LETTER DT. 21.11 .2007. IN HIS COMMUNICATION, HE HAS STATED THAT AS FOLLOWS: THE BIFR IN PAGE 15 OF THE CIRCULAR REFERRED BY TH E ASSESSEE DT. 2.4.2004 HAS RECOMMENDED TO THE GOVT. OF INDIA TO CONSIDER THE FOLLOWING SUGGESTIONS: (I) TO EXTENDS THE BENEFIT OF CARRY FORWARD OF LOSS ES BEYOND THE EIGHT YEAR PERIOD AS PRESCRIBED IN SEC. 72(3) O F THE I.T. ACT, 1961. (II) TO GRANT EXEMPTIONS UNDER THE PROVISIONS OF SE C. 41(1) I.E. INTEREST WAIVER/PENALTY WAIVER NOT TO BE TREAT ED AS INCOME. (III) 43B DISALLOWANCE RELATING TO PAYMENT OF SALES TAX/LOANS ETC. NOT TO BE CONSIDERED. (IV) TO EXEMPT THE COMPANY FROM APPLICATION OF 115J B I.E. MAT TILL SUCH TIME THE COMPANY HAS FULLY UTILIZED I TS CARRY FORWARD BOOK LOSSES AND UNABSORBED DEPRECIATION. (V) TO EXEMPT THE COMPANY UNDER THE PROVISIONS OF S EC. 139(1) OF THE I.T. ACT SO THAT THE COMPANY IS ALLOW ED TO CARRY FORWARD THE UNABSORBED LOSSES. 4. THE LD. CIT(A) FURTHER HELD AS FOLLOWS: FROM THE CIRCULAR OF THE BIFR, IT IS SEEN THE ABO VE ARE ONLY SUGGESTIONS. THE AO IS BOUND BY THE PROVISION S OF THE ACT AND RELIEF COULD NOT HAVE BEEN GIVEN AT THE TIM E OF ASSESSMENT. THEREFORE, THE AO HAS RIGHTLY MADE DISALLOWANCES. HOWEVER, THE CIT(A) MAY DECIDE AS D EEMED FIT. THE AO HAS NOT OBJECTED TO THE ADMISSION OF THE ADDITIONAL GROUNDS. IT IS CONSIDER REASONABLE TO A DMIT THEM AND THE SAME ARE ACCORDINGLY ADMITTED. I HAVE CONS IDERED THE SUBMISSIONS OF THE APPELLANT AS WELL AS THE COMMENT S OF THE VIRAJ ALLOYS 3 AO ON MERITS. AS PER THE SANCTIONED SCHEME ISSUED BY THE BOARD FOR INDUSTRIAL RECONSTRUCTION, THE EXPRESSION USED WAS THAT THE INCOME TAX DEPARTMENT MAY CONSIDER GRANTIN G THE BENEFITS LISTED ABOVE BY THE AO WHICH INTER ALIA IN CLUDED NO DISALLOWANCE U/S. 43B. SINCE THE AO HAVING RECEIVE D THE REQUEST OF THE APPELLANT DID NOT ALLOW THE SAID BEN EFIT, IT CAN BE CONCLUDED THAT THE SAME WAS CONSIDERED BY THE AO AS PER THE SANCTIONED SCHEME OF BIFR BUT WAS NOT ALLOWED A FTER DUE CONSIDERATION. SINCE THE BIFR DID NOT GIVE A CATEG ORICAL DIRECTION TO THE I.T. DEPARTMENT TO ALLOW THE SAID BENEFIT TO THE APPELLANT, THE AO WAS WITHIN HIS JURISDICTION TO FO LLOW THE EXPLICIT PROVISIONS OF THE I.T. ACT AND TO MAKE DIS ALLOWANCE U/S. 43B. 5. GROUND NO. 2 RAISED BY THE ASSESSEE READS AS FOL LOWS: ON THE FACTS AND CIRCUMSTANCES OF THE APPELLANTS CASE AND IN LAW THE LD. CIT(A) ERRED IN NOT DIRECTI NG THE AO TO DELETE THE ENTIRE ADDITIONS/DISALLOWANCE MADE BY THE AO U/S. 43B ON ACCOUNT OF BELATED PAYMENT OF EMPLOYERS AND EMPLOYEES CONTRIBUTION TO PROVIDENT FUND . 6. THE LD. CIT(A) HELD AS FOLLOWS: FOLLOWING THE VARIOUS JUDGEMENTS, INCLUDING THE DE CISION OF HONBLE ITAT, MUMBAI BENCH IN THE CASE OF ATE (P) L TD. VS ACIT (2004) 84 TTJ 186 (MUM) AND CIT VS VINAY CEMENTS LT D. REPORTED IN 213 CTR (SC) 268, ALL THE PAYMENTS MADE BY THE APPE LLANT BOTH ON ACCOUNT OF EMPLOYERS CONTRIBUTION AND EMPLOYEES C ONTRIBUTION TOWARDS THE STATUTORY DUES WITHIN THE GRACE PERIOD OF FIVE DAYS FROM THE DUE DATE ARE ALLOWED AS A DEDUCTION AND ANY ADD ITION MADE ON THAT ACCOUNT IS HEREBY DELETED. CONSEQUENTLY, THE AO IS DIRECTED TO DELETE ANY ADDITIONS MADE ON ACCOUNT OF PAYMENTS MA DE WITHIN FIVE DAYS OF THE DUE DATE IN RESPECT OF EMPLOYERS AND E MPLOYEES CONTRIBUTION TOWARDS STATUTORY DUES. THIS FINDING IS GIVEN IN VIEW OF THE DECISION GIVEN BY THE MUMBAI K BENCH OF ITAT IN THE APPELLANTS OWN CASE FOR THE A.Y. 2002-03 IN ITA NO . 2994/M/2006 IN THE COMBINED ORDER IN ITA NOS. 2988 TO 2995 OF 2 006 DT. 29.8.2007. ALSO ALL THE PAYMENTS MADE ON ACCOUNT O F EMPLOYERS CONTRIBUTION TO VARIOUS STATUTORY DUES ARE ALLOWED PROVIDED THE SAME ARE PAID BEFORE THE DUE DATE OF FILING OF RETU RN FOLLOWING THE JUDGEMENT OF THE SUPREME COURT REFERRED ABOVE (SUPR A) (213 CTR 268). VIRAJ ALLOYS 4 7. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE U S ON BOTH 1 ST AND 2 ND GROUND. 8. IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD., (200 9) 319 ITR 306 (SC), THE SUPREME COURT HAS HELD AS FOLLOWS: THE OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE I.T. ACT, 1961, BY THE FINANCE ACT, 2003, OPERATED, RETR OSPECTIVELY, WITH EFFECT FROM APRIL 1,1988 AND NOT PROSPECTIVEL Y FROM APRIL 1,2004. EARLIER UNDER THE SECOND PROVISO TO SEC. 43B AS AME NDED BY THE FINANCE ACT, 1989, ASSESSEES WERE ENTITLED TO D EDUCTION ONLY IF THE CONTRIBUTION STOOD CREDITED ON OR BEFOR E THE DUE DATE GIVEN IN THE PROVIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATION MADE TO THE FI NANCE MINISTRY ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WI TH EFFECT FROM APRIL 1,2004, THE AMENDMENT WAS CURATIV E IN NATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1,1988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY U NINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION THEREIN IS REQUI RED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. 9. FURTHER THE APEX COURT IN THE CASE OF CIT VS ALO M EXTRUSIONS LTD., (2009) 319 ITR 306 (SC), VIDE PARAGRAPHS 11 TO 18, THE APEX COURT HAS THOROUGHLY DISCUSSED THE EMPLOYERS CONTRIBUTION AN D EMPLOYEES CONTRIBUTION AND HAVE DIRECTED THAT BOTH EMPLOYERS CONTRIBUTION AND EMPLOYEES CONTRIBUTION ARE ELIGIBLE FOR DEDUCTION U/S. 43B ON ACTUAL PAYMENT BASIS PROVIDED SUCH PAYMENTS ARE MADE BEFOR E THE DATE OF FILING OF THE RETURN OF INCOME. THE DECISION IN THE CASE O F CIT VS PAMWI TISSUES LTD (2008) 215 CTR (BOM) 150 (2009) 313 ITR 137 (BO M) HAS BEEN REVERSED BY THE HONBLE APEX COURT. VIRAJ ALLOYS 5 10. FOLLOWING THE DECISION OF THE HONBLE SUPREME C OURT, WE ALLOW THE 1 ST AND 2 ND GROUND RAISED BY THE ASSESSEE. 11. BEFORE THE LD. CIT(A), THE ASSESSEE HAS NOT PRE SSED GROUND NO. 3 & 4 THEREFORE THE LD. CIT(A) OBSERVED IN HIS ORDER TH AT THE GROUNDS WERE NOT PRESSED BY THE ASSESSEE BEFORE HIM AND HENCE HE HAD NOT GIVEN ANY FINDING WITH RESPECT TO THE SAME. HENCE THESE GRO UNDS ARE DISMISSED AS NOT PRESSED. 12. IN THE RESULT, ALL THE THREE APPEALS FILED BY T HE ASSESSEE ARE PARTLY ALLOWED. ORDER PRONOUNCED ON THIS 25 TH DAY OF JUNE, 2010 SD/- SD/- (R.S. SYAL ) (ASHA VIJAYARAGHAVAN) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED 25 TH JUNE, 2010 RJ COPY TO : 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT-CONCERNED 4. THE CIT(A)-CONCERNED 5. THE DR F BENCH TRUE COPY BY ORDER ASSTT. REGISTRAR, I.T.A.T, MUMBAI VIRAJ ALLOYS 6 DATE INITIALS 1 DRAFT DICTATED ON: 15.6.2010 SR. PS/PS 2. DRAFT PLACED BEFORE AUTHOR: 16.6.2010 ______ SR. PS/PS 3. DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER: _________ ______ JM/AM 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER: _________ ______ JM/AM 5. APPROVED DRAFT COMES TO THE SR. PS/PS: _________ ______ SR. PS/PS 6. KEPT FOR PRONOUNCEMENT ON: _________ ______ SR. PS/PS 7. FILE SENT TO THE BENCH CLERK: _________ ______ SR. PS/PS 8. DATE ON WHICH FILE GOES TO THE HEAD CLERK: _________ ______ 9. DATE OF DISPATCH OF ORDER: _________ ______