V S Eximast , Hyderabad V. Asst. Commissioner of Income Tax, Circle-6(1), Hyerabad

ITA 1922/Hyd/2019

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 7014 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-04-2021
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Next Hearing Date: 16-03-2021
• Assessment Year: 2018-2019
• Appeal Filed On: 30-12-2019
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A VENKATA RAO
• Assessee Lawyers: C S SUBRAMANYAM
• Section: 43B; 143(1); 28; 2; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCH SMC, HYDERABAD BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER ITA NO. 1922/HYD/2019 ASSESSMENT YEAR: 2018 - 19 M/S. V.S. EXIMAST , HYDERABAD. PAN: AABFV 3222 A VS. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE - 6(1), HYDERABAD. (APPELLANT) (RESPONDENT) ASSESSEE BY: SHRI C.S. SUBRAMANYAM REVENUE BY: SHRI A. VENKATA RAO, DR DATE OF HEARING: 16/03/2021 DATE OF PRONOUNCEMENT: 09 /04/2021 ORDER PER A. MOHAN ALANKAMONY, AM.: THIS APPEAL IS FILED BY THE ASSESSEE AGAINST THE ORDER OF THE LD. CIT (A) - 6, HYDERABAD IN APPEAL NO. 10187/2019 - 20/C CIT(A) - 6, DATED 17/12/ 2019 PASSED U/S. 143(1) R.W.S 250(6) OF THE ACT FOR THE AY 2018 - 19. 2. THE ASSESSEE HAS RAISED FIV E GROUNDS IN HIS APPEAL HOWEVER, THE CRUX OF THE ISSUE IS THAT : - THE LD. CIT (A) HAS ERRED IN UPHOLDING THE ORDER OF THE LD. AO WHO HAD DENIED DEDUCTION OF RS. 1,04,701/ - BEING THE EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AS THE SAME WAS NOT PAID WITHIN THE DUE DATE UNDER THE RELEVANT ACT. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A FIRM FILED ITS RETURN OF INCOME ON 29/10/2018 AND THE RETURN WAS PROCES SED U/S. 14 3(1) OF THE ACT WHEREIN DEDUCTION OF RS. 1,04,701/ - WAS DENIED TO THE ASSESSEE BEING THE EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND WHICH WAS PAID BEYOND THE DUE DATE SPECIFIED IN THE PROVIDENT FUND ACT. ON APPEAL THE LD. CIT (A) CONFIRMED THE ORDER OF THE LD. AO BY RELYING ON THE DECISIONS OF VARIOUS HIGHER JUDICIARY WHICH ARE CITED IN HIS ORDER. 4. AT THE OUTSET, I DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD. CIT (A) ON THE ISSUE WHEREIN HE HAS FOLLOWED THE DECISION S OF THE HONBLE KERALA HIGH COUR T VIZ., (I) CIT VS. MERCHEM LTD [2015] 378 ITR 443 (KERALA); (II) CIT VS. SOUTH INDIA CORPN., LTD [2000] 242 ITR 114 (KER.) (II I ) CIT VS. G.T.N. TEXTIOLES LTD [2004] 269 ITR 282 (KER.), (IV) CIT VS. JAIRAM & SONS [2004] 269 ITR 285 (KER.) AND THE DECISION OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJART STATE ROAD TRANSPORT CORPORATION [2014] 366 ITR 170 (GUJ.) . 5. FURTHER, THIS BENCH OF THE TRIBUNAL IN THE CA SE OF CAF D LAKE PRIVATE LIMITED, HYDERABAD VS. ITO IN ITA NO. 237/HYD/2019 VIDE ORDER DATED 03/02/2021 HAD OBSERVED AS UNDER: - 6. WE HAVE HEARD THE RIVAL SUBMISSIONS AND CAREFULLY PERUSED THE MATERIALS ON RECORD. WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE ON THIS ISSUE. SECTION 36(1)(VA) OF THE ACT SPECIFICALLY PROVIDES THAT IF THE ASSESSEE REMITS THE EMPLOYEES CONT RIBUTION TO PROVIDENT FUND/ESI WITHIN THE DUE DATE MENTIONED IN THE RELEVANT ACT P.F ACT, THEN THE DEDUCTION WILL BE ALLOWABLE. THE RELEVANT PORTIONS OF SECTION 36(1)(VA) IS REPRODUCED HEREIN BELOW FOR REFERENCE: - 36(1)(VA) ANY SUM RECEIVED BY THE ASSESSE E FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB - CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION: - FOR THE PURPOSES OF THIS CLAUSE, DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT, RULE, ORDER OR NOTIFICATION ISSUED THERE - UNDER OR UNDER A NY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE; 7. FURTHER SECTION 43B OF THE ACT, ONLY PROVIDES THAT DEDUCTION WILL BE ALLOWED WITH RESPECT TO EMPLOYERS CONTRIBUTION TO PROVIDENT FUND IF THE SAME IS REMITTED WITHIN THE DUE DATE OF FILING TH E RETURN OF INCOME. THE RELEVANT PORTION OF SECTION 43B IS EXTRACTED HEREIN BELOW FOR REFERENCE: - [CERTAIN DEDUCTION TO BE ONLY ON ACTUAL PAYMENT.] 43B NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THIS ACT, A DEDUCTION OTHERWISE ALLOWABLE UNDER THIS ACT IN RESPECT OF --- (A) ------------------- (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES ------------------ ------------------ ------------------- PROVIDED THAT NOTHING CONTAINED IN THIS SECT ION SHALL APPLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB - SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY T O PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUCH RETURN. 8. THUS SECTION 36(1)(VA) OF THE ACT REFERS TO EMPLOYEES CONTRIBUTION TO P.F/ESI WHILE AS SECTION 43B OF THE ACT REFERS TO EM PLOYERS CONTRIBUTION TO P.F. HENCE SECTION 43B OF THE ACT HAS NO APPLICATION WITH RESPECT TO EMPLOYEES CONTRIBUTION TO P.F./ESI. ACCORDINGLY SECTION 43B OF THE ACT WILL NOT OVERRIDE THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT WITH RESPECT TO EMPLOYEE S CONTRIBUTION TO PROVIDENT FUND. IT IS PERTINENT TO MENTION THAT THOUGH EMPLOYEES & EMPLOYERS CONTRIBUTION TO P.F/ESI ARE REMITTED BY THE EMPLOYER INTO THE GOVERNMENT TREASURY, THEY ARE SEPARATE AND DISTINCT FOR WHICH INDEPENDENT PROVISIONS HAVE BEEN CA ST UNDER THE ACT. EMPLOYEES CONTRIBUTION TO P.F./ESI, IS NOTHING BUT APPROPRIATION OF A PORTION OF THE SALARY WHICH IS LEGITIMATELY DUE TO THE EMPLOYEE AND REMITTED BY THE EMPLOYER IN THE GOVERNMENT TREASURY ON BEHALF OF THE EMPLOYEE IN ACCORDANCE WITH TH E PROVISIONS OF THE RELEVANT P.F., ACT. HENCE IT IS CRYSTAL CLEAR FROM SECTION 36(1)(VA) OF THE ACT THAT WITH RESPECT TO REMITTANCE OF EMPLOYEES CONTRIBUTION TO RECOGNIZED PROVIDENT FUND/ESI, DEDUCTION WILL BE ALLOWABLE TO THE ASSESSEE ONLY IF THE SAME IS REMITTED WITHIN THE DUE DATE MENTIONED IN THE RELEVANT P.F. ACT AND WITH RESPECT TO EMPLOYERS CONTRIBUTION TO RECOGNIZED PROVIDENT FUND, SECTION 43B OF THE ACT MAKES IT CLEAR THAT DEDUCTION WILL BE ALLOWABLE IF THE REMITTANCE IS MADE WITH IN THE DUE DATE OF FILING THE RETURN OF INCOME. THE HONBLE GUJARAT HIGH COURT IN THE CASE CIT VS. GUJART STATE ROAD TRANSPORT CORPORATION REPORTED IN [2014] 366 ITR 170 (GUJ.) HAS OBSERVED AS UNDER ON THE ISSUE: - UNDER SECTION 2(24)(X) OF THE INCOME TAX ACT, 1961 ANY S UM RECEIVED BY THE ASSESSEE - EMPLOYER FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF THE EMPLOYEES STATE INSURANCE ACT, 1948, OR ANY OTHER FUND FOR THE WELFARE OF SUCH EMPLOYEES SH ALL BE TREATED AS AN INCOME. UNDER SECTION 36(1)(VA) THE ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 WITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM THE EMPLOYEES TO WHICH THE PROVISIONS OF SUB - CLA USE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. AS PER THE EXPLANATION TO SECTION 36(1)(VA) FOR THE PURPOSE OF CLAUSE (X), DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE. SECTION 43B IS WITH RESPECT TO CERTAIN DEDUCTIONS ONLY ON ACTUAL PAYMENT. THE DELETION OF THE SECOND PROVISO TO SECTION 43B AND THE AMENDMENT IN THE FIRST PROVISO TO SECTION 43B ALONE AND THE DELETION OF THE SECOND PROVISO TO SECTI ON 43B BY THE AMENDMENT PURSUANT TO THE FINANCE ACT, 2003, CANNOT BE MADE APPLICABLE WITH RESPECT TO SECTION 36(1)(VA) OF THE ACT. THEREFORE, WITH RESPECT TO ANY SUM WITH RESPECT TO THE EMPLOYEES CONTRIBUTION AS MENTIONED IN SECTION 36(1)(VA) OF THE ACT, THE ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH SUM TOWARDS THE EMPLOYEES CONTRIBUTION IF IT IS DEPOSITED IN THE ACCOUNTS OF THE CONCERNED EMPLOYEES AND IN THE CONCERNED FUND SUCH AS PROVIDENT FUND, EMPLOYEES STATE INSURANCE CONTRIBUTION FUND ET C., PROVIDED THE SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE UNDER THE PROVIDENT FUND ACT, EMPLOYEES STATE INSURANCE ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY S TANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHERWISE. THERE IS NO AMENDMENT IN SECTION 36(1)(VA) AND EVEN THE EXPLANATION TO SECTION 36(1)(VA) IS NOT DELETED AND IS STILL ON THE STATUTE AND IS REQUIRED TO BE COMPLIED WITH. MERELY BECAUSE THE SECOND PRO VISO TO SECTION 43B WHICH PROVIDED THAT EVEN WITH RESPECT TO THE EMPLOYERS CONTRIBUTION (SECTION 43(B)), THE ASSESSEE WAS REQUIRED TO CREDIT THE AMOUNT IN THE RELEVANT FUND UNDER THE PROVIDENT FUND ACT OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES O N OR BEFORE THE DUE DATE UNDER THE RELEVANT ACT IS DELETED. IT CANNOT BE SAID THAT SECTION 36(1)(VA) IS ALSO AMENDED OR THE EXPLANATION TO SECTION 36(1)(VA) HAS BEEN DELETED OR AMENDED. THEREFORE, IF THE ASSESSEE HAS NOT CREDIT THE EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE MENTIONED IN THE EXPLANATION TO SECTION 36(1)(VA), THE ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMOUNT IN COMPUTING THE INCOME REFERRED IN SECTION 28. 9. SIMILA RLY THE HONBLE KERALA HIGH COURT IN THE CASE OF CIT VS. MERCHEM LTD REPORTED IN [2015] 378 ITR 443 (KER) HELD AS UNDER: - ON A READING OF SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961 ALONG WITH SECTION 2(24)(X), IT IS CATEGORIC AND CLEAR THAT THE CONTRIB UTION RECEIVED BY THE ASSESSEE FROM THE EMPLOYEES ALONE WAS TREATED AS INCOME FOR THE PURPOSE OF SECTION 36(1)(VA) AND THEREFORE, THE ASSESSEE IS ENTITLED TO GET DEDUCTION FOR THE SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES TOWARDS CONTRIBUTION TO THE FUND OR FUNDS SO MENTIONED ONLY IF, THE AMOUNT WAS CREDITED BY THE ASSESSEE ON OR BEFORE THE DUE DATE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND AS PROVIDED UNDER EXPLANATION TO SECTION 36(1)(VA) OF THE ACT. SO FAR AS THE SECTION 43(B) IS CONCERNED, IT TAKES CARE OF ONLY THE CONTRIBUTION PAYABLE BY THE EMPLOYER OR THE ASSESSEE TO THE RESPECTIVE FUNDS. THEREFORE, SECTIONS 36(1)(VA) AND 43B(B) OPERATE IN DIFFERENT FIELDS, I.E., THE FORMER TAKES CARE OF THE EMPLOYEES CONTRIBUTION AND THE LATTER THE EMPLO YERS CONTRIBUTION. THE ASSESSEE IS ENTITLED TO GET THE BENEFIT OF DEDUCTION UNDER SECTION 43B(B) AS PROVIDED UNDER THE PROVISO THERETO ONLY WITH REGARD TO THE PORTION OF THE AMOUNT PAID BY THE EMPLOYER TO THE CONTRIBUTORY FUND. HELD, ALLOWING THE APPEAL, THAT SINCE THE ASSESSEE HAD ADMITTEDLY NOT PAID THE REMITTANCE OF THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND AND ESI WITHIN THE DATES PRESCRIBED UNDER THE RESPECTIVE ACT, THE ASSESSEE WAS NOT ENTITLED TO DEDUCTION U/S. 43B OF THE AMOUNTS DED UCTED THEREUNDER FOR AND ON BEHALF OF THE EMPLOYEES. 10. SIMILAR VIEW WAS VENTED BY THE HONBLE MADHYA PRADESH HIGH COURT IN THE CASE OF B.S. PATEL VS. DCIT REPORTED IN [2010] 326 ITR 457 (MP). 11. FOR THE ABOVE STATED REASONS, WE DO NOT FIND ANY INFIR MITY IN THE ORDERS OF THE LD. REVENUE AUTHORITIES. ACCORDINGLY, WE HEREBY CONFIRM THE ORDERS OF THE REVENUE AUTHORITIES ON THESE ISSUES. ACCORDINGLY, GROUND NO.1 IS HELD AGAINST THE ASSESSEE. 6. FOLLOWING THE RATIO LAID DOWN BY THE ABOVE - MENTIONED DECISI ON S , I DO NOT FIND ANY INFIRMITY IN THE ORDERS OF THE LD. REVENUE AUTHORITIES ON THE ISSUE . ACCORDINGLY, I HEREBY CONFIRM THE ORDERS OF THE LD. REVENUE AUTHORITIES . 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMISSED. PRONOUNCED IN THE OPEN COURT ON THE 09 TH APRIL, 2021. SD/ - ( A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER HYDERABAD, DATED: 09 TH APRIL, 2021. OKK COPY TO: - 1) V S EXIMAST, UNIT 201, CHALLA ESTATE, MAIN ROAD, ERRAGADDA, HYDERABAD. 2) ACIT, CIRCLE - 6(1), 6 TH FLOOR, IT TOWERS, AC GUARDS, HYDERABAD. 3) THE CIT (A) - 6, HYDERABAD. 4) THE PR. CIT - 6, HYDERABAD. 5) THE DR, ITAT, HYDERABAD 6) GUARD FILE