ITO Corporate WArd 4(4), CHENNAI V. Layam Flexi Solutions Private Limited, CHENNAI

ITA 2106/CHNY/2017

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 5717 (ITAT-CHENNAI)
• Duration Of Justice: 2 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 30-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N MADHAVAN ACIT
• Assessee Lawyers: RAMESHNANAVATIC A
• Keywords: Tax effect
• Section: 43B

Judgement Text

, B/ SMC , IN THE INCOME TAX APPELLATE TRIBUNAL B/SMC BENCH, CHENNAI . , BEFORE SHRI CHANDRA POOJARI, ACCOUNTANT MEMBER I.T.A.NOS. 2105 & 2106 /MDS./2017 ( ASSESSMENT YEAR : 2013-14 & 2014-15 ) THE INCOME TAX OFFICER , CORPROTE WARD 4(4), CHENNAI-34. VS. M/S.LAYAM FLEXI SOLUTIONS PVT LTD ., 131/1, 5 TH CROSS STREET, INDIRA NAGAR, ADYAR, CHENNAI 600 020. PAN AABCL 6457 A ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : MR.N.MADHAVAN,, ACIT, D.R / RESPONDENT BY : MR.RAMESHNANAVATI,C.A ! ' / DATE OF HEARING : 15.11.2017 #$%& ! ' /DATE OF PRONOUNCEMENT : 29.11.2017 / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THESE TWO APPEALS ARE FILED BY THE REVENUE, AGGR IEVED BY THE COMMON ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(A)-8, ITA NO. 2105 & 2106/MDS/2017 2 CHENNAI DATED 27.06.2017 PERTAINING TO ASSESSMENT YEARS 2013-14 & 2014-15. 2. THE REVENUE HAS RAISED THE FOLLOWING COMMON GRO UNDS IN THE ABOVE APPEALS CITED ABOVE. 1. THE ORDER OF THE CIT(A) IS CONTRARY TO LAW AND F ACTS OF THE CASE. 2. THE CIT(A) ERRED IN DELETING THE ADDITION OF ` 9,62,231/- (FOR A.Y 2013-14) & ` 33,32,886/-(FOR A.Y.2014-15) MADE U/S 36(I)(VA) R.W .S 2(24)(X) OF THE INCOME TAX ACT, 1961. 2.1 AS PER THE PROVISIONS OF SECTION 36(1)(VA) DEDU CTION IN RESPECT OF ANY SUM RECEIVED BY THE TAX PAYER AS CONTRIBUTION FROM HIS EMPLOYEES TOWARDS ANY WELFARE FUND OF SUCH EMPLOYEES IS ALLOWED ONLY IF S UCH SUM IS CREDITED BY THE TAX PAYER TO THE EMPLOYEES ACCOUNT IN THE RELE VANT FUND ON OR BEFORE THE DUE DATE. DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT SUCH CONTRIBUTION TO THE E MPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE PROVISIONS OF ANY LAW O R TERM OF CONTRACT OF SERVICE OR OTHERWISE. 2.2 IT IS PERTINENT TO MENTION THAT THE PROVISIONS OF SECTION 43B OF THE INCOME- TAX ACT 1961 IS NOT APPLICABLE IN THE CASE OF EMPLO YEES CONTRIBUTION TOWARDS PF/ESI. 2.3 IT IS SUBMITTED THAT THE CBDT IN CIRCULAR NO. 2 2/2015 DATED 17.12.2015 HAS CLARIFIED THAT DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION TO WELFARE ITA NO. 2105 & 2106/MDS/2017 3 FUNDS ARE GOVERNED BY SECTION 36(1)(VA) OF THE INCO ME-TAX ACT. THIS CIRCULAR WAS ISSUED BY THE CBDT IN THE LIGHT OF THE JUDICIAL DECISION IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD (2009) 185 TAXMA N 416 (SC) 2.4 DECISION OF THE JURISDICTIONAL HIGH COURT IN TH E CASE OF M/S INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT LTD IS NOT ACCEPT ED AND REVIEW PETITION FILED BEFORE THE HONBLE HIGH COURT OF MADRAS. 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESS EE IS ENGAGED IN THE BUSINESS OF MANPOWER SERVICES AND RECRUITMENT S ERVICES AND FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2013 -14 ON 15.09.2013 AND FOR ASSESSMENT YEAR 2014-15 ON 31.10.2014 ADMIT TING TOTAL INCOME OF ` 22,56,384/- AND ` 12,90,970/- RESPECTIVELY. SUBSEQUENTLY, THE ASSESSMENTS FOR BOTH THE ASSESSMENT YEARS WERE COMPLETED U/S.143(3) OF THE ACT WITH CERTAIN ADDITIONS MADE B Y LD. ASSESSING OFFICER. FOR A.Y. 2013-14 ` `` ` I) CAR HIRE CHARGES PAID U/S.40A2(B) 1,32,915/- II) DISALLOWANCE U/S.36(1)(VA) RWS 2(24)(X) 9,62, 231/- III) INTEREST U/S.2444A 52,114/- FOR A.Y. 2014-15 I) DISALLOWANCE U/S.36(1)(VA) RWS 2(24)(X) 33,32 ,886/- ITA NO. 2105 & 2106/MDS/2017 4 3.1 AGGRIEVED BY THE ORDERS OF LD. ASSESSING OFFIC ER, THE ASSESSEE CARRIED THE APPEALS BEFORE THE LD.CIT(A). ON APPEAL, LD.CIT(A) DELETED THE ADDITIONS MADE BY THE LD. ASS ESSING OFFICER U/S.36(1)(VA) OF THE ACT FOR ASSESSMENT YEARS UNDER CONSIDERATION, FOLLOWING THE JUDGEMENT OF JURISDICTIONAL HIGH COUR T IN THE CASE OF CIT VS. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. L TD., IN TCA NO.585 & 586 OF 2015 DATED 24.07.2015 WHEREIN HELD THAT:- 5. WE FIND THAT THE TRIBUNAL HAS RIGHTLY RELI ED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LIMITED REPORTED IN 391 ITR 306, WHEREBY, THE SUPREME COURT HELD THAT OMISSION OF SECTION PROVISO TO SEC.43B AND AMENDMEN T TO THE FIRST PROVISO BY FINANCE ACT, 2003 ARE CURATIVE IN NATUR E AND ARE EFFECTIVE RETROSPECTIEL I.E. W.E.F 01.04.1988 I.E THE DATE OF INSERTION OF FIRST PROVISO. THE DELHI HIGH COURT IN THE CASE OF CIT V S. AIMIL LTD., REPORTED IN 321 ITR 508 HELD THAT IF THE ASSESSEE H AD DEPOSITED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT, BUT BEFO RE THE DUE DATE OF FILING OF RETURN UNDER THE INCOME TAX ACT, NO DISAL LOWANCE COULD BE MADE IN VIEW OF PROVISIONS 43B AS AMENDED BY FINANC E ACT, 2003. 6. IN THE PRESENT CASE, THE ASSESSEE HAD REMITTED THE EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE FOR PAYMENT, BUT W ITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME. HENCE, FOLLOW ING THE AFORESAID ITA NO. 2105 & 2106/MDS/2017 5 DECISIONS, WE FIND NO REASON TO DIFFER WITH THE FIN DINGS OF THE TRIBUNAL. AGAINST THE COMMON ORDER OF LD.CIT(A), NOW THE REVE NUE CARRIED THESE TWO APPEAL BEFORE US. 4. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL ON RECORD. ADMITTEDLY, IN THIS CASE, THE TAX EFFECT IS BELOW THE MONETARY LIMIT FIXED BY THE DEPARTMENT CIRCULAR NO. 21/2005 DATED 10.12.2015 WHEREIN IT IS INSTRUCTED ITS OFFIC ERS TO WITHDRAW ALL THE APPEALS PENDING BEFORE THE ITAT WHERE THE T AX EFFECT IS LESS THAN ` 10 LAKHS. AS SUCH, THE AO IS PRECLUDED IN FILING T HIS APPEAL BEFORE THE TRIBUNAL. FURTHER, IT IS ALSO NO TED THAT AS PER CIRCULAR NO.21/2015 CITED ABOVE, IN CASE OF A COMPO SITE ORDER OF APPELLATE AUTHORITY, WHICH INVOLVES MORE THAN ONE A SSESSMENT YEAR AND COMMON ISSUES IN MORE THAN ONE ASSESSMENT YEAR, APPEAL SHALL BE FILED IN RESPECT OF ALL SUCH ASSESS MENT YEARS, EVEN IF THE TAX EFFECT IS LESS THAN THE PRESCRIBE D MONETARY LIMITS IN ANY OF THE YEAR(S), IF IT IS DECIDED TO FILE APPEAL IN RESPECT OF THE YEAR(S) IN WHICH TAX EFFECT EXCEEDS THE MO NETARY LIMIT ITA NO. 2105 & 2106/MDS/2017 6 PRESCRIBED. IN CASE, WHERE A COMPOSITE ORDER INVOLV ES MORE THAN ONE ASSESSEE, EACH ASSESSEE SHALL BE DEALT WITH SEP ARATELY. 4.1 SINCE IN THE PRESENT CASES AS POINTED OUT BY T HE LD.A.R, WHICH WAS DULY CONFIRMED BY THE LD.D.R THAT THE TAX EFFECT INVOLVED IN THESE TWO APPEALS IS AS FOLLOWS:- ASSESSMENT YEAR TAX EFFECT IN ( `) 2013-14 2,88,669/- 2014-15 9,99,865/- THUS, THE TAX EFFECT BEING LESS THAN ` 10/- LAKHS IN EACH ASSESSMENT YEAR IN RESPECT OF THE APPEAL FILED BY T HE REVENUE, WHICH ARE NOT MAINTAINABLE. THEREFORE, THE APPEALS FILED BY THE REVENUE STAND DISMISSED. 4.2 WITHOUT PREJUDICE TO THE ABOVE, I HAVE NOTICED THAT THE ISSUE IN DISPUTE IS WITH REGARD TO ADDITION MADE U/S.36(1)(VA) OF THE ACT WHICH IS SQUARELY COVERED BY THE JUDGEMENT OF JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. INDUSTRIAL SECURITY & INTELLIGENCE ITA NO. 2105 & 2106/MDS/2017 7 INDIA PVT. LTD., (SUPRA).ACCORDINGLY, THESE TWO APPEALS DISMISSED ON MERIT ALSO. 5. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE DISMISSED. ORDER PRONOUNCED ON 29 TH NOVEMBER, 2017 . SD/- ( ) ( CHANDRA POOJARI ) /ACCOUNTANT MEMBER CHENNAI, DATED THE 29 TH NOVEMBER, 2017 . K S SUNDARAM. ' ( )!*+ ,+%! / COPY TO: 1 . / APPELLANT 3. ' ' -! () / CIT(A) 5. +0 1 )!)23 / DR 2. / RESPONDENT 4. ' ' -! / CIT 6. 1 45 6 / GF