HERRENKNECHT INDIA P.LTD, CHENNAI V. DCIT CIR 1(1)(2), MUMBAI

ITA 2108/MUM/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 6743 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-04-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 24-03-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Transfer pricing; International transaction; TDS
• Section: 43B; 143(3); 260A; 40(a)(ia); 37(1); 194C; 147; 148; 28; 139

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES K , MUMBAI . , , , BEFORE SHRI G. MANJUNATHA, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD, JUDICIAL MEMBER, IT(TP)A NO.2108/MUM/2017 ASSESSMENT YEAR:-2012-13 M/S HERRENKNECHT INDIA PRIVATE LIMITED, GNT ROAD NO.11, ALINJIVAKKAM PONNERI TALUKA, TIRUVALLUR DISTRICT, CHENNAI-600067 / VS. DCIT, CIRCLE-1(1)(2), AAYAKAR BHAVAN, MUMBAI ( /ASSESSEE) ( / REVENUE) P.A. NO.AABCH8691J !' # / DATE OF HEARING : 08/04/2019 ' # / DATE OF ORDER: 08/04/2019 / O R D E R PER G. MANJUNATHA (ACCOUNTANT MEMBER) THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF THE LD. AO, PASSED U/S144C(13) R.W.S. 143( 3) OF THE !' / ASSESSEE BY MS. DINKLE HARIYA !' / REVENUE BY SHRI RIGNESH K. DAS 2 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) DATED 3 0/01/2017 WHICH, IN TURN, BASED ON DIRECTIONS OF THE DRP VIDE ITS DIRECTIONS U/S 144(C)(5) OF THE ACT, DATED 23/12/2016 AND IT P ERTAINS TO AY 2012-13. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. A. THE LEARNED ASSESSING OFFICER ('AO') ERRED I N OVERLOOKING AND DISREGARDING THE APPELLANTS SUBMISSION DATED 11 MARCH 2016 IN ITS ENTIRETY FILED IN RESPONSE TO THE NOTIC E DATED 25 JANUARY 2016 WITH RESPECT TO DISALLOWANCE OF DELAYE D PAYMENTS OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUN D ('PF') OF RS. 24,61,552/-. B. THE LEARNED AO HAS, IN THE IMPUGNED ORDER DATED 30 JANUARY 2017, ERRED IN DISALLOWING DELAYED PAYMENTS OF EMPLOYEES CONTRIBUTION TO PF OF RS. 24,61,552/- WHI CH WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF IN COME. 2. A. THE LEARNED AO HAS ERRED IN DISALLOWING TRANS PORTATION CHARGES PAID TO PROCAM LOGISTICS PRIVATE LIMITED AN D SWAMY AND SONS TRANSPORT OF RS. 3,77,000/- AND RS. 63,000 /- RESPECTIVELY, 'IN CONTRAVENTION OF SECTION 194C(6) OF THE ACT DESPITE THE APPELLANT HAVING PROVIDED THE PERMANENT ACCOUNT NUMBER ('PAN') OF THE ABOVE TWO PARTIES DURING THE ASSESSMENT PROCEEDINGS. B. THE LEARNED AO HAS ERRED IN NOT GRANTING RELIEF TO THE APPELLANT WITH RESPECT TO PAYMENT OF TRANSPORTATION CHARGES TO PROCAM LOGISTICS PRIVATE LIMITED AND SWAMY AND SONS TRANSPORT ON THE ALLEGED GROUND THAT THE APPELLANT DID NOT RAISE OBJECTION BEFORE THE HON'BLE DISPUTE RESOLUTION PAN EL ('DRP') AND IN COMPLETE DISREGARD TO THE SPECIFIC DIRECTION S OF THE DRP IN THIS REGARD. THE LEARNED AO ERRED IN NOT GRANTING RELIEF TO THE APPELLANT DESPITE THE HON'BLE DRP GRANTING COMPLETE RELIEF TO THE APPELLANT FOR OBJECTION 8. 2. THE BRIEF, FACTS OF THE CASE ARE THAT THE ASSES SEE IS ENGAGED IN THE BUSINESS OF REFURBISHMENT OF TUNNEL BORING MACHINES. THE ASSESSEE HAS FILED ITS RETURN OF INCO ME FOR AY 2012-13 ON 30/11/2012, DECLARING TOTAL INCOME AT 3 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. RS.7,89,23,800/-. THE CASE WAS SELECTED FOR SCRUTIN Y AND DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A REFERENCE U /S 92CA(1) OF THE INCOME TAX ACT, 1961 (HEREINAFTER THE ACT) WA S MADE TO THE JURISDICTIONAL TRANSFER PRICING OFFICER FOR COMPUTA TION OF ARMS LENGTH PRICE IN RELATION TO THE INTERNATIONAL TRANS ACTIONS OF THE ASSESSEE COMPANY. THE TPO, VIDE HIS ORDER U/S 92CA( 3) OF THE ACT, DATED 29/01/2016 HAS MADE AN UPWARD ADJUSTMENT TO THE ARMS LENGTH PRICE OF INTERNATIONAL TRANSACTIONS OF THE ASSESSEE. THEREAFTER, THE LD. AO HAS PASSED A DRAFT ASSESSMEN T ORDER DATED 15/03/2016 U/S 144C(1) OF THE ACT, AND PROPOSED ADJ USTMENT AS SUGGESTED BY THE LD. TPO. THE AO HAS MADE DISALLOWA NCE OF CERTAIN EXPENSES U/S 40(A)(IA) FOR FAILURE TO DEDUC T TDS U/S 194C OF THE ACT AND ALSO LATE PAYMENT OF PF REMITTANCE I N RESPECT OF EMPLOYEES CONTRIBUTION. THE ASSESSEE HAS FILED ITS OBJECTIONS BEFORE THE DISPUTE RESOLUTION PANNEL-1, MUMBAI, AGA INST DRAFT ASSESSMENT ORDER PASSED BY LD. AO U/S 194C OF THE A CT. THE LD. DRP-1, MUMBAI, AFTER CONSIDERING THE OBJECTIONS OF THE ASSESSEE PASSED A DIRECTION U/S 144C(5) OF THE ACT, ON 23/12 /2016 AND UPHELD ADJUSTMENT MADE BY THE AO TOWARDS ALP OF INT ERNATIONAL TRANSACTIONS. THE DRP HAS ALSO DELETED DISALLOWANCE OF TRANSPORTATION CHARGES FOR NOT DEDUCTING TDS U/S 19 4C, IN 4 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. RESPECT OF PROVISION FOR TRANSPORTATION CHARGES AND SALARY PAID TO PRADEEP AND OTHERS. HOWEVER, IN RESPECT OF SUB-CONT RACT CHARGES, UPHELD THE ADDITIONS MADE BY THE AO. THE AO, ON THE BASIS OF DIRECTIONS OF THE DRP-1, PASSED FINAL ASSESSMENT OR DER U/S 144C(13) R.W.S. 143(3) OF THE ACT, ON 30/01/2017 AN D DETERMINED TOTAL INCOME OF RS.8,22,27,350/-, AFTER MAKING ADD ITIONS TOWARDS DISALLOWANCES OF EXPENDITURE U/S 40A(IA) OF THE ACT, FOR FAILURE TO DEDUCT TDS U/S194C OF THE ACT AND ALSO L ATE PAYMENT TO EMPLOYEES CONTRIBUTION TO PF. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE TRIBUNAL. 3. THE FIRST ISSUE THAT CAME UP FOR OUR CONSIDERATI ON FROM GROUND NUMBER-1 OF ASSESSEES APPEAL IS DELAYED PAY MENTS OF EMPLOYEES CONTRIBUTION TO PF U/S 43B OF THE ACT. TH E AO HAS DISALLOWED EMPLOYEES CONTRIBUTION TO PF U/S 2(24(X) R.W.S 36(1)(VA) ON THE BASIS OF OBSERVATION OF TAX AUDITO RS IN THE REPORT IN FORM NO.3CD AND ALSO BY RELYING UPON THE DECISIO N IN ITO VS LKP SECURITIES LTD. IN ITA NO.638 & 1093/MUM/2012. ACCORDING TO THE AO, LATE PAYMENT OF EMPLOYEES CONTRIBUTION T O PF IS COVERED UNDER THE PROVISIONS OF SECTION 36(1)(VA) O F THE ACT, THEREFORE, IF EMPLOYEES CONTRIBUTION IS PAID AFTER THE DUE DATE 5 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. SPECIFIED UNDER THE PROVIDENT FUND ACT, THE SAME SH ALL FALL UNDER THE DEFINITION INCOME AS DEFINED U/S 2(24)(X) OF TH E ACT, AND HENCE, MADE ADDITION OF RS.24,61,552/-. 4. THE LD. AR FOR THE ASSESSEE, AT THE TIME OF HEAR ING, SUBMITTED THAT THIS ISSUE IS COVERED IN FAVOUR OF T HE ASSESSEE BY THE DECISION OF CIT VS GHATGE PATIL TRANSPORT LTD. (2014) 368 ITR 749, WHERE THE HONBLE JURISDICTIONAL HIGH COURT BY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT IN THE CASE O F CIT VS ALOM EXTRUSION LTD. (2009) 319 ITR 306, HELD THAT IF PRO VIDENT FUND, INCLUDING EMPLOYEES CONTRIBUTION IS PAID ON OR BEFO RE DUE DATE OF FURNISHING OF RETURN OF INCOME U/S 139(1) OF THE AC T, THE SAME CAN BE ALLOWED AS DEDUCTION. 5. THE LD. DR, ON THE OTHER HAND, STRONGLY SUPPORTE D THE ORDER OF THE AO. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. THE ISSUE OF LATE PAYMENT OF E MPLOYEES CONTRIBUTION TO PROVIDENT FUND IS DEDUCTIBLE OR NOT , IF SUCH PAYMENT IS MADE ON OR BEFORE DUE DATE OF FURNISHING OF RETURN OF INCOME U/S 139(1) OF THE ACT, IRRESPECTIVE OF THE F ACT THAT SUCH 6 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. PAYMENT IS MADE BEYOND DUE DATE SPECIFIED UNDER THE PF ACT IS NO LONGER RES-INTIGRA. THE ITAT, MUMBAI BENCH, IN THE CASE OF M/S AVION SYSTEMS PVT. LTD. IN ITA NO.3282/MUM/2016 HAD CONSIDERED IDENTICAL ISSUE AND BY FOLLOWING THE DEC ISION OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS GHA TGE PATIL TRANSPORT LTD.(SUPRA) HELD THAT IF PAYMENT OF EMPLO YEES CONTRIBUTION TO PROVIDENT FUND IS DEPOSITED ON OR B EFORE THE DUE DATE OF FILING OF RETURN OF INCOME THEN THE SAME IS ALLOWABLE DEDUCTION U/S 36(1)(VA) OF THE ACT. THE RELEVANT FI NDINGS OF THE TRIBUNAL ARE AS UNDER:- 2.1. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN VIEW O F THE ABOVE, WE ARE REPRODUCING HEREUNDER THE RELEVANT PO RTION FROM THE ORDER FROM HON'BLE BOMBAY HIGH COURT IN TH E CASE OF CIT VS GHATGE PATIL TRANSPORT LTD. (SUPRA) FOR R EADY REFERENCE AND ANALYSIS:- THIS ORDER DISPOSES OF THE ABOVE TWO APPEALS UNDER SECTION 260A OF THE INCOME-TAX ACT, 1961 ('THE I. T. ACT'), WHICH I NVOLVE COMMON QUESTIONS OF LAW, WHICH READ AS UNDER : '(1) WHETHER THE DECISION OF THE INCOME-TAX APPELLA TE TRIBUNAL IGNORING THE PROVISIONS OF SECTION 2(24)(X) READ WI TH SECTION 36(1)(VA) AS PER WHICH THE EMPLOYEES' CONTRIBUTION TO THE ESI , PF AND PENSION FUND IS DEDUCTIBLE ONLY IF PAYMENT IS MADE BEFORE T HE DUE DATE AS PRE SCRIBED IN THE RESPECTIVE ACTS, RULES ORDER OR NOTI FICATION GOVERNING SUCH FUNDS IS ERRONEOUS AND CONTRARY TO THE PROVISI ONS OF THE INCOME- TAX ACT, 1961 ? (2) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN IGNORING THE CLEAR D ISTINCTION BETWEEN THE EMPLOYEES' CONTRIBUTION TO THE ESI, PF AND PENSION FUND AND THE EMPLOYER'S CONTRIBUTION AND THE FACT THAT THE DECIS ION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. [2009] 319 ITR 306 (SC) IS APPLICABLE ONLY TO THE EMPLOYER'S CONTRIBU TION ? 7 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. (3) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE TRIBUNAL WAS RIGHT IN HOLDING THAT THE PAY MENT OF THE EMPLOYEES' CONTRIBUTION TO THE PF/ESI/PENSION FUND IS SUBJECT TO THE PROVISIONS OF SECTION 43B OF THE ACT ? (4) WHETHER THE INCOME-TAX APPELLATE TRIBUNAL FAILE D TO APPRECIATE THE FACT THAT THE AMENDMENT TO SECTION 43B IS APPLICABL E ONLY TO THE EMPLOYER'S CONTRIBUTION AND NOT TO THE EMPLOYEES' C ONTRIBUTION AND, HENCE, WHETHER THE SECOND PROVISO TO SECTION 43B OM ITTED WITH EFFECT FROM APRIL 1, 2004, IS RETROSPECTIVE OR NOT, IS NOT GERMANE TO THE ISSUE OF THE EMPLOYEES' CONTRIBUTION ?' 2. AT THE OUTSET, MR. VIMAL GUPTA, LEARNED SENIOR C OUNSEL APPEARING ON BEHALF OF THE APPELLANT, SUBMITTED THAT THE APPELLA NT IS NOT PRESSING QUESTION NO. 1. IT IS, THEREFORE, NOT NECESSARY TO ANSWER THE SAME. 3. THE APPEALS AS FILED PERTAIN TO THE ORDERS PASSE D BY THE INCOME-TAX APPELLATE TRIBUNAL, PUNE 'A' BENCH ON JULY 29, 2011 , IN INCOME TAX APPEAL NO. 340/PN/10 IN RESPECT OF THE ASSESSMENT Y EAR 2003-04 AND INCOME TAX APPEAL NO. 341/PN/10 IN RESPECT OF THE A SSESSMENT YEAR 2004-05. 4. THE FACTS BEING SIMILAR, WE WILL REFER TO THE FA CTS PERTAINING TO INCOME TAX APPEAL NO. 1002 OF 2012 IN RESPECT OF TH E ASSESSMENT YEAR 2003-04. THE ASSESSEE HAD FILED A RETURN OF INCOME DECLARING A TOTAL LOSS OF RS. 1,88,71,600 ON NOVEMBER 27, 2003. A NOTICE CAME TO BE ISSUED UNDER SECTION 148 OF THE INCOME-TAX ACT, 1961 ('THE I. T. ACT') ON AUGUST 30, 2004, AND WHILE COMPLETING THE ASSESSMENT UNDER SEC TION 143(3) READ WITH SECTION 147 OF THE INCOME-TAX ACT, ADDITIONS W ERE MADE ON ACCOUNT OF THE PAYMENT OF THE EMPLOYEES' CONTRIBUTI ON TOWARDS PROVIDENT FUND, ESI AND PENSION FUND IN A SUM OF RS . 32,03,947. 5. WHILE DISALLOWING THE CLAIM FOR DEDUCTION, THE D EPARTMENT CONTENDED THAT THE PAYMENT OF THE EMPLOYEES' CONTRI BUTION HAD TO BE MADE WITHIN THE DUE DATE, VIZ., ON OR BEFORE THE 15 TH OF EVERY SUCCEEDING MONTH. ADMITTEDLY, THESE PAYMENTS WERE N OT SO MADE BUT WERE PAID AFTER THE DUE DATES. THE ASSESSING OFFICE R, THEREFORE, DISALLOWED THE DEDUCTION MADE TO THE EXTENT OF RS. 32,03,547. 6. THE COMMISSIONER OF INCOME-TAX (APPEALS) DISMISS ED THE ISSUE OF DISALLOWANCE ON ACCOUNT OF THE PAYMENT OF THE EMPLO YEES' CONTRIBUTION WHICH WAS COVERED UNDER SECTION 36(1)(VA) OF THE IN COME-TAX ACT RELYING ON THE DECISION OF THIS COURT REPORTED IN C IT V. GODAVERI (MANNAR) SAHAKARI SAKHAR KARKHANA LTD. [2008] 298 ITR 149 (BOM) AND HELD THAT THE AMENDMENTS TO SECTION 43B, ON THE BASIS OF WHICH RELIEF COULD HAVE BEEN GIVEN TO THE ASSESSEE, WERE NOT RETROSPECTIVE. THE TRIBUNAL HELD THAT THE DISALLOWANCE OF THE EMPL OYEES' CONTRIBUTION MADE ON ACCOUNT OF PROVIDENT FUND, ESI AND PENSION FUND FOR ASSESSMENT YEAR 2003-04 WAS ON ACCOUNT OF DELAY IN PAYMENT OF THE EMPLOYEES CONTRIBUTION WAS NOT SUSTAINABLE. 7. THE QUESTION ARISING, THEREFORE, IS (A) WHETHER THE TRIBUNAL WAS RIGHT IN IGNORING THE DISTINCTION BETWEEN THE EMPLOYEES' CONTRIBUTION AND EMPLOYER'S CONTRIBUTION AND WHETHER THE DECISION OF THE HON'BLE 8 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. REPORTED IN [2009] 319 ITR 306 (SC) WOULD APPLY ONLY IN THE CASES OF THE EMPLOYEES' CONTRIBUTION ; AND (B) WHETHER THE TRIBU NAL WAS RIGHT IN HOLDING THAT THE PAYMENT OF THE EMPLOYEES' CONTRIBU TION IS SUBJECT TO THE PROVISIONS OF SECTION 43B OF THE INCOME-TAX ACT ENTAILING THAT THE AMENDMENT TO SECTION 43B WOULD LEAD TO THE INCLUSIO N OF THE EMPLOYERS' CONTRIBUTION AS WELL. 8. MR. GUPTA SUBMITTED THAT THE TRIBUNAL ERRED IN D ELETION OF THE ADDITION OF THE AMOUNT TO THE EXTENT OF RS. 32,03,9 47 AND THAT THE IMPUGNED ORDER DATED JULY 29, 2011, IS LIABLE TO BE QUASHED. MR. GUPTA RELIED UPON THE JUDGMENT OF THE PUNJAB AND HARYANA HIGH COURT IN CIT V. LAKHANI RUBBER WORKS REPORTED IN [2010] 326 ITR 415 (P&H) AND SUBMITTED THAT QUESTIONS NOS. 1 AND 2 IN THAT CASE HAD ALREADY BEEN DECIDED AGAINST THE REVENUE IN VIEW OF THE DECISION OF ALOM EXTRUSIONS LTD. (SUPRA). IT IS FOR THIS REASON THAT HE DID NOT PRESS FOR AN ANSWER TO QUESTION NO. 1 IN THESE APPEALS. 9. MR. NANIWADEKAR, LEARNED COUNSEL APPEARING ON BE HALF OF THE ASSESSEE, ON THE OTHER HAND, RELIED UPON THE DECISI ON OF THE SUPREME COURT UPON THE DECISION OF ALOM EXTRUSIONS (SUPRA) AND POINTED OUT THAT THE SCHEME OF THE INCOME-TAX ACT, 1961, AS IT EXISTED PRIOR TO APRIL 1, 1984, AND THEREAFTER. 10. HE SUBMITTED THAT SECTION 43B MADE IT MANDATORY FOR THE DEPARTMENT TO GRANT DEDUCTION IN COMPUTING THE INCO ME UNDER SECTION 28 IN THE YEAR IN WHICH TAX, DUTY, CESS, ETC., IS A CTUALLY PAID. HOWEVER, PARLIAMENT TOOK COGNIZANCE OF THE FACT THAT THE ACC OUNTING YEAR OF A COMPANY DID NOT ALWAYS TALLY WITH THE DUE DATES UND ER CERTAIN STATUTES AND, THEREFORE, BY WAY OF THE FIRST PROVISO, AN INC ENTIVE/RELAXATION WAS SOUGHT TO BE GIVEN IN RESPECT OF TAX, DUTY, CESS OR FEE BY EXPLICITLY STATING THAT IF SUCH TAX, DUTY, CESS OR FEE IS PAID BEFORE THE DATE OF FILING OF THE RETURN UNDER THE INCOME- TAX ACT, THE ASSESSEE WOULD BE ENTITLED TO DEDUCTION. IT DID NOT APPLY TO CONTRIBU TIONS TO LABOUR WELFARE FUNDS. 11. THE SECOND PROVISO RESULTED IN IMPLEMENTATION P ROBLEMS AND WHICH LED TO DELETION OF THE SECOND PROVISO IN THE FINANC E ACT, 2003, AND BRINGING ABOUT UNIFORMITY IN THE FIRST PROVISO BY E QUATING TAX, DUTY, CESS AND FEE WITH CONTRIBUTIONS TO WELFARE FUNDS LI KE EMPLOYEES' PROVIDENT FUND, SUPERANNUATION FUND AND OTHER WELFA RE FUNDS. THE FIRST PROVISO BY THE FINANCE ACT, 2003, WAS MADE APPLICAB LE WITH EFFECT FROM APRIL 1, 2004, AND THE ASSESSEE WOULD ARGUE THAT IT WAS CURATIVE IN NATURE, CLARIFICATORY AND, THEREFORE, APPLIED RETRO SPECTIVELY FROM APRIL 1, 1988. THE DEPARTMENT ARGUED THAT IT WAS CLARIFAC TORY AND, THEREFORE, APPLIED PROSPECTIVELY. THE SUPREME COURT HELD THAT THE FINANCE ACT, 2003, WOULD BE APPLICABLE RETROSPECTIV ELY AND DEFAULTER WHO FAILS TO PAY THE CONTRIBUTION TO THE WELFARE FU ND RIGHT UP TO APRIL 1, 2004, AND WHO PAYS THE CONTRIBUTION AFTER APRIL 1, 2004, WOULD GET THE BENEFIT OF DEDUCTION UNDER SECTION 43B OF THE INCOM E-TAX ACT. IT IS HELD THAT THE FINANCE ACT, 2003, TO THE EXTENT INDICATED ABOVE WOULD BE CURATIVE IN NATURE AND, HENCE, IS RETROSPECTIVE. TH E REASON BEING TO BE THAT THE EMPLOYERS SHOULD NOT SIT ON THE COLLECTED CONTRIBUTIONS AND DEPRIVE THE WORKMEN OF THE RIGHTFUL BENEFITS UNDER SOCIAL WELFARE 9 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. LEGISLATIONS BY DELAYING THE PAYMENT OF CONTRIBUTIO NS TO THE WELFARE FUNDS. 12. MR. NANIWADEKAR ALSO RELIED UPON THE JUDGMENT D ATED JULY 11, 2014, IN INCOME TAX APPEAL NO. 399 OF 2012 (CIT V. HINDUSTAN ORGANICS CHEMICALS LTD. [2014] 366 ITR 1 (BOM) PASSED BY THIS COURT, TO WHICH ONE OF US (S. C. DHARMADHIKARI J.) WAS A PARTY WHERE THE FOLLOWING TWO ISSUES OF LAW WERE RAISED (PAGE 3 ) : '(A) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL, IN LAW, WAS RIGHT IN ALLOWING THE CLAIM O F THE ASSESSEE ON ACCOUNT OF DELAYED PAYMENTS OF P. F. OF THE EMPLOYE ES' CONTRIBUTION AMOUNTING TO RS. 1,82,77,138 BY RELYING ON THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. [2009] 319 ITR 306 (SC) ? (B) WHETHER, ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE TRIBUNAL IN LAW, WAS RIGHT IN DELETING THE DISALLOW ANCE OF RS. 10,00,300 ON BOND REGISTRATION CHARGES AND ALLOWING THE CLAIM OF THE ASSESSEE UNDER SECTION 37(1) OF THE INCOME-TAX ACT, 1961 ?' 13. IN THAT JUDGMENT, THIS COURT HELD THAT NO SUBST ANTIAL QUESTIONS OF LAW WOULD ARISE SINCE SECTION 43B IS INSERTED IN TH E INCOME-TAX ACT WITH EFFECT FROM APRIL 1, 1984, BY WHICH THE MERCAN TILE SYSTEM OF ACCOUNTING WITH REGARD TO TAX, DUTY AND CONTRIBUTIO N TO WELFARE FUNDS STOOD DISCONTINUED. UNDER SECTION 43B OF THE INCOME -TAX ACT, IT BECAME MANDATORY FOR THE ASSESSEE TO ACCOUNT FOR SU CH PAYMENT INCLUDING TO WELFARE FUNDS NOT ON THE MERCANTILE BA SIS BUT ON CASH BASIS. THE JUDGMENT FURTHER MENTIONS THAT THIS SITU ATION CONTINUED BETWEEN APRIL 1, 1984, AND APRIL 1, 1988. IT IS ALS O NOTICED THAT SECTION 43B WAS AGAIN AMENDED AND THE FIRST PROVISO THERETO HAS BEEN ADDED WHICH WAS RESTRICTED TO TAX, DUTY, CESS OR FEE EXCL UDING LABOUR WELFARE. IN VIEW THEREOF, THE SECOND PROVISO AS FOLLOWS CAME TO BE INSERTED : 'PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH S UM HAS ACTUALLY BEEN PAID DURING THE PREVIOUS YEAR ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION (1 ) OF SECTION 36.' THE SECOND PROVISO WAS FURTHER AMENDED WITH EFFECT FROM APRIL 1, 1989, TO READ AS UNDER : 'PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPE CT OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SUCH S UM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHEQUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATIO N BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36, AND WHERE SUCH PA YMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALI SED WITHIN FIFTEEN DAYS FROM THE DUE DATE.' 14. FROM A READING OF ABOVE, IT IS CLEAR THAT THE E MPLOYER-ASSESSEE WOULD BE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBU TION TO THE EMPLOYEES' WELFARE FUND STOOD CREDITED ON OR BEFORE THE DUE DATE AND NOT OTHERWISE. IT TRANSPIRES THAT INDUSTRY ONCE AGA IN MADE 10 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. REPRESENTATIONS TO THE MINISTRY OF FINANCE TO REMOV E THIS ANOMALY. THE RESULT WAS THAT AN AMENDMENT WAS INSERTED WHICH CAM E INTO FORCE WITH EFFECT FROM APRIL 1, 2004, AND TWO CHANGES WERE MAD E IN SECTION 43B, FIRSTLY, BY DELETING THE SECOND PROVISO AND FURTHER AMENDMENT IN THE FIRST PROVISO WHICH READS AS UNDER : 'PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELA TION TO ANY SUM WHICH IS ACTUALLY PAID BY THE ASSESSEE O N OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURNISHING THE RETU RN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PR EVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORE SAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE ASSESS EE ALONG WITH SUCH RETURN.' 15. IN THIS MANNER, THE AMENDMENT PROVIDED BY THE F INANCE ACT, 2003, PUT ON PAR THE BENEFIT OF DEDUCTIONS OF TAX, DUTY, CESS AND FEE ON THE ONE HAND WITH CONTRIBUTIONS TO VARIOUS EMPLOYEES' W ELFARE FUNDS ON THE OTHER. ALL THIS CAME UP FOR CONSIDERATION BEFORE TH E HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). THE TRIBUNAL IN THE CASE AT HAND RELIED UPON THE SAID JUDGMENT. THERE I S NO REASON TO FAULT THE ORDER PASSED BY THE TRIBUNAL. WE ARE OF THE VIE W THAT THE DECISION OF THE SUPREME COURT IN ALOM EXTRUSIONS LTD. APPLIE S TO THE EMPLOYEES' CONTRIBUTION AS WELL AS EMPLOYERS' CONTRIBUTION. QU ESTIONS NOS. 2, 3 AND 4 ARE ACCORDINGLY ANSWERED IN FAVOUR OF THE ASS ESSEE AND AGAINST THE REVENUE. 16. THE FACTS IN INCOME TAX APPEAL NO. 1034 OF 2012 ARE SIMILAR, EXCEPT FOR THE CHANGE IN THE ASSESSMENT YEAR AND TH E QUESTIONS ARISE OUT OF THE COMMON ORDER OF THE TRIBUNAL DATED JULY 29, 2011, AND, ACCORDINGLY, QUESTIONS NOS. 2, 3 AND 4 ARE ANSWERED IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. WE HOLD THAT BOTH EMPLOYEES' AND EMPLOYER'S CONTRIBUTIONS ARE COVERED UNDER THE AMEN DMENT TO SECTION 43B OF THE INCOME-TAX ACT AND THE ALOM EXTRUSIONS J UDGMENT. HENCE, THE TRIBUNAL WAS RIGHT IN HOLDING THAT PAYMENTS THE REOF ARE SUBJECT TO BENEFITS OF SECTION 43B. BOTH THE APPEALS ARE DISPO SED OF ACCORDINGLY. NO ORDER AS TO COSTS. 2.2. IN THE AFORESAID DECISION, THE HON'BLE HIGH COURT HAS DULY CONSIDERED SECTION 43B OF THE ACT. SUCH PAYMENT/DEPOSIT, IF DEPOSITED WITH DUE DATE OF FILI NG OF RETURN OF INCOME U/S 139(1) OF THE ACT THEN IT IS A N ALLOWABLE DEDUCTION. THE RATIO LAID DOWN IN FOLLOWING CASES A LSO FORTIFIES THE CASE OF THE ASSESSEE. I. CIT VS RAJASTHAN STATE GANGANAGAR SUGAR MILLS LTD. (2017) 393 ITR 0421 (RAJ.) SLP DISMISSED: [(2017) 84 TAXMANN.COM 185 (SC)] II. BIHAR STATE WAREHOUSING CORP. LTD. V. CIT [(2017) 3 93 ITR 386 (PATNA HC)] III. SAGUN FOUNDRY (P.) LTD. V. CIT [(2017) 291 CTR 557 (ALL.)(HC)] IV. CIT V. MAGUS CUSTOMERS DIALOG P. LTD. [(2015) 371 I TR 242 11 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. (KAM.) (HC)] V. CIT V. NUCHEM LTD. [(2015) 59 TAXMANN.COM 455 (PUNJ AB & HARYANA)] VI. ESSAE TERA OKA (P) LTD .. V. DCIT [(2014) 366 ITR 4 08 (KAM.)(HC)] VII. CIT V. HERNIA EMBROIDERY MILLS (P.) LTD. [(2014) 36 6 ITR 167 (P&H)(HC)] VIII. CIT V. JAIPUR VIDYUT VITRAN NIGAM LTD. [(2014) 363 ITR 307 (RAJASTHAN)] IX. CIT V. STATE BANK OF BIKANER & JAIPUR [(2014) 363 ITR 70 (RAJ.) (HC)] X. CIT V. MARK AUTO INDUSTRIES LTD. [(2014) 358 ITR 43 (P&H)] XI. CIT V. SPECTRUM CONSULTANTS INDIA (P) LTD[(2014) 26 6 CTR 241 (KRN.)(HC)] XII. CIT V. VIJAY SHREE LTD.[ (2014) 43 TAXMANN.COM 396 (CAL.)(HC)] XIII. CIT V. KICHHA SUGAR CO. LTD. [(2013) 356 ITR 351 (UTTARAKHAND)] XIV. CIT VIS. ANZ INFORMATION TECHNOLOGY (P) LTD. {(2009) 318 ITR 123 (KARN)} XV. CIT V. AIMIL LTD.[(2010) 321 ITR 508 (DEL)] IN A LATER DECISION, HON'BLE RAJASTHAN HIGH COURT I N THE CASE OF CIT VS RAJASTHAN STATE GANGANAGAR SUGAR MIL LS LTD. (2017) 393 ITR 0421 (RAJ.) HELD AS UNDER:- 41. AS REGARDS THE SUBSTANTIAL QUESTION FRAMED IN DB INCOME TAX APPEAL NO.120/2012. REFERRED TO SUPRA, IN REGAR D TO DELETING ADDITION OF RS.7,61,777/- MADE ON ACCOUNT OF DEPOSI TING THE PF/ESI PAYMENT BEYOND THE PRESCRIBED TIME, COUNSEL FOR THE APPELLANT-REVENUE CONTENDED THAT THE SAID AMOUNT WA S REQUIRED TO BE DISALLOWED AS ONCE IT WAS PAID BEYOND THE PRE SCRIBED TIME UNDER THE RELEVANT STATUTES OF PROVIDENT FUND/ESI, THE AMOUNT COULD NOT HAVE BEEN ALLOWED. HE THUS CONTENDED THAT THE MANDATE OF THE STATUTE HAS TO BE STRICTLY FOLLOWED AND THE ASSESSEE OUGHT TO HAVE PAID THE AMOUNT ACCORDING TO THE DUE DATE ACCORDING TO THE RELEVANT PROVISIONS OF PF/ESI AND SINCE THERE WAS VIOLATION OF THOSE ACTS, THEREFORE, THE BENEFIT/DEDUCTION CANNOT BE GRANTED/ALLOWED. 41.1 HOWEVER, LEARNED COUNSEL FOR THE ASSESSEE, IN SO FAR AS THE ABOVE QUESTION IS CONCERNED, CONTENDED THAT THIS CO URT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S. STATE B ANK OF BIKANER & JAIPUR AND COMMISSIONER OF INCOME TAX VS. JAIPUR VIDYUT VITARAN NIGAM LTD. : (2014) 363 ITR 70 (RAJ. ), HAS HELD 12 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. THAT IF THE AMOUNT IS PAID ON OR BEFORE THE DUE DAT E OF FILING OF RETURN OF INCOME, THE SAME IS ALLOWABLE. 41.2. WE HAVE CONSIDERED THE ARGUMENTS AND IN OUR V IEW, THE ISSUE IS SQUARELY COVERED BY THE JUDGMENT OF THIS C OURT IN THE CASE OF COMMISSIONER OF INCOME TAX VS. M/S. STATE B ANK OF BIKANER & JAIPUR AND OF INCOME TAX VS. JAIPUR VIDYU T VITARAN NIGAM LTD. (SUPRA) AND CIT VS. UDAIPUR DUGDH UTPADA K SAHKARI SANGTH LTD.: (2014) 366 ITR 163 (RAJ.) WHEREIN, THI S COURT, AFTER TAKING INTO CONSIDERATION THE JUDGMENTS OF TH E APEX COURT, HAS COME TO THE CONCLUSION THAT IF PF/EPF/CPF/GPF E TC., IF PAID AFTER DUE DATE UNDER THE RESPECTIVE ACT BUT BEFORE FILING OF THE RETURN OF INCOME UNDER SECTION 139(1) OF THE IT ACT , THE SAME CANNOT BE DISALLOWED. 42. TAKING INTO CONSIDERATION THE SAME AND THE FACT S NOTICED HEREIN BEFORE, THE QUESTION RELATING TO PF/ ESI PAY MENT BEYOND THE PRESCRIBED TIME IS ALSO ANSWERED AGAINST THE RE VENUE AND IN FAVOUR OF THE ASSESSEE. 2.3. IT IS NOTEWORTHY THAT SLP AGAINST THE AFORESA ID ORDER WAS DISMISSED BY HON'BLE APEX COURT IN (2017) 84 TAXMAN.COM 185 (SC). CONSIDERING THE AFORESAID JUDI CIAL PRONOUNCEMENTS, WE ARE OF THE VIEW, IF THE PAYMENT WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME U/S 139(1) OF THE ACT THEN IT IS AN ALLOWABLE DEDUCTION . WE HOLD SO. ACCORDINGLY, THE LD. ASSESSING OFFICER IS DIREC TED TO ALLOW THE CLAIMED DEDUCTION IN THE LIGHT OF THE AFORESAID OBSERVATION, IF THE PAYMENT OF EMPLOYEES CONTRIBUTI ON TOWARDS PF & ESIC IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN. THUS, WE FIND NO INFIRMITY IN THE CONCLU SION OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL) THE APPEAL OF THE REVENUE IS DISMISSED. 7. IN THIS VIEW OF THE MATTER AND CONSISTENT WITH V IEW TAKEN BY THE CO-ORDINATE BENCH OF THE TRIBUNAL, WE DIRECT TH E AO TO DELETE ADDITIONS MADE TOWARDS LATE PAYMENT OF EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND. 8. THE NEXT ISSUE THAT CAME UP FOR OUR CONSIDERATIO N FROM GROUND NO.2 IS DISALLOWANCE OF TRANSPORTATION CHARG ES PAID TO 13 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. PROCLAIM LOGISTICS PVT. LTD. AND SWAMY AND SONS TRA NSPORT U/S 40(A)(IA) OF THE ACT, FOR FAILURE TO DEDUCT TDS U/ S 194C OF THE ACT. THE AO HAS DISALLOWED TRANSPORTATION CHARGES O N THE GROUND THAT NO TDS HAS BEEN DEDUCTED U/S 194C OF THE ACT. IT IS A CONTENTION OF THE ASSESSEE THAT AS PER PROVISIONS O F SECTION 194C(6) OF THE ACT, IF PERMANENT ACCOUNT NUMBER OF THE PAYEE IS FURNISHED, THEN THERE IS NO REQUIREMENT OF DEDUCTIO N OF TDS U/S 194C OF THE ACT, CONSEQUENTLY, NO DISALLOWANCES COU LD BE MADE U/S 40(A)(IA) OF THE ACT. 9. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MAT ERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW. WE, FIND THAT THE LD. DRP HAS CONSIDERED THE ISSUE IN LIGHT OF CLAUSE (6) TO SECTION 194C, WHICH IS APPLICABLE FROM AY 2012-13 AND HELD THAT PROVISIONS OF SECTION 194C(6) GRANTS AN EXEMPTION TO THE PAYER FOR DEDUCTION OF T AX AT SOURCE, IF THE PAYEE, WHO IS ENGAGED IN THE BUSINESS OF TRANSP ORT OF GOODS/HIRING OF CARRIAGES FURNISHES HIS PAN. THE LD . DRP FURTHER OBSERVED THAT FROM MATERIAL PLACED ON RECORD, IT IS EVIDENT THAT THE ASSESSEE HAS OBTAINED AND FURNISHED THE PAN OF ALL THREE PARTIES TO CLAIM THE BENEFIT AS PROVIDED U/S 194C(6 ) OF THE ACT. 14 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. ALTHOUGH, THE LD. DRP HAS OBSERVED THAT THE ASSESSE E HAS FURNISHED PAN IN RESPECT OF PAYMENT MADE TO ABOVE T WO PARTIES, THE AO HAS MADE ADDITIONS WITHOUT CONSIDERING THE F INDINGS RECORDED BY THE LD. DRP, ONLY FOR THE REASON THAT T HE ASSESSEE HAS NOT RAISED ANY OBJECTIONS REGARDING DISALLOWANC ES U/S 40A(IA) IN RESPECT OF PAYMENT MENTIONED IN THE ASSESSMENT O RDER AT PARA-7, MORE PARTICULARLY, IN RESPECT OF TWO PAYMEN TS MADE TO M/S PROCLAIM LOGISTICS PVT. LTD. AND SWAMY AND SONS TRANSPORT. THEREFORE, WE ARE OF THE CONSIDERED VIEW THAT THE A O WAS ERRED IN DISALLOWING TRANSPORT CHARGES FOR FAILURE TO DEDUCT TDS U/S 194C OF THE ACT, EVEN THOUGH THE ASSESSEE HAS FURNISHED RELEVANT PAN OF THE PAYEES. HOWEVER, THE FACTS WITH REGARD TO SU BMISSIONS OF PAN NUMBERS BEFORE THE AO ARE CLEAR, BECAUSE AS PER THE OBSERVATIONS OF THE AO, THE ASSESSEE HAS NOT RAISED ANY OBJECTIONS. THEREFORE, WE ARE OF THE CONSIDERED VIE W THAT THIS ISSUE NEEDS TO BE RE-EXAMINED BY THE AO IN LIGHT OF OBSERVATIONS OF THE LD. DRP. HENCE, WE SET-ASIDE THIS ISSUE TO T HE FILE OF THE LD. AO AND DIRECT HIM TO CALL NECESSARY ENQUIRIES A ND IF THE AO FOUND THAT THE ASSESSEE HAS FURNISHED PAN OF PAYEES , THEN ADDITIONS MADE TOWARDS DISALLOWANCE OF TRANSPORTATI ON CHARGES SHOULD BE DELETED. 15 IT(TP)A NO.2108/MUM/2017 M/S HERRENKNECHT INDIA PVT. LTD. 10. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 08/04/2019. SD/- SD/- ( RAVISH SOOD ) (G. MANJUNATHA) #'$ /JUDICIAL MEMBER %'$ / ACCOUNTANT MEMBER MUMBAI; & DATED : 08/04/2019 F{X~{T? P.S / /. . . &#'()*)+' / COPY OF THE ORDER FORWARDED TO : 1. '( )* / THE APPELLANT (RESPECTIVE ASSESSEE) 2. +,)* / THE RESPONDENT. 3. -- . ( '( ) / THE CIT, MUMBAI. 4. -- . / CIT(A)- , MUMBAI, 5. 0 1+2 , -'(#'23 , / DR, ITAT, MUMBAI 6. 1 45 / GUARD FILE. / BY ORDER, / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI