ACIT, CHENNAI V. Best & Crompton Engineering Projects Ltd., CHENNAI

ITA 212/CHNY/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 4394 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2012-2013
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PAVUNA SUNDARI
• Keywords: Depreciation
• Section: 43B; 2

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI ... , , # BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ I.T.A. NO. 212/MDS/2017 / ASSESSMENT YEAR : 2012-13 ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE -1(2), CHENNAI 600 034. VS. M/S. BEST & CROMPTON ENGG PROJECTS LTD, NO. 42 (OLD NO. 129) STERLING ROAD, NUNGAMBAKKAM, CHENNAI 600 034. [PAN: AABCB 5248H] ( / APPELLANT) ( / RESPONDENT) % & / APPELLANT BY : SHRI PA V UNA SUNDARI, JCIT )*% & / RESPONDENT BY : NONE & /DATE OF HEARING : 01.06.2017 & /DATE OF PRONOUNCEMENT : 07.06.2017 /O R D E R PER S. JAYARAMAN, ACCOUNTANT MEMBER: THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-1, CHENNAI DAT ED 07.11.2016. :-2-: I.T.A. N0. 212/MDS/2017 2. M/S. BEST & CROMPTON ENGINEERING PROJECTS LTD, T HE ASSESSEE, IS ENGAGED IN DOING ENGINEERING PROJECTS. IN THE ASSE SSMENT MADE U/S. 143(3), THE ASSESSEES DEPRECIATION CLAIM AGGREGATED TO RS. 31,89,358/- WAS NOT ENTERTAINED BY THE AO. THE AO WAS OF THE VIEW THAT ASSET UNDER CONSIDERATION WAS SELF-GENERATED BY THE DE-MERGER C OMPANY AND PASSED ON TO THE RESULTING COMPANY, BEING THE ASSESSEE COMPAN Y. THE AO DISALLOWED THE CLAIM HOLDING THAT THE DEPARTMENT HAD CONSISTEN TLY HELD THAT THE DEPRECIATION IS NOT ALLOWABLE FOR THE ELABORATE DIS CUSSION MADE ON THIS ISSUE IN THE EARLIER YEARS. FURTHER, THE AO DISALLOWED DELA YED REMITTANCE OF EMPLOYEE CONTRIBUTION TO PF & ESI AT RS. 1,95,226/- AND RS. 1,47,970/-, RESPECTIVELY, AS THESE PAYMENTS WERE NOT MADE AS PER THE DUE DATE SP ECIFIED AND NOT EVEN PAID BEFORE THE GRACE PERIOD ALLOWED. 3. THE ASSESSEE FILED AN APPEAL BEFORE THE CIT(A)- 1 CHENNAI. THE CIT(A) IN HIS ORDER IN ITA NO. 1/CIT(A)-1/2015-16 DATED 07 .11.2016, ON THE DEPRECIATION ISSUE FOUND THAT THE APPELLANTS OWN C ASE ON SIMILAR ISSUE, THE HONBLE ITAT CHENNAI FOR THE ASSESSMENT YEARS 2002- 03 TO 2005-06 HAS GIVEN A FINDING THAT EXPLANATION 2 AND 2A TO SECTION 43(6 ) OF THE INCOME TAX ACT IS NOT APPLICABLE IN THE APPELLANTS CASE AND ALSO GIV EN A FINDING THAT THE HIVING OFF THE PROJECTS DIVISION IN THE APPELLANTS OWN CA SE IS NOT A DEMERGER. FOLLOWING IT, HE DIRECTED THE AO TO ALLOW THE DEPRE CIATION ON PRE-QUALIFICATION RIGHTS AND TECHNICAL PROPRIETARY INFORMATION OF RS. 31,89,358/-. ON THE ISSUE :-3-: I.T.A. N0. 212/MDS/2017 OF DISALLOWANCE OF DELAYED REMITTANCE OF EMPLOYEE C ONTRIBUTION TO PF & ESI THE ASSESSEE CONTESTED BEFORE THE CIT(A) THAT THE I MPUGNED AMOUNTS WERE PAID WITHIN THE DUE DATE FOR FILING THE RETURN AS S TIPULATED UNDER PROVISION TO SECTION 43B WHICH IS 30.09.2013, THE CIT(A) OBSERVE D THAT IT WILL SERVE USEFUL PURPOSE TO REFERE TO CIRCULAR NO 22/2015 DATED 17.1 2.2015 IN F. NO. 279/MISC./140/2015-ITJ. IT HAS BEEN CLARIFIED THER EIN, THAT THE APEX COURT DECISION IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD 185 TAXMANN416 HAS BEEN ACCEPTED WITH REGARD TO THE EMPLOYERS CONTRIBUTION TO THE PF FUND OR SUPERANNUATION FUND OR GRATUITY FUND IF DEPOSITED O N OR BEFORE THE DUE DATE. NO DISALLOWANCE COULD BE MADE U/S. 43B OF THE ACT. IT HAS ALSO BEEN CLARIFIED THAT THE CIRCULAR DOES NOT APPLY TO CLAIM OF DEDUCT ION RELATING TO EMPLOYEES CONTRIBUTION TO WELFARE FUNDS GOVERNED BY A S. 36(1 )(VA). HOWEVER, IN VIEW OF THE JURISDICTIONAL HIGH COURTS DECISION DATED 2 4.07.2015 IN THE CASE OF CIT VS INDUSTRIAL SECURITY AND INTELLIGENCE INDIA (P) L TD IN TC(A) NO. 585 & 586 OF 2015 AND MP NO. 1 OF 2015, IT HAS BEEN HELD THEREIN PLACING RELIANCE ON THE DELHI HIGH COURTS DECISION IN THE CASE OF AIMIL LT D 321 ITR 508, THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYEES CONTRIBUTION TOWAR DS PF AND ESI AFTER THE DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT, BUT BEFORE THE DUE DATE OF FILING OF THE RETURN UNDER THE INCOME TAX ACT, NO D ISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS U/S. 43B AS AMENDED BY FI NANCE ACT, 2003. THUS RESPECTFULLY FOLLOWING THE RATIO LAID DOWN BY THE H ONBLE HIGH COURT, THE :-4-: I.T.A. N0. 212/MDS/2017 CIT(A) ALLOWED THE ASSESSEES APPEAL. AGGRIEVED, TH E REVENUE FILED THIS APPEAL. 4. THE DR SUBMITTED HIS ARGUMENTS ON THE LINES OF G ROUND OF APPEAL. PER CONTRA, THE AR SUBMITTED A COPY OF THIS TRIBUNAL DE CISION IN ITA NO. 646 & 647/MDS/2016 FOR THE ASSESSMENT YEAR 2011-12 DATED 28.02.2017 AND RELIED ON THE DECISION. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND GON E THROUGH THIS TRIBUNAL ORDER. THE RELEVANT PORTION OF THE ORDER, SUPRA, IS EXTRACTED AS UNDER: 6. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D.R., AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEE CLAIMED DEPRECIATION ON THE TECHNICAL PROP RIETARY INFORMATION AND PREQUALIFICATION RIGHTS WHICH WAS S AID TO BE TRANSFERRED BY THE PARENT COMPANY. THIS ISSUE WAS E XAMINED BY THE TRIBUNAL IN THE ASSESSEES OWN CASE FOR THE ASSESSMENT YEARS 2002-03 TO 2005-06 IN ITA NOS. 1675 TO 1678/M DS/2008 DATED 20.04.2011. THIS TRIBUNAL APPARENTLY PLACED I TS RELIANCE ON THE JUDGMENT OF THE SUPREME COURT IN TECHNO STOC KS AND SHARES V CIT 327 ITR 323 AND FOUND THAT THE ASSESSE E IS ELIGIBLE FOR DEPRECIATION. THE CIT (APPEALS) BY PLA CING RELIANCE ON THE ORDER OF THIS TRIBUNAL ALLOWED THE CLAIM OF THE ASSESSEE. NOW, THE REVENUE CLAIMS THAT AN APPEAL WAS ALREADY FILED BEFORE THE HIGH COURT AGAINST THE ORDER OF THIS TRI BUNAL AND IT :-5-: I.T.A. N0. 212/MDS/2017 IS PENDING. THIS TRIBUNAL IS OF THE CONSIDERED OPIN ION MERE PENDENCY OF AN APPEAL BEFORE THE HIGH COURT CANNOT BE A REASON FOR TAKING A DIFFERENT VIEW. IT IS NOT THE C ASE OF THE REVENUE THAT THE ORDER OF THIS TRIBUNAL WAS STAYED BY THE HIGH COURT. IN THOSE CIRCUMSTANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THE CIT (APPEALS) HAS RIGHTLY PLACED HIS RE LIANCE ON THE ORDER OF THIS TRIBUNAL AND ALLOWED THE CLAIM OF DEP RECIATION. ACCORDINGLY, THIS TRIBUNAL DO NOT FIND ANY REASON T O INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY AND THE SAME IS CONFIRMED. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10. WE HAVE CONSIDERED THE SUBMISSIONS OF THE LD. D .R., AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BOTH THE EMPLOYEES AND EMPLOYER CONTRIBUTION HAS TO BE ALLO WED ON PAYMENT BEFORE THE DUE DATE FOR FILING THE RETURN O F INCOME IN VIEW OF SECTION 43B OF THE ACT. IN THIS CASE, THE A SSESSEE CLAIMS THAT THE EMPLOYEES CONTRIBUTION WAS PAID TO THE ACCOUNT OF THE GOVERNMENT BEFORE THE DUE DATE FOR FILING TH E RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. HOWEVER, TH E ASSESSING OFFICER HAS NO OCCASION TO EXEMPT THE ACT UAL PAYMENT SAID TO BE MADE BY THE ASSESSEE. THEREFORE, THE CIT (APPEALS) HAS DIRECTED THE ASSESSING OFFICER TO VER IFY THE EXACT DATE OF PAYMENT AND ALLOW THE CLAIM OF THE ASSESSEE PROVIDED THE SAME WAS PAID WITHIN THE DUE DATE PROVIDED UNDE R SECTION 139(1) OF THE ACT. THIS TRIBUNAL IS OF THE CONSIDER ED OPINION, IN VIEW OF THE JUDGMENT OF MADRAS HIGH COURT IN NEXUS COMPUTER (P) LTD SUPRA, THE PAYMENT MADE BEFORE THE DUE DATE OF FILING :-6-: I.T.A. N0. 212/MDS/2017 OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT HAS TO BE ALLOWED. ACCORDINGLY THE ASSESSING OFFICER NEEDS TO VERIFY THE EXACT DATE OF PAYMENT OF EMPLOYEES CONTRIBUTION TO THE PF ACCOUNT AND IF IT IS PAID BEFORE THE DUE DATE FOR F ILING OF RETURN OF INCOME, THE SAME HAS TO BE ALLOWED AS FOUND BY T HE CIT(APPEALS). THEREFORE THIS TRIBUNAL DO NOT FIND A NY REASON TO INTERFERE WITH THE ORDER OF THE LOWER AUTHORITY. AC CORDINGLY THE SAME IS CONFIRMED. 6. SINCE, THIS TRIBUNAL HAS EXAMINED THOSE ISSUES I N THE APPELLANTS CASE IN THE EARLIER YEARS AND PASSED THE ABOVE ORDER, FOLLO WING IT, THE REVENUES APPEAL IS DISMISSED. 7. IN THE RESULT, THE REVENUE APPEAL IS DISMISSED. ORDER PRONOUNCED ON WEDNESDAY, THE 07 TH DAY OF JUNE, 2017 AT CHENNAI. SD/- ( . . . ) (N.R.S. GANESAN) ! ' /JUDICIAL MEMBER SD/- ( ) (S. JAYARAMAN) ' /ACCOUNTANT MEMBER /CHENNAI, J /DATED: 07 TH JUNE, 2017 JPV & )KL ML /COPY TO: 1. %/ APPELLANT 2. )*% /RESPONDENT 3. N ( )/CIT(A) 4. N /CIT 5. L ) /DR 6. Q /GF