A. Menarini India Pvt. Ltd., Ahmedabad V. The Dy. CIT, Circle-1(1)(1), Ahmedabad

ITA 2199/AHD/2017

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 4948 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 year(s) 7 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2019
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 03-10-2017
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: KAMLESH MAKWONA
• Section: 43B; 143(3); 28; 139

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER &SHRI AMARJIT SINGH, ACCOUNTANT MEMBER ./I.T.A. NO. 2199/AHD/2017 ( / ASSESSMENT YEAR:2014-15) A. MENARINI INDIA PVT. LTD. A-101, SHAPATH IV, NEAR KARNAVATI CLUB, S.G. HIGHWAY, AHMEDABAD- 380015 / VS. DCIT CIRCLE- 1(1)(1), AHMEDABAD ./ ./PAN/GIR NO. : AAA CI9 822 K ( /APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : WRITTEN SUBMISSION / RESPONDENTBY: KAMLESH MAKWONA, SR. DR !' /DATE OFHEARING 10/05/2019 #$!' / DATE OF PRONOUNCEMENT 23/05/2019 %& /O R D E R PER AMARJIT SINGH - AM: THE APPEAL HAS BEEN FILED BY THE ASSESSEE FOR A.Y. 2014-15, ARISE FROM ORDER OF THE CIT(A)-1, AHMEDABAD DATED 31.07.2017, I N PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE AC T. 2. ALL THE GROUND OF APPEAL OF THE ASSESSEE AGAINST THE ORDER OF CIT(A)- AHMEDABAD ARE PERTAINED TO THE SOLITARY ISSUE OF CO NFIRMING DISALLOWANCE OF RS. 11,95,274/- BEING THE AMOUNT OF EMPLOYEES CONTRIBU TION TO PROVIDENT FUND AND ESIC. THEREFORE, FOR THE SAKE OF CONVENIENCE ALL TH E GROUNDS OF APPEAL ARE ADJUDICATED TOGETHER WITH THIS COMMON ORDER. THE FA CT IN BRIEF IS THAT ASSESSEE HAD ITA NO. 2199/AHD/2017 A.Y. 2014-15 2 FILED RETURN OF INCOME DECLARING LOSS OF RS. (-)23, 58,10,490/- ON 29.11.2014. SUBSEQUENTLY, THE CASE WAS SELECTED UNDER SCRUTINY BY ISSUING OF NOTICE U/S. 143(2) OF THE ACT ON 03.09.2015. DURING THE COURSE OF ASS ESSMENT THE AO NOTICED THAT ASSESSEE HAS NOT MADE PAYMENT TOWARDS THE CONTRIBUT ION OF EMPLOYEES TO PROVIDENT FUND AND ESIC WITHIN THE DUE DATE PRESCRI BED IN THE PARTICULAR ACT. THE DETAIL OF SUCH PAYMENT IS REPRODUCED AS UNDER:- PROVIDENT FUND:- MONTH EMPLOYEES CONTRIBUTION IN RS. DUE DATE ACTUAL DATE OF PAYMENT APR-13 186026 21.05.2013 23.05.2013 APR-13 1038700 20.05.2013 29.05.2013 THEREFORE, THE ASSESSEE WAS ASKED TO EXPLAIN WHY EM PLOYEES CONTRIBUTION OF PROVIDENT FUND/ESIC PAID AFTER DUE DATE SHOULD N OT BE DISALLOWED AS PER SEC. 36(1)(V)(A) R.W.S. 2(24)(X) OF THE ACT. IN RESPONS E THE ASSESSEE EXPLAINED THAT THE PAYMENT WERE MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AND QUOTED THE DECISION OF HONBLE KARNATAKA HIGH COURT IN THE CASE OF ESSAETEREOKA PRIVATE LIMITED REPORTED IN 266 CIR 246. THE AO HAS NOT ACCE PTED THE EXPLANATION OF THE ASSESSEE AND STATED THAT ASSESSEE HAS FAILED TO MAK E PAYMENT IN RESPECT OF EMPLOYEES CONTRIBUTION TOWARD PROVIDENT FUND/ESIC W ITHIN THE GROSS PERIOD ALLOWED AND AFTER PLACING RELIANCE ON THE DECISION OF THE HONBLE JURISDICTIONAL GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT ST ATE ROAD TRANSPORT CORPORATION DISALLOWED THE DEDUCTION OF RS. 12,24,7 26/- AND THE SAME WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. THE ASSESSEE HAS FILED THE APPEAL BEFORE THE LD. C IT(A) IN NOT ALLOWING THE DEDUCTION OF PAYMENT OF EMPLOYEES CONTRIBUTION TO THE PROVIDENT AND ESIC. THE LD. CIT(A) HAS DISMISSED THE APPEAL OF THE ASSESSEE AFTER PLACING RELIANCE ON THE ITA NO. 2199/AHD/2017 A.Y. 2014-15 3 DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF STATE ROAD TRANSPORT CORPORATION 366 ITR 170. THE RELEVANT PART OF THE D ECISION OF THE LD. CIT(A) IS REPRODUCED AS UNDER:- 3.3. I HAVE CAREFULLY CONSIDERED ASSESSMENT ORDER AND SUBMISSION FILED BY THE APPELLANT. I HAVE CAREFULLY CONSIDERED THE ASSESSME NT ORDER AND THE SUBMISSION FILED BY THE APPELLANT. THE ASSESSING OFFICER HAS OBSERVE D THAT APPELLANT HAS FAILED TO DEPOSIT EMPLOYEES CONTRIBUTION TO PROVIDENT FUND B EFORE DUE DATE PRESCRIBED UNDER RELEVANT PROVISIONS OF THE SAID ACTS HENCE HE RELIE D UPON PROVISIONS OF SECTION 36(1)(VA) R.W.S 2(24)(X) AND DECISION OF HONBLE GU JARAT HIGH COURT IN THE CASE STATE ROAD TRANSPORT CORPORATION AND MADE DISALLOWANCE OF RS.12,24,726/-. ON THE OTHER HAND, APPELLANT HAS ARGUED THAT AS EMPLOYEES CONTR IBUTION TO PROVIDENT FUND IS MADE BEFORE DUE DATE OF FILING OF RETURN OF INCOME AND EVEN BEFORE COMPLETION OF FINANCIAL YEAR, DISALLOWANCE CANNOT BE MADE. 3.4 ON CAREFULLY CONSIDERATION OF OBSERVATION OF AS SESSING OFFICER AND CONTENTION OF APPELLANT, I OBSERVE THAT ENTIRE ISSUE IS COVERED A GAINST APPELLANT BY DECISION OF HONBLE GUJARAT HIGH COURT IN CASE OF STATE ROAD TR ANSPORT CORPORATION (366 ITR 170) WHEREIN IT IS HELD AS UNDER: SECTION 43B, READ WITH SECTION 36(1)(VA) OF THE IN COME-TAX ACT, 1961 BUSINESS DISALLOWANCE CERTAIN DEDUCTIONS TO BE AL LOWED ON ACTUAL PAYMENT (EMPLOYEES CONTRIBUTION) WHETHER WHERE AN EMPLOY ER HAS NOT CREDITED SUM RECEIVED BY IT AS EMPLOYEES CONTRIBUTION TO EMPLOY EES ACCOUNT IN RELEVANT FUND ON OR BEFORE DUE DATE AS PRESCRIBED IN EXPLANA TION TO SECTION 36(1)(VA), ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMOUNT THOUGH HE DEPOSITS SAME BEFORE DUE DATE PRESCRIBED UNDER SECTION 43B I .E., PRIOR TO FILING OF RETURN UNDER SECTION 139(1) HELD, YES ASSESSEE STATE TRANSPORT CORPORATION COLLECTED A SUM BEING PROVIDENT FUND CO NTRIBUTION FROM ITS EMPLOYEES HOWEVER, IT HAD DEPOSITED LESSER SUM IN PROVIDENT FUND ACCOUNT ASSESSING OFFICER DISALLOWED SAME UNDER SECTION 43B HOWEVER, COMMISSIONER (APPEALS) DELETED DISALLOWANCE ON GROU ND THAT EMPLOYEES CONTRIBUTION WAS DEPOSITED BEFORE FILING RETURN W HETHER SINCE ASSESSEE HAD NOT DEPOSITED SAID CONTRIBUTION IN RESPECTIVE FUND ACCOUNT ON DATE AS PRESCRIBED IN EXPLANATION TO SECTION 36(1)(VA), DIS ALLOWANCE MADE BY ASSESSING OFFICER WAS JUST AND PROPER HELD, YES [ PARA 8] [IN FAVOUR OF REVENUE] 3.5 IN VIEW OF THE EXPRESS PROVISIONS OF SECTION 2 (24)(X) AND SECTION 36(1)(VA) OF THE INCOME TAX ACT, I AM INCLINED TO HOLD THAT CONTRIBU TION RECEIVED BY THE APPELLANT FROM THE EMPLOYEES TOWARDS PROVIDENT FUND, ESI, ETC. WHI CH ARE PAID AFTER THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACT IS LIABLE TO BE D ISALLOWED AS HELD BY THE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION. RESPECTFULLY FOLLOWING THE J UDGMENT OF THE HONBLE HIGH COURT OF GUJARAT CITED SUPRA, I HOLD THAT THE ASSES SING OFFICER IS RIGHT IN MAKING THE DISALLOWANCE WITH RESPECT TO THE DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND. FURTHER, DURING THE COURSE OF APPEL LATE PROCEEDINGS, THE APPELLANT ITA NO. 2199/AHD/2017 A.Y. 2014-15 4 HAS CONTENDED THAT THE A.O. HAS WRONGLY TAKEN AN AM OUNT OF RS. 10,38,700/- INSTEAD OF 10,09,248/-. THUS, THE ACTUAL DISALLOWANCE IN RE SPECT OF LATE PAYMENT OF PF AND ESIC OF RS. 11,95,274/- INSTEAD OF 12,24,726/-. THE ADDITION MADE BY THE AO FOR A SUM OF RS. 11,95,274/- IS THEREFORE, CONFIRMED. ACC ORDINGLY, THIS GROUND IS DISMISSED AND DECIDED AGAINST THE APPELLANT. 4. NO ONE HAS ATTENDED FROM THE SIDE OF THE ASSESSE E, HOWEVER, THE ASSESSEE HAS FILED WRITTEN SUBMISSION MAINLY STATING THAT THE AS SESSEE HAS PAID THE ENTIRE AMOUNT AND EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND E SIC BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S. 139(1) OF THE ACT. IT IS FURTHER STATED THAT ASSESSEE HAS PAID THE AFORESAID CONTRIBUTION WITHIN THE TIME PRESCRIBED U/S. 43B OF THE ACT. IN THE WRITTEN SUBMISSION ASSESSEE HAS REFERRED A N UMBER OF JUDICIAL PRONOUNCEMENT AND STATED THAT IF THE EMPLOYEES CON TRIBUTION IS PAID BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME U/S. 139 T HE DEDUCTION OF THE EXPENDITURE ARE ALLOWABLE U/S. 43B OF THE ACT. 5. THE LD. DR HAS SUPPORTED THE ORDER OF LD. CIT(A) A ND SUBMITTED THAT IN VIEW OF THE DECISION OF JURISDICTIONAL HIGH COURT I N THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION 366 ITR 170 THE ASS ESSEE IS NOT ENTITLED TO GET DEDUCTION IN RESPECT OF LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC. 6. WE HAVE HEARD BOTH THE SIDES AND PERUSED THE MAT ERIAL ON RECORD CAREFULLY. DURING THE COURSE OF ASSESSMENT PROCEEDING THE AO H AS NOTICED THAT AMOUNT RECEIVED BY THE ASSESSEE BY WAY OF EMPLOYEES CONTR IBUTION TOWARDS PROVIDENT FUND HAS NOT BEEN DEPOSITED BY THE ASSESSEE IN THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND ON ORDER BEFORE DUE DATE. BEFORE THE AO IT WAS CONTENDED THAT IF THE PAYMENT OF PROVIDENT FUND CONTRIBUTION HAS BEEN MAD E WITHIN THE DUE DATE OF FILING RETURN OF INCOME THEN THE SAME IS ALLOWABLE AS DEDUCTION U/S. 43B OF THE ACT. THE AO HAS REJECTED CONTENTION OF THE ASSESSEE THAT THE NON-OBSTANTE CLAUSE OF SEC. 43B CANNOT OVERRIDE THE SPECIFIC PROVISION IN SEC. 36(1)(VA) FOR EMPLOYEES ITA NO. 2199/AHD/2017 A.Y. 2014-15 5 CONTRIBUTION. THE LD. CIT(A) HAS NOT AGREED WITH THE CONTENTION OF THE ASSESSEE AND HELD THAT AS PER SEC. 36(1)(VA) OF THE ACT ANY AMOUNT NOT DEPOSITED TILL THE DUE DATE AS SPECIFIED IN THE RESPECTIVE ACT SHOULD BE A DDED TO THE TOTAL INCOME OF THE ASSESSEE. THE LD. CIT(A) HAS ALSO PLACED RELIANCE O N THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT OF GUJARAT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION REPORTED IN 265 CTR 64 (GUJ) WH EREIN IT IS HELD THAT WERE THE EMPLOYER HAS NOT CREDITED THE SUM RECEIVED BY I T AS EMPLOYEES CONTRIBUTION TO EMPLOYEES ACCOUNT IN RELEVANT FUND ON OR BEFORE DUE DATE AS PRESCRIBED IN EXPLANATION TO SEC. 36(1)(VA) THE ASSESSEE SHALL NO T BE ENTITLED TO DEDUCTION OF SUCH AMOUNT THOUGH IT DEPOSIT THE SAID SUM BEFORE THE DU E DATE PRESCRIBED U/S. 43B I.E. PRIOR TO FILING OF RETURN U/S. 139 (1) OF THE ACT. WE CONSIDEREDTHAT DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. GUJARAT STATE ROAD TRANSPORT CORPORATION MORE RELEVANT TO THE CASE OF T HE ASSESSEE. THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. GUJ ARAT STATE ROAD TRANSPORT CORPORATION HAS HELD THAT AS PER EXPLANATION TO SEC . 36(1)(VA) FOR THE PURPOSE OF SAID CLAUSE, DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES CONTRIBUTION TO T HE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE ACT. THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION OF SUCH AMOUNT IN COMPUTING THE INCOME REFERRED TO IN SEC. 28 IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVA NT FUND OR FUNDS ON OR BEFORE DUE DATE I.E. DATE BY WHICH THE ASSESSEE IS REQUIRE D AS EMPLOYER TO CREDIT THE EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND. WE CONSIDER THAT EXPLANATION TO SEC. 36(1)(VA) MAKES I T VERY MUCH CLEAR THAT FOR THE PURPOSE OF CLAUSE (VA) OF SUB-SECTION 1 OF SEC. 36 DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CR EDIT THE EMPLOYEES CONTRIBUTION TO EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER ANY ACT. WE HAVE ALSO PERUSED THE PARA 38 OF CHAPTER VI OF THE OF THE EMPLOYEES PROVIDENT FUND ACT, 1952 PROVIDE THAT THE EMPLOYERS AND THE EMPLOYEES CONT RIBUTION SHALL BE REMITTED WITHIN 15 DAYS OF THE CLOSE OF EVERY MONTH REFER TO CLOSE OF THE MONTH TO WHICH THE ITA NO. 2199/AHD/2017 A.Y. 2014-15 6 WAGES PERTAIN. THEREFORE, AFTER TAKING INTO CONSIDE RATION THE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT ST ATE ROAD TRANSPORT CORPORATION WHEREIN IT IS HELD THAT DEDUCTION TOWAR DS EMPLOYEES CONTRIBUTION IS TO BE MADE AS PER THE DUE DATE PRESCRIBED IN THE RELEV ANT ACT, WE DO NOT FIND ANY MERIT IN THE SUBMISSION OF THE ASSESSEE. ACCORDING LY, THE APPEAL OF THE ASSESSEE IS DISMISSED. 7. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS DIS MISSED. SD/- SD/- (MAHAVIR PRASAD) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 23/05/2019 TANMAY TRUE COPY / COPY OF ORDER FORWARDED TO:- 1. / REVENUE 2. % / ASSESSEE 3. '( ! )! / CONCERNED CIT 4. )! - / CIT (A) 5. *+, ! ( , ' ( , -.%'% / DR, ITAT, AHMEDABAD 6. ,/ 0 / GUARD FILE. BY ORDER / %& , 1 / - ' ( , -.%'% 2 1.DATE OF DICTATION ON 20.05.2019 2.DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE TH E DICTATING MEMBER 21.05.2019 3.DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR. P.S./P.S. 22.05.2019 4.DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE DICTATING MEMBER FOR PRONOUNCEMENT 22.05.2019 5.DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR .P.S./P.S 23.05.2019 6.DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 23 .05.2019 7.DATE ON WHICH THE FILE GOES TO THE HEAD CLERK . 8.THE DATE ON WHICH THE FILE GOES TO THE ASSTT. REG ISTRAR FOR SIGNATURE ON THE ORDER 9.DATE OF DESPATCH OF THE ORDER THIS ORDER PRONOUNCED IN OPEN COURT ON 23/05/2019