M/s Martin Spinning Mills & Agencies P Ltd, Coimbatore V. DCIT, Corporate Circle-2, Coimbatore

ITA 2240/CHNY/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 7912 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 14-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MARUDHU
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH: CHENNAI . , .. ', BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI DUVVURU RL REDDY, JUDICIAL MEMBER ./ ITA NO.2240/CHNY/2017 $% % /ASSESSMENT YEAR: 2013-14 M/S.MARTIN SPINNING MILLS & AGENCIES PVT. LTD., 54, METTUPALAYAM ROAD, G.N.MILLS POST, COIMBATORE-641 029. VS. THE DY. COMMISSIONER- OF INCOME TAX, CORPORATE CIRCLE-2, COIMBATORE. [PAN: AAFCM 8245 F ] ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : NONE )*( + /RESPONDENT BY : MR.MARUDHU PANDIAN, ACIT + /DATE OF HEARING : 10.09.2018 + /DATE OF PRONOUNCEMENT : 19.09.2018 / O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER : THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE COMMISSIONER OF INCOME TAX(A)-1, COIMBATORE, DATED 29.06.2017, FOR THE AY 2013-14. 2. THE ASSESSEE HAS RAISED ONLY ONE EFFECTIVE GROUN D. THE LD.CIT(A) HAS ERRED IN DISALLOWING THE AMOUNT OF RS.35,44,777 /- ON ACCOUNT OF ITA NO.2240/CHNY/2017 :- 2 -: BELATED REMITTANCES OF EMPLOYEES CONTRIBUTION TOWA RDS PF AS PER SEC.36(1)(VA) OF THE ACT, THOUGH, THE SAME WAS PAID BEFORE FILING OF THE RETURN OF INCOME AS CONTEMPLATED U/S.43B OF THE ACT . 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE LTD., CO., FILED ITS RETURN OF INCOME FOR THE AY 2013-14 ON 29 .09.2013 DECLARING TOTAL INCOME OF RS. NIL. THE RETURN WAS PROCESSED U/S.14 3(1). THE CASE WAS SELECTED FOR SCRUTINY UNDER CASS AND THE ASSESSMENT WAS COMPLETED ON 20.01.2016 U/S.143(3) OF THE ACT. THE ASSESSEE COL LECTED EMPLOYEES PF CONTRIBUTION FOR PAYMENT TO THE PF AUTHORITIES AND THE AMOUNT WAS SO COLLECTED WAS NOT PAID TO THE PF AUTHORITIES WITHIN THE DUE DATE SPECIFIED IN PF ACCOUNT, THOUGH IT WAS PAID BEFORE THE DUE DA TE OF FILING THE RETURN OF INCOME UNDER INCOME TAX ACT, 1961. DURING THE C OURSE OF THE ASSESSMENT PROCEEDINGS, THE AO HAD PROPOSED FOR DIS ALLOWANCE OF THE DELAYED REMITTANCES OF ESI AND PF COLLECTED FROM IT S EMPLOYEES DURING THE FINANCIAL YEAR CORRESPONDING TO THE AY 2013-14. THE AO NOT SATISFIED WITH THE REPLY OF THE ASSESSEE PREFERRED TO DISALLOW A S UM OF RS.35,44,777/- AND TREATED THE SAME AS INCOME OF THE ASSESSEE AND BROUGHT TO TAX U/S.2(24)(X) R.W.S.36(1)(VA) OF THE ACT. 4. THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD.CIT(A), AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD.CIT(A) DISMISSED THE APPEAL WITHOUT ASSIGNING ANY PROPER REASONS. ITA NO.2240/CHNY/2017 :- 3 -: 5. ON BEING AGGRIEVED, THE ASSESSEE PREFERRED AN AP PEAL BEFORE THE TRIBUNAL AND CHALLENGED THE ISSUE WITH REGARD TO BE LATED REMITTANCE OF EMPLOYEES CONTRIBUTION TOWARDS PF & ESI. 6. LD.COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE S AID AMOUNT WAS PAID BEFORE FILING OF THE RETURN OF INCOME AS CONTE MPLATED U/S.43B OF THE ACT. THEREFORE, THE SAID AMOUNTS CANNOT BE TREATED AS INCOME U/S.2(24)(X) OF THE ACT AND THE SAME HAS TO BE ALLO WED AS DEDUCTION U/S.43(B) OF THE ACT. THE ASSESSEE ALSO RELIED ON THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF CI T VS. INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT. LTD. IN TCA NO.585 & 586 OF 2016 & MP NO.1 OF 2015 DATED 24.07.2015. 7. PER CONTRA, THE LD.DR SUBMITTED THAT THE ASSESSE E HAS NOT REMITTED THE CONTRIBUTION OF EMPLOYEES TO PF & ESI BEFORE T HE DUE DATE UNDER PF ACT. THE AO AS WELL AS THE LD.CIT(A) HELD THAT THE ASSESSEE DOES NOT QUALIFY FOR CLAIMING DEDUCTION U/S.36(1)(VA) OF THE ACT TO AVAIL THE BENEFIT U/S.43(B) OF THE ACT. THEREFORE, THE ORDERS PASSED BY THE LD.CIT(A) BE CONFIRMED. 8. WE HAVE HEARD BOTH THE SIDES AND GONE THROUGH TH E MATERIALS PLACED ON RECORD. ITA NO.2240/CHNY/2017 :- 4 -: 9. WE HAVE PERUSED THE CASE LAW BY THE ASSESSEE COU NSEL RENDERED IN THE CASE OF CIT VS. INDUSTRIAL SECURITY & INTELLIGE NCE INDIA PVT. LTD., AS MENTIONED SUPRA, THE RELEVANT PORTION OF THE ORDER OF THE HONBLE JURISDICTIONAL HIGH COURT IS REPRODUCED HERE UNDER: '5. HEARD BOTH SIDES. PERUSED ORDERS OF LOWER AUTH ORITIES AND THE DECISIONS RELIED ON BEFORE US. IT IS NOT IN DISPUTE THAT ALL THESE PAYMENTS O F PROVIDENT FUND RS.16,20,571/- AND ESI RS.17,51,490/- WERE MADE BEYOND THE GRACE PERIOD/DU E DATE ALLOWED UNDER PROVIDENT FUND & ESI ACTS BUT BEFORE DUE DATE FOR FILING OF INCOME -TAX RETURN. THIS ISSUE HAS BEEN DECIDED IN FAVOUR OF THE ASSESSEE BY VARIOUS HIGH COURTS FO LLOWING THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION S LTD. (319 ITR 306), WHEREIN THE HON'BLE SUPREME COURT HELD THAT OMISSION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT OF FIRST PROVISO BY FINANCE ACT , 2003 ARE CURATIVE IN NATURE AND ARE EFFECTIVE RETROSPECTIVELY AND THUS WITH EFFECT FROM 1.4.1988 I.E. THE DATE OF INSERTION OF FIRST PROVISO. THE CO-ORDINATE BENCH OF THIS TRIBUNAL CONSIDERING A SIMILAR ISSUE IN THE CASE OF M/S.VENKATESWARA ELECTRICAL INDUSTRIES P. LTD. VS. D CIT (SUPRA) FOLLOWING THE DECISION OF HON'BLE DELHI HIGH COURT IN THE CASE OF CIT VS. AMI L LTD. (321 ITR 508) HELD THAT EVEN THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND IS TO BE A LLOWED AS DEDUCTION IF IT IS PAID WITHIN DUE DATE FOR FILING OF RETURN. WHILE HOLDING SO, T HE TRIBUNAL OBSERVED AS UNDER:- '6. WE HAVE HEARD THE SUBMISSIONS MADE BY THE REPR ESENTATIVES OF BOTH THE SIDES AND HAVE PERUSED THE ORDERS OF THE AUTHORITIES BELOW, A S WELL AS THE JUDGMENTS/DECISIONS RELIED ON BY THE LD. COUNSEL FOR THE ASSESSEE. IT IS AN U N-DISPUTED FACT THAT THERE HAS BEEN DELAY IN REMITTANCE OF EMPLOYEES CONTRIBUTION OF ESI AND PROVIDENT FUND IN BOTH THE AYS I.E., 2008-09 & 2009-10. IT IS EQUALLY UN-DISPUTED THAT THE ASSESSEE HAS DEPOSITED THE AMOUNT TOWARDS EMPLOYEES CONTRIBUTION OF ESI AND PROVIDENT FUND BEFORE THE DUE DATE OF FILING OF RETURN. THE HON'BLE DELHI HIGH COURT IN THE CASE O F CIT VS. AMIL LTD., REPORTED AS 321 ITR 508 HAS HELD THAT IF THE ASSESSEE HAD DEPOSITED EMP LOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIBED UNDER THE RELEVANT ACT BUT BEFORE THE DUE DATE OF FILING OF RETURN UNDER THE INCOME TAX ACT , NO DIS-ALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY THE FINANCE ACT , 2003. THE DECISION OF THE HON'BLE DELHI HIGH COURT HAS BEEN FOLLOWED BY THE C O-ORDINATE BENCH OF THE TRIBUNAL IN THE CASE OF JCIT VS. M/S.S.M.APPARELS (P) LTD. (SUPRA). T HE TRIBUNAL HAS BEEN CONSISTENTLY FOLLOWING THE VIEW TAKEN BY THE HON'BLE DELHI HIGH COURT. ACCORDINGLY, WE HOLD THAT THE ASSESSEE IS ENTITLED TO CLAIM EXPENDITURE ON EMPLOY EE'S CONTRIBUTION TOWARDS ESI AND PROVIDENT FUND FOR BOTH THE AYS. ACCORDINGLY, BOTH THE APPEALS OF THE ASSESSEE ARE ALLOWED.' UPON PERUSAL OF THE ABOVE SAID DECISION, ONE THING IS CLEAR THAT IF THE ASSESSEE HAD REMITTED THE EMPLOYEES CONTRIBUTION W ITHIN THE DUE DATE FOR FILING OF THE RETURN OF INCOME UNDER INCOME TAX ACT , NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SEC.43(B) AS AMENDED BY FINANCE ACT, 2003. IN THE PRESENT CASE, THERE IS NO DISPUT E THOUGH THE ASSESSEE HAS REMITTED THE EMPLOYEES CONTRIBUTION WITHIN THE DUE DATE FOR FILING OF THE RETURN OF INCOME. THE TRIBUNAL HAS ALSO FOLLOW ED THE ABOVE DECISION OF ITA NO.2240/CHNY/2017 :- 5 -: THE HONBLE JURISDICTIONAL HIGH COURT IN DECIDING T HE SIMILAR ISSUE IN VARIOUS CASES. IN VIEW OF THE ABOVE, WE SET-ASIDE THE ORDER PASSED BY THE LD.CIT(A) AND THE GROUND RAISED BY THE ASSESSEE IS ALLOWED. 10. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED ON THE 19 TH DAY OF SEPTEMBER, 2018, IN CHENNAI. SD/- SD/- ( . ) ( ABRAHAM P.GEORGE ) /ACCOUNTANT MEMBER ( . . ' ) ( DUVVURU R.L. REDDY ) $ /JUDICIAL MEMBER /CHENNAI, 1 /DATED: SEPTEMBER 19, 2018. TLN + )$23 43 /COPY TO: 1. ( /APPELLANT 4. 5 /CIT 2. )*( /RESPONDENT 5. 3 )$$ /DR 3. 5 ( ) /CIT(A) 6. % /GF