DCIT, CIRCLE-6, JAIPUR V. M/S. JAIPUR VIDYUT VITRAN NIGAM LTD., JAIPUR

ITA 225/JPR/2020

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 9115 (ITAT-JAIPUR)
• Duration Of Justice: 4 month(s) 30 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-08-2020
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2007-2008
• Appeal Filed On: 06-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AMRISH BEDI
• Keywords: Depreciation; Unabsorbed depreciation
• Section: 43B; 143(3); 143(2); 139(1); 254(2)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,A JAIPUR JH JESK LH0 KEKZ] YS[KK LNL; ,OA JH FOT; IKY JKO] U;KF;D LNL; DS LE{K BEFORE: SHRI RAMESH. C. SHARMA, AM & SHRI VIJAY PA L RAO, JM VK;DJ VIHY LA- @ ITA NO. 225/JP/2020 FU/KZKJ.K O'KZ @ ASSESSMENT YEAR : 2007-08 THE DCIT CIRCLE-6 JAIPUR CUKE VS. M/S. JAIPUR VIDYUT VITARAN NIGAM LTD VIDYUT BHAWAN, JANPATH JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AABCJ 6373 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS @ REVENUE BY : SHRI AMRISH BEDI, CIT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI P.C. PARWAL, CA LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 03/08/2020 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT: 05 /08/2020 VKNS'K@ ORDER PER: R.C. SHARMA, A.M. THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF LD. CIT(A)-1, JODHPUR DATED 11.12.2019 FOR THE A.Y. 200 7-08, IN THE MATTER OF ORDER PASSED BY THE A.O. 143(3) OF THE INCOME TA X ACT, 1961 (IN SHORT, THE ACT). 2.1 THE ONLY DISPUTE OF THE REVENUE RELATES TO DELE TION OF ADDITION MADE ON ACCOUNT OF DELAY IN DEPOSIT OF EMPLOYEES CONTRIB UTIONS TOWARDS CPF, GPF AND ESI U/S 36(1)(VA) OF THE ACT. ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 2 2.2 RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORDS P ERUSED. THE FACTS OF THE CASE IN BRIEF ARE THAT THE ASSESSEE IS A STA TE GOVERNMENT UNDERTAKING AND ENGAGED IN THE DISTRIBUTION AND SAL E OF ELECTRICITY. THE ASSESSEE FILED THE RETURN OF INCOME FOR A.Y. 20 07-08 ON 29.10.2007 CLAIMING UNABSORBED DEPRECIATION/CURRENT YEAR LOSS OF RS. 7,58,44,627/-. THE CASE WAS SELECTED FOR SCRUTI NY AND NOTICE U/S 143(2) OF THE ACT WAS ISSUED ON 25.09.2008. AFTER H EARING THE ASSESSEE, THE AO COMPLETED THE ASSESSMENT U/S 143(3 ) OF THE ACT ON 10.10.2006 AND MADE THE ADDITION ON ACCOUNT OF AMOU NTS DEPOSITED IN RESPECT OF EMPLOYEES CONTRIBUTION TOWARDS CPF, GPF AND ESI WHICH WAS ALLEGED TO BE ALLOWED. 2.3 BY IMPUGNED ORDER THE LD. CIT(A) DELETED THE AD DITION AFTER OBSERVING AS UNDER:- 4.2 I HAVE CONSIDERED THE ASSESSMENT ORDER, FACTS O F THE CASE, SUBMISSIONS OF THE APPELLANT AND CASE-LAWS RELIED O N BY THE APPELLANT. THE AO HAS MADE THE ADDITION OF RS. 19,73,42,499/- OBSERVING THAT THE ASSESSEE FAILED TO DEPOSIT THE CONTRIBUTION TOWARDS CPF, GPF AND ESI WITHIN THE DUE DATE. THE APPELLANT HAS SUBMITTED TH AT IT HAD MADE PAYMENT WITHIN THE GRACE PERIOD OR BEFORE DUE DATE OF FILING OF RETURN OF INCOME, HENCE THE SAME IS ALLOWABLE DEDUCTION AS PE R SEC. 43B OF THE ACT. I HAVE ALSO GONE THROUGH VARIOUS JUDICIAL PREC EDENTS ON THIS ISSUE AND I FIND THAT THE HON'BLE SUPREME COURT IN CASE O F CIT VS. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306 HELD THAT O MISSION OF SECOND PROVISO TO SEC 43B AND THE AMENDMENT OF FIRST PROVI SO BY FINANCE ACT, ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 3 2003, BRINGING ABOUT UNIFORMITY IN PAYMENT OF TAX, DUTY, CESS AND FEE ON ONE HAND AND CONTRIBUTION TO EMPLOYEES' WELFARE FUNDS ON THE OTHER, ARE CURATIVE IN NATURE, AND THUS, EFFECTIVE RETROSP ECTIVELY W.E.F. 1-4-88 I.E. THE DATE OF INSERTION OF FIRST PROVISO. IT WAS FURTHER HELD THAT WHERE PROVIDENT FUND AND EMPLOYEES STATE INSURANCE CONTRI BUTION WERE PAID BY THE ASSESSEE BEFORE FILING OF THE RETURN AND PRO OF OF PAYMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER, THE AMOUNTS WERE DEDUCTIBLE AS DEDUCTION. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. AIM IL LTD & ORS. REPORTED IN 321 ITR 508 HELD AS UNDER:- 'AS SOON AS EMPLOYEES' CONTRIBUTION TOWARDS PF OR E SI IS RECEIVED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTH ERWISE FROM THE SALARY/ WAGES OF THE EMPLOYEES, IT WILL BE TREATED AS 'INCOME' AT THE HANDS OF THE ASSESSEE. IT CLEARLY FOLLOWS THERE FRO M THAT IF THE ASSESSEE DOES NOT DEPOSIT THIS CONTRIBUTION WITH PF /ESI AUTHORITIES, IT WILL BE TAX AS INCOME AT THE HANDS OF THE ASSESSEE. HOWEVER, ON MAKING DEPOSIT WITH THE CONCERNED AUTHORITIES, THE ASSESSEE BECOMES ENTITLED TO DEDUCTION UNDER THE PROVISIONS OF S. 36 (11)(VA). SEC. 43B(B), HOWEVER, STIPULATES THAT SUCH DEDUCTION WOU LD BE PERMISSIBLE ONLY ON ACTUAL PAYMENTS. THIS IS THE SCHEME OF THE ACT FOR MAKING AN ASSESSEE ENTITLED TO GET DEDUCTION FROM INCOME INSO FAR AS EMPLOYEES' CONTRIBUTION IS CONCERNED. DELETION OF THE SECOND P ROVISO HAS BEEN TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT AP PLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE FIRST PROVISO. IF THE EMPLOYEES' CONTRIBUTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENA LTIES ALSO, FOR WHICH SPECIFIC PROVISION ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THEREFORE, THE ACTS PERMIT THE EMPLOYE R TO MAKE THE DEPOSIT WITH SOME DELAYS , SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS THE I T ACT IS CONCERNED, THE ASSESSEE C AN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED. CIT VS. VINAY CEMENT LTD. (2007) 213 CTR (SC) 268, CIT VS. DHARME NDRA SHARMA (2007) 213 CTR (DEL) 609: (2008) 297 ITR 320 (DEL) AND CIT VS. P. M. ELECTRONICS LTD. (2008) 220 CTR (DEL) 635 : ( 2008) 15 DTR (DEL) 258 FOLLOWED.' APART FROM THE ABOVE DECISIONS, THE FOLLOWING DECIS IONS ARE ALSO APPLICABLE ON THE ISSUE AT HAND:- ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 4 (I) DYCIT VS. ORBIT RESORTS (P) LTD (48 SOT 23 (URO) (II) ACIT VS. RANABAXY LABORATORIES LTD. (2011) 7 ITR (TRIB) 161 (DLH) (III) ACIT VS. M/S. ANIL SPECIAL STEEL INDUSTRIES LTD. (DECISION OF JAIPUR BENCH IN ITA NO. 1100/JP/2011) FURTHER, I HAVE ALSO GONE THROUGH THE ORDER OF THE HON'BLE ITAT, JODHPUR BENCH PASSED IN THE APPELLANT'S OWN C ASE IN ITA NO. 132/JP/2009 FOR AY 2006-07 AND I FIND THAT THE ISSUE IS SQUARELY COVERED BY THE HON'BLE ITAT'S FINDINGS RECORDED FOR AY 2006-07 WHERE SIMILAR DISALLOWANCE WAS MADE. FOR THE SAKE OF CLARITY, THE RELEVANT FINDINGS OF THE HON'B LE ITAT ARE REPRODUCED AS UNDER:- 'AFTER HEARING THE PARTIES WE FIND THAT THERE IS NO DISPUTE IN THE PRESENT CASE THAT THE EMPLOYEES CONT RIBUTION TO PF AND ESI WAS PAID BEFORE THE DUE DATE OF FILIN G OF RETURN U/S 139(1) THOUGH AFTER THE STATUARY DATES SPECIFIE D IN THE RESPECTIVE ACTS. THIS IS SUPPORTED BY THE DECISION OF KARNATAKA HIGH COURT IN CASE OF CIT VS. SABARI ENTE RPRISES 298 ITR 141, CIT VS. P M ELECTRONICS 171 TAXMAN 1 ( DELHI), SUNIL GOEL VS. ACIT 118 TTJ 415 (DELHI) AND ALSO BY THE DECISION OF THIS BENCH INCLUDING THE SUBSEQUENT DEC ISIONS DATED 31-12-2008 AND 13-02-2009 (SUPRA) MAY ALSO NO T THAT AGAINST THE DECISION OF THIS BENCH IN ASSESSEE'S OW N CASE DATED 30-09-2008, THE APPLICATION U/S 254(2) IS PEN DING FOR DISPOSAL. IN VIEW OF THE DECISION OF THE HIGH COURT SUPRA AND THE SUBSEQUENT DECISIONS OF THIS BENCH ON THE ISSUE WE DIRECT TO DELETE THE SAID DISALLOWANCE MADE BY THE LOWER AUTHORITIES. THIS GROUND IS ALLOWED.' SINCE THE FACTS OF THE PRESENT CASE ARE ALMOST IDEN TICAL TO THAT OF AY 2006-07. THEREFORE. RESPECTFULLY FOLLOWI NG THE ABOVE FINDINGS OF HON'BLE ITAT, JAIPUR BENCH 'A', JAIPUR , IT IS HELD THAT THE AO WAS NOT JUSTIFIED IN MAKING THE ADDITION OF RS. 19,73,42,499/-. THUS, THE ADDITION OF RS. 19,73,42, 499/- MADE ON ACCOUNT OF DISALLOWANCE FOR LATE DEPOSITING EMPLOYE ES CONTRIBUTION TOWARDS CPF & GPF & ESI IS DELETED. THE GROUNDS OF APPEAL RAISED BY THE APPELLANT REGARDING THIS ISSUE ARE ALLOWED. 2.4 WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND CA REFULLY GONE THROUGH THE ORDERS OF THE AUTHORITIES BELOW AND FOUND FROM RECORD THAT THE AO ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 5 MADE AN ADDITION OF RS. 19,73,42,499/- ON ACCOUNT O F DELAY IN DEPOSIT OF EMPLOYEE'S CONTRIBUTION TOWARDS CPF/GPF/ESI U/S 36( 1)(VA). IN THIS REGARD, THE AO NOTED THAT THERE WAS DELAY IN DEPOSITING OF EMPLOYEE'S CONTRIBUTION TO CPF (RS. 42986497/-), GPF (RS. 15425088/-) & ESI (RS.102913). ON BEING ASKED VIDE SHOW CAUSE NOTICE, THE ASSESSEE HA S SUBMITTED THAT THE PRINCIPLES AND PROVISIONS OF SECTION 36(1)(VA) AND SECTION 43B OF THE ACT ARE BASED ON HARMONIOUS INTERPRETATION AND SIMILARITY OF OBJECTIVES AND CONSEQUENT TO OMISSION OF SECOND PRO VISO TO SECTION 43B AND INSERTION OF THE NEW PROVISO REGARDING ALL OWANCE OF ANY SUM PAID BY HIM AS AN EMPLOYER SUBJECT TO PAYMENT BEFOR E THE DUE DATE OF FURNISHING OF THE RETURN SHOULD APPLY TO SECTION 36 (1)(VA) SIMULTANEOUSLY. THE REPLY OF THE ASSESSEE WAS NOT F OUND ACCEPTABLE BY THE AO. THE AO WAS OF THE OPINION THAT AS PER THE P ROVISIONS OF SECTION 2(24)(X) OF THE ACT THE SAME IS AN INCOME OF THE AS SESSEE AND CAN BE ALLOWED AS DEDUCTION ONLY, IF SUCH CONTRIBUTIONS WA S ACTUALLY PAID ON OR BEFORE DUE DATE MENTIONED IN THE RELEVANT ACT OR RU LES. IN THIS CASE, THE ASSESSEE MADE THE ABOVE PAYMENTS AMOUNTING TO R S. 19,73,42,499/- AFTER THE PRESCRIBED DUE DATE. HENCE , IT FORMS THE ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 6 TAXABLE INCOME OF THE ASSESSEE AS PER SECTION 2(24) (X) OR THE ACT AND DEDUCTION OF THIS AMOUNT IS NOT ALLOWABLE U/S 36(1) (VA) OF THE ACT. ACCORDINGLY, THE AO DISALLOWED RS. 19,73,42,499/- A ND ADDED THE SAME TO THE TOTAL INCOME OF THE ASSESSEE. 2.5 WE FOUND THAT THE ISSUE UNDER CONSIDERATION IS SQUARELY COVERED BY THE DECISION OF ITAT, JAIPUR BENCH IN ASSESSEES OW N CASE FOR THE A.Y. 2006-07. 2.6 WE ALSO FOUND THAT THE DECISION OF ITAT JAIPUR BENCH IN ASSESSEES OWN CASE HAS BEEN UPHELD BY THE JURISDICTIONAL HIGH COURT VIDE ORDER DATED 07-08-2019 IN APPEAL NO. 284/2018. THE PRECISE OBSE RVATION OF THE HONBLE HIGH COURT IS AS UNDER:- LEARNED COUNSEL FOR THE PARTIES ARE AT IDOM THAT THE QUESTIONS THAT ARE PROPOSED IN THESE APPEALS PERTAIN TO CONTRIBUTION T OWARDS PROVIDENT FUND AND ESI AND THE SAID ISSUES SHAVE ALREADY BEEN DECIDED AGAINST THE REVENUE BY THIS COURT VIDE JUDGEMENT DATED 06-01-2014 PASSED IN COMMISSIONER O F INCOME TAX VS. M/S. STATE BANK OF BIKANER AND JAIPUR (2014) 363 ITR 70 (RAJ). HOWEVER, THE REVENUE HAS PREFERRED SLP (C ) NO. 016249/2014 AGAINST THE AFOR ESAID JUDGEMENT BEFORE THE SUPREME COURT. LEARNED COUNSEL SUBMIT THAT ALTHOUGH THIS COURT HAS ANSWERED THE QUESTION WITH RESPECT TO INTERPRETATION TO SECTION 43-B OF THE INCOME TAX ACT AGAINST THE REVENUE BUT CORRECTNESS OF THAT JUDGEMENT IS TO BE TESTED BY THE SUPREME COURT IN THE AFORESAID PENDING SLP. THEREFORE THESE APPEALS MAY BE DISPOSED OF MAKING THEM SUBJECT TO THAT FINAL JUDGEMENT OF THE SUPREME COURT ON THE AFORESAID QUESTION IN PENDING SLP. IN VIEW OF ABOVE, ALL THE AFORESAID APPEALS ARE DIS POSED OF ACCORDINGLY. ITA225/JP/2020 DCIT, CIRCLE-6, JAIPUR VS M/S.JVVNL, JAIPUR 7 2.7 RESPECTFULLY FOLLOWING THE ORDER OF THE COORDIN ATE BENCH, JAIPUR IN ASSESSEES OWN CASE WHICH HAS BEEN CONFIRMED BY THE HONBLE HIGH COURT (SUPRA), WE DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF THE LD. CIT(A) 3.0 IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 05 / 08/2020. SD/- SD/- FOT; IKY JKO JESK LH0 KEKZ (VIJAY PAL RAO) (RAMESH. C. SHARMA) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 05/08/2020. *MISHRA . VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- THE DCIT, CIRCLE-6, JAIPUR 2. IZR;FKHZ@ THE RESPONDENT- M/S. JAIPUR VIDYUT VITARAN NIGAM LT D. JAIPUR 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 225/JP/2020} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSTT. REGISTRAR