DCIT, CHENNAI V. M/s. Q Source Global Consulting (P) Ltd., CHENNAI

ITA 2282/CHNY/2016

• Counselvise Citation: [2016] 121 COUNSELVISE.COM (IT) 3991 (ITAT-CHENNAI)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-11-2016
• Appeal Filed By: Department
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 04-08-2016
• Court: TRIBUNAL
• Department Lawyers: SUPRIYO PAL
• Keywords: Condonation of delay
• Section: 43B; 143(3); 115JB

Judgement Text

, , IN THE INCOME - TAX APPELLATE TRIBUNAL B BENCH, CHENNAI . , . , BEFORE SHRI A. MOHAN ALANKAMONY, ACCOUNTANT MEMBER & SHRI DUVVURU R L REDDY , JUDICIAL MEMBER ./ I T.A. NO. 2282 /MDS/201 6 / ASSESSMENT YEAR :20 1 2 - 1 3 THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5 ( 2 ) , CHENNAI 600 034 . VS. M/S. Q SOURCE GLOBAL CONSULTING (P) LIMITED, NO. S - 16, THIRU VI KA INDUSTRIAL ESTATE, SIDDARTH, 15 TH MAIN ROAD, GUINDY, CHENNAI 600 032 . [PAN:AA ACQ1521H ] ( / APPELLANT ) ( / RESPONDENT ) / APPELLANT BY : SHRI SUPRIYO PAL, JCIT / RESPONDENT BY : NONE / DATE OF HEARING : 25 . 1 0 .201 6 / DATE OF P RONOUNCEMENT : 23. 1 1 .201 6 / O R D E R PER DUVVURU RL REDDY , JUDICIAL MEMBER : THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER O F INCOME TAX (APPEALS) 3 , CHENNAI , DATED 1 7 . 0 3 .20 1 6 RELEVANT TO THE ASSESSMENT YEAR 20 1 2 - 1 3 . IN THIS APPEAL, THE REVENUE HAS RAISED TWO EFFECTIVE GROUNDS VIZ., (I) THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF .94,49,691/ - MADE ON ACCOUNT OF DELAY IN PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI AND (II) THE LD. CIT(A) HAS ERRED IN I.T.A. NO . 2282 /M/ 16 2 DELETING THE ADDITION OF .11,94,171/ - MADE ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF OF EARLIER YEARS PAID IN THE ASSESSMENT YEAR 2012 - 13. 2. THE APPEAL OF THE RE VENUE IS FOUND TO HAVE BEEN FILED LATE BY 31 DAYS BEFORE THE TRIBUNAL . THE ASSESSING OFFICER HAS FILED AN AFFIDAVIT FOR CONDONATION OF DELAY BY STATING THAT THE CONCERNED SECTION WAS HANDLED BY THE OFFICER IN CHARGE AND IN THE ANNUAL GENERAL TRANSFER 2016 ONLY REGULAR OFFICER TOOK OVER CHARGE OF THIS SECTION. THEREAFTER, THE ENTIRE SECTION WAS REARRANGED AND WHILE SCRUTINIZING ALL THE FILES, IT WAS NOTICE THAT THE ABOVE SAID CASE WAS MIXED UP WITH THE OLD FILES OF THE SAME CASE AND THEREFORE COULD NOT FILE THE APPEAL WITHIN TIME. T HE LD. DR , CITING THE REASONS AS STATED BY THE ASSESSING OFFICER, REQUESTED FOR CONDONING THE DELAY AND TO ADMIT THE APPEAL FOR HEARING. ACCORDINGLY, WE CONDONE THE DELAY OF 31 DAYS IN FILING THE APPEAL AND ADMIT THE APPEAL FOR HEA RING. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED HIS RETURN OF INCOME ADMITTING NIL INCOME AND ADMITTED BOOK PROFIT UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 [ ACT IN SHORT] AT .20,62,599/ - . AFTER VERIFICATION OF DETAILS FILED BY THE ASSESSEE, THE ASSESSING O FFICER HAS COMPLETED THE ASSESSMENT UNDER SECTION 143(3) OF THE ACT BY DETERMINING THE INCOME OF THE ASSESSEE AT .52,26,285/ - AFTER MAKING VARIOUS ADDITIONS. I.T.A. NO . 2282 /M/ 16 3 4 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND CHALLENGED THE ADDITION OF .94,49,691/ - MADE BY THE ASSESSING OFFICER TOWARDS EMPLOYEES CONTRIBUTION TO PF AND ESI AND ADDITION OF .11,94,171/ - MADE TOWARDS REJECTION OF CLAIM OF DEDUCTION OF EMPLOYEES CONTRIBUTION TO PF DISALLOWED BY THE ASSESSEE IN THE EARLIER YEARS AND CLAI MED AS DEDUCTION IN THE ASSESSMENT YEAR 2012 - 13 ON PAYMENT BASIS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE AS WELL AS VARIOUS DECISIONS, THE LD. CIT(A) DELETED BOTH THE ADDITIONS AND ALLOWED THE APPEAL OF THE ASSESSEE. 5 . ON BEING AGGRIEVED, TH E REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. WITH REGARD TO THE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AND ESI, THE LD. CIT(A) HAS WRONGLY RELIED ON THE DECISION IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC), WHEREIN THE ISSUE RELATES TO PAY MENT OF EMPLOYERS CONTRIBUTION AND NOT EMPLOYEES CONTRIBUTION AND PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERTED AND RESTORED THAT OF THE ASSESSING OFFICER. 6 . DESPITE SERVICE OF NOTICE [AD ON RECORD], NONE APPEARED ON BEHALF OF THE ASSES SEE OR ANY ADJOURNMENT APPLICATION FILED OR ANY WRITTEN SUBMISSION FILED WITH REGARD TO BOTH THE ISSUES RAISED BY THE REVENUE BEFORE THE TRIBUNAL. THUS, WE PROCEEDED TO DECIDE THE ISSUES ON MERITS AFTER HEARING THE LD. DR AND CONSIDERING THE FACTS OF THE C ASE. I.T.A. NO . 2282 /M/ 16 4 7 . WE HAVE HEARD THE LD. DR , PERUSED THE MATERIALS ON RECORD AND GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. SINCE THE ASSESSEE DOES NOT QUALIFY FOR CLAIMING DEDUCTION UNDER SECTION 36(1)(VA) OF THE ACT TO AVAIL THE BENEFIT UNDER SECTION 43B OF T HE ACT IN VIEW OF THE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. MADRAS RADIATORS AND PRESSING LTD. 129 TAXMANN 709, THE ASSESSING OFFICER MADE DISALLOWANCE OF .94,49,691/ - AND ADDED TO THE INCOME OF THE ASSESSEE. BY FOLLOWING THE DECISION IN THE CASE OF CI T V. INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PVT. LTD. IN TCA NOS. 585 & 586 OF 2015 & M.P. NO. 1 OF 2015, THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON THIS ACCOUNT. IN THIS CASE, I T IS NOT DISPUTED BY THE REVENUE THAT TH E ASSESSEE HAS NOT PAID THE EMPLOYEES CONTRIBUTION RECEIVED BY IT BEFORE THE DUE DATE OF FILING OF THE RETURN. VARIOUS COURTS INCLUDING THE HON BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. NEXUS COMPUTER (P) LTD. 313 ITR 144, IT HAS HELD THAT THE PF AND ESI CONTRIBUTION PAID BELATEDLY, BUT PRIOR TO DUE DATE OF FILING OF RETURN COULD NOT BE DISALLOWED UNDER SECTION 43B OF THE ACT. THEREFORE, RESPECTFULLY FOLLOWING THE ABOVE DECISION OF THE HON BLE JURISDICTIONAL HIGH COURT ALSO, WE FIND NO REASON TO I NTERFERE WITH THE ORDER PASSED BY THE LD. CIT(A) ON THIS ISSUE AND THUS, THE GROUND RAISED BY THE REVENUE IS DISMISSED. 8 . THE NEXT GROUND RAISED IN THE APPEAL OF THE REVENUE IS THAT THE LD. CIT(A) HAS ERRED IN DELETING THE ADDITION OF .11,94,171/ - MADE ON ACCOUNT I.T.A. NO . 2282 /M/ 16 5 OF EMPLOYEES CONTRIBUTION TO PF OF EARLIER YEARS PAID IN THE ASSESSMENT YEAR 2012 - 13 . THE ASSESSEE HAS CLAIMED EXPENDITURE OF .72,77,254/ - AND DISALLOWED UNDER SECTION 43B OF THE ACT IN THE PREVIOUS ASSESSMENT YEARS. OUT OF THIS AMOUNT OF .72,77,254/ - , AN AMOUNT OF .11,94,171/ - PERTAINS TO EMPLOYEES CONTRIBUTION TO PF OF EARLIER YEARS. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE ASSESSING OFFICER HAS OBSERVED THAT THE EMPLOYEES CONTRIBUTION TO PF IS STRICTLY GO VERNED BY SECTION 36(1)(VA) OF THE ACT AND NOT BY SECTION 43B OF THE ACT. THERE IS NO PROVISION UNDER SECTION 36(1)(VA) OF THE ACT TO ALLOW DEFAULT OF PAYMENT OF EMPLOYEES CONTRIBUTION OF EARLIER YEARS IN THE SUBSEQUENT YEARS. SINCE THE ASSESSEE HAS NOT S ATISFIED THE CONDITIONS LAID DOWN IN SECTION 36(1)(VA) OF THE ACT, THERE WAS NO NEED TO APPLY PROVISIONS OF SECTION 43B. IN VIEW OF THE ABOVE, THE ASSESSING OFFICER HAS HELD THAT THE DEDUCTION UNDER SECTION 43B OF THE ACT DISALLOWED IN THE PREVIOUS YEARS A LLOWED NOW SHOULD BE RESTRICTED TO .60,83,083/ - AND THE BALANCE OF .11,94,171/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 9 . THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) AND SUBMITTED THAT THE AMOUNT OF .11,94,171/ - PERTAINS TO EMPLOYEES CONTRIBUTION TO PF DISALLOWED IN EARLIER ASSESSMENT YEARS AS SAME WAS NOT PAID BEFORE THE FILING OF RETURN OF INCOME BUT PAID DURING THE YEAR UNDER CONSIDERATION. AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE, THE LD. CIT(A) HAS OBSERVED TH AT THE PROVISIONS OF SECTION 43B OF THE ACT ARE I.T.A. NO . 2282 /M/ 16 6 APPLICABLE TO THE EMPLOYEES CONTRIBUTION TO PF AND ESI, ETC. HE FURTHER OBSERVED THAT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. 319 ITR 306, THE HON BLE SUPREME COURT HAS DISCUSSED THE ISSUE ON HAND AND HEL D THAT BY THE FINANCE ACT, 2003, THE SECOND PROVISO TO SECTION 43B OF THE ACT STOOD DELETED WITH EFFECT FROM 01.04.2004 AND CERTAIN CHANGES WERE ALSO MADE IN THE FIRST PROVISO BY WHICH UNIFORMITY WAS BROUGHT ABOUT BETWEEN PAYMENTS OF FEES, TAXES, CESS, ETC . ON THE ONE HAND AND CONTRIBUTION MADE TO EMPLOYEES PROVIDENT FUND ETC. ON THE OTHER. BY FOLLOWING THE RATIO LAID DOWN BY THE HON BLE SUPREME COURT AND IN VIEW OF THE ABOVE DECISION, THE LD. CIT(A) HAS OBSERVED THAT THE PROVISIONS OF SECTION 43B OF THE AC T IS APPLICABLE TO THE EMPLOYEES CONTRIBUTION TO PF A ND ESI AMONG OTHERS AND HELD THAT THE DEDUCTION CLAIMED ON ACCOUNT OF PF, WHICH WAS DISALLOWED ON NON - PAYMENT BASIS IN EARLIER YEARS AND PAID DURING THE YEAR UNDER CONSIDERATION WILL DEFINITELY FALL UND ER SECTION 43B OF THE ACT AND DIRECTED THE ASSESSING OFFICER TO DELETE THE ADDITION MADE ON THIS ACCOUNT. 10 . ON BEING AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE THE TRIBUNAL. BY RELYING ON THE DECISION IN THE CASE OF MERCHEM LTD. 61 TAXMANN.COM 119 (KE R), WHEREIN, IT WAS HELD THAT THE DEDUCTION SHALL BE ALLOWED UNDER SECTION 36(1)(VA) OF THE ACT ONLY IF THE EMPLOYEES CONTRIBUTION TO PF AND ESI IS CREDITED IN THE SPECIFIED ACCOUNT WITHIN THE SPECIFIED DUE DATE THE LD. DR HAS SUBMITTED THAT SINCE THE ASS ESSEE HAS NOT CREDITED WITHIN THE DUE DATE, THE I.T.A. NO . 2282 /M/ 16 7 LD. CIT(A) WAS WRONG IN DELETING THE ADDITION MADE ON THIS ACCOUNT. FURTHER THE RELIANCE PLACED BY THE LD. CIT(A) IN THE CASE OF ALOM EXTRUSIONS LTD., THERE WAS NO ISSUE WITH REGARD TO EMPLOYEES CONTRIBUTION AND THEREFORE, HE PLEADED THAT THE ORDER OF THE LD. CIT(A) SHOULD BE REVERTED AND RESTORED THAT OF THE ASSESSING OFFICER. NONE APPEARED ON BEHALF OF THE ASSESSEE. 11 . WE HAVE HEARD THE LD. DR , PERUSED THE MATERIALS ON RECORD AND GONE THROU GH THE ORDERS OF AUTHORITIES BELOW. IN THIS CASE, THE ASSESSEE HAS CLAIMED DEDUCTION ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF, WHICH WAS DISALLOWED ON NON - PAYMENT IN EARLIER YEARS BUT CREDITED IN THE ASSESSMENT YEAR UNDER CONSIDERATION BEFORE DUE DATE F OR FILING OF RETURN OF INCOME. THE ASSESSING OFFICER HAS OBSERVED THAT THERE IS NO PROVISION UNDER SECTION 36(1)(VA) OF THE ACT TO ALLOW THE DEFAULT OF PAYMENT OF EMPLOYEES CONTRIBUTION OF EARLIER YEARS IN THE SUBSEQUENT YEARS AND THEREFORE, HE HELD THAT THE ASSESSEE HAS NOT SATISFIED THE CONDITIONS LAID DOWN IN SECTION 36(1)(VA) OF THE ACT. THE ASSESSEE HAS NOT GIVEN ANY VALID REASON FOR NON PAYMENT OF EARLIER YEARS. IN FACT, MANY HIGH COURTS AND VARIOUS BENCHES OF THE TRIBUNAL HAVE HELD THAT IF THE EMPLO YEE S CONTRIBUTION OR EMPLOYER S CONTRIBUTION WERE NOT PAID BEFORE DUE DATE BUT PAID BEFORE DUE DATE OF FILING OF RETURN OF INCOME, THEN THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION. BUT, IN THIS CASE, THE ASSESSEE WAS IN DEFAULT OF PAYMENT OF EMPLOYEES CO NTRIBUTION OF EARLIER YEARS EITHER BEFORE DUE DATES OF ITS REMITTANCE OR REMITTED BEFORE I.T.A. NO . 2282 /M/ 16 8 DUE DATE FOR FILING OF RETURN OF INCOME, ACTUALLY, IN THAT EARLIER YEAR THE ASSESSEE HAS NOT REMITTED THE EMPLOYEES CONTRIBUTION. THEREFORE, WHATEVER CONTRIBUTION TO BE PAID IN THAT RELEVANT YEAR AND PAID IN THE SUBSEQUENT YEAR I.E., RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION, THE EMPLOYEES CONTRIBUTION DEDUCTED FROM THEIR SALARY IS NOTHING BUT INCOME OF THE ASSESSEE COMPANY. BY GIVING PROPER AND STRICT INTER PRETATION OF THE STATUTE, WE ARE OF THE VIEW THAT THE LAW IS UNAMBIGUOUS AND WHATEVER BE THE RATIONALE BEHIND IT, IT IS VERY CLEAR THAT THE ASSESSEE SHOULD DEPOSIT THE EMPLOYEE S CONTRIBUTION WITHIN THE DUE DATE AND CLAIM DEDUCTION OR ELSE BE PAY THE T AX O N SUCH CONTRIBUTIONS WHICH SHOULD BE TREATED AS INCOME UNDER SECTION 2(24)(X). THIS HAS BEEN RELAXED TO THE EXTENT THAT BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME, IF THE ASSESSEE PAID THE EMPLOYEES CONTRIBUTION THEN THE ASSESSEE SHOULD ALLOWED TO CLAIM DEDUCTION. BUT, N OWHERE IN THE CASE LAW RELIED ON BY THE LD. CIT(A) OR IN ANY OTHER CASE LAW IT IS MENTIONED THAT THE EMPLOYEES CONTRIBUTION COLLECTED AND NOT REMITTED TO THE RELEVANT SCHEME IN THE RELEVANT YEAR AND SUBSEQUENTLY, ACCORDINGLY TO ASSE SSEE S CONVENIENCE, THE PAYMENT OF EMPLOYEES CONTRIBUTION OF EARLIER YEARS MADE IN THE SUBSEQUENT YEARS ALSO THE ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION. MOREOVER, IT IS A CLEAR VIOLATION OF LAW LAID DOWN IN THE STATE. UNDER THE ABOVE FACTS AND CIRCUMSTAN CES, WE ARE OF THE CONSIDERED OPINION THAT ONCE THE ASSESSEE HAS NOT REMITTED THE EMPLOYEES CONTRIBUTION IN A PARTICULAR YEAR , THE CONTRIBUTION IS INCOME OF THE ASSESSEE AND THE ASSESSEE I.T.A. NO . 2282 /M/ 16 9 IS LIABLE TO PAY TAX ON THAT INCOME. THUS, WE SET ASIDE THE ORDER PA SSED BY THE LD. CIT(A) ON THIS ISSUE AND SUSTAINED THE ADDITION MADE BY THE ASSESSING OFFICER . A CCORDINGLY, THE GROUND RAISED BY THE REVENUE IS ALLOWED. 12. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED . ORDER PRONOUNCED ON THE 23 R D NOVEMBER , 2016 AT CHENNAI. SD/ - SD/ - (A. MOHAN ALANKAMONY ) ACCOUNTANT MEMBER ( DUVVURU RL REDDY ) JUDICIAL MEMBER CHENNAI, DATED, THE 23 . 1 1 .201 6 VM/ - / COPY TO: 1. / APPELLANT , 2. / RESPONDENT , 3. ( ) / CIT(A) , 4. / CIT , 5. / DR & 6. / GF.