DCIT, Circle - 11(1) , Kolkata V. M/s. G.S. Atwal & Co. (Engg.) Pvt. Ltd., , Kolkata

ITA 2414/KOL/2018

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 2783 (ITAT-KOLKATA)
• Duration Of Justice: 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-06-2019
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RADHEY SHYAM
• Keywords: TDS
• Section: 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D, BENC H KOLKATA BEFORE SHRI A.T.VARKEY, JM &DR. A.L.SAINI, AM ./ITA NO.2414/KOL/2018 ( / ASSESSMENT YEAR:2013-14) DCIT, CIRCLE-11(1), KOLKATA VS. M/S G.S. ATWAL & CO. (ENGG.) PVT. LTD. 48, LITTLE RUSSEL STREET, KOLKATA- 700001. ./ ./PAN/GIR NO.: AABCG 0816 E (ASSESSEE) .. (REVENUE) ASSESSEE BY : SHRI RADHEY SHYAM, CIT DR RESPONDENT BY : SHRI SOUMITRA CHOUDHURY, ADVOCATE / DATE OF HEARING : 23/04/2019 /DATE OF PRONOUNCEMENT : 12/06/2019 / O R D E R PER DR. A. L. SAINI: THE CAPTIONED APPEAL FILED BY THE REVENUE, PERTAI NING TO ASSESSMENT YEAR 2013- 14, IS DIRECTED AGAINST AN ORDER PASSED BY THE LE ARNED COMMISSIONER OF INCOME TAX (APPEALS)-4, KOLKATA (IN SHORT THE LD. CIT(A)], W HICH IN TURN ARISES OUT OF AN ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER U /S 143(3) OF THE INCOME TAX ACT, 1961 ( IN SHORT THE ACT) DATED 01/03/2016. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE ARE AS FOLLOWS: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN DELETING THE DISALLOWANCE MADE BY THE A.O. U/S 36(1 )(VA) READ WITH 2(24)(X) UNDER THE HEAD LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF/ESI. M/S G.S.ATWAL & CO. (ENGG.) PVT. LTD. ITA NO.2414/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 2 22 2 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN DELETING ADDITION / DISALLOWANCES MADE BY THE A.O. UNDER THE HEAD INTEREST ON TDS, VAT, ENTRY TAX AND PROFESSIONAL TAX. 3. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. CIT(A) ERRED IN DELETING ADDITION / DISALLOWANCES MADE BY THE A.O. UNDER THE HEAD INTEREST ON SERVICE TAX AND SERVICE TAX RCM. 4. THE APPELLANT CRAVES FOR LEAVE TO ADD, ALTER /OR AMEND ANY OF THE GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING. 3. GROUND 1 RAISED BY THE REVENUE RELATES TO DIS ALLOWANCE MADE BY THE ASSESSING OFFICER U/S 36(1)(VA) READ WITH SECTION 2(24)(X) UN DER HEAD LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF / ESI. 4. BRIEF FACTS QUA THE ISSUE ARE THAT DURING THE AS SESSMENT PROCEEDINGS THE ASSESSING OFFICER ON EXAMINATION OF THE DETAILS OF EMPLOYEES CONTRIBUTION TO PF AND ESI, IT WAS NOTED THAT THE ASSESSEE HAD DEDUCTE D EMPLOYEES CONTRIBUTION TO ESI AMOUNTING TO RS. 1,07,430/- AND PF RS. 13,27,94 2/-. THE ASSESSING OFFICER NOTED THAT THE ASSESSEE COMPANY HAS NOT DEPOSITED T HE EMPLOYEES CONTRIBUTION TO PF AND ESI BEFORE THE APPROPRIATE AUTHORITIES WITHI N THE DUE DATE AS PER THE PROVISION OF THE PROVIDENT FUND ACT. THEREFORE THE ASSESSING OFFICER DISALLOWED RS. 13,27,942/- ON ACCOUNT OF PF AND RS. 1,07,430/- ON ACCOUNT OF ESI. 5. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION. 6. AGGRIEVED BY THE ORDER OF THE LD. CIT(A), THE RE VENUE IS IN APPEAL BEFORE US. 7. THE LD. DR HAS PRIMARILY REITERATED THE STANDS TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED M/S G.S.ATWAL & CO. (ENGG.) PVT. LTD. ITA NO.2414/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 3 33 3 FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A) 8. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE M ATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE ASSESSEE DEPOSITED EMPLOYEES CONT RIBUTION TO PF & ESI BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139( 1) OF THE ACT. IF THE ASSESSEE DEPOSITS PF AND ESI BEFORE THE DUE DATE OF FILING O F RETURN OF INCOME THEN IT WOULD BE CONSIDERED SUFFICIENT COMPLIANCE AND NO ADDITIO N SHOULD BE MADE ON ACCOUNT OF LATE PAYMENT OF PF AND ESI. FOR THAT WE RELY ON THE JUDGMENT OF THE JURISDICTIONAL HONBLE CALCUTTA HIGH COURT IN THE C ASE OF VIJAY SHREE LTD. IN I.T.A. NO. 245/KOL/2011, WHEREIN IT WAS HELD THAT I F THE ASSESSEE DEPOSITED PF AND ESI WITHIN THE DUE DATE PRESCRIBED IT U/S 139(1) OF THE ACT THEN NO DISALLOWANCE SHOULD BE MADE. THAT BEING SO, WE DECLINE TO INTERF ERE IN THE ORDER PASSED BY THE LD. CIT(A), HIS ORDER ON THIS ISSUE, IS HEREBY UPHE LD AND GROUNDS RAISED BY THE REVENUE IS DISMISSED. 9. GROUND NO. 2 RAISED BY THE REVENUE RELATES TO DI SALLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD INTEREST ON TDS, V AT, ENTRY TAX AND PROFESSIONAL TAX. 10. DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSIN G OFFICER NOTED THAT THE ASSESSEE HAS DEPOSITED IN HIS PROFIT AND LOSS ACCOU NT FOLLOWING EXPENDITURE THE DETAILS OF WHICH ARE GIVEN BELOW: M/S G.S.ATWAL & CO. (ENGG.) PVT. LTD. ITA NO.2414/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 4 44 4 THE ASSESSING OFFICER NOTED THAT INTEREST ON TDS, I NTEREST ON VAT, INTEREST ON ENTRY TAX AND INTEREST ON PROFESSIONAL TAX ARE NOT ALLOWABLE U/S 37(1) OF THE ACT AS THIS EXPENDITURE ARE NOT INCURRED BY THE ASSESSEE F OR THE PURPOSE OF BUSINESS. HENCE THE ASSESSING OFFICER DISALLOWED THE ENTIRE E XPENSES TO THE TUNE OF RS. 3,15,047/- (2,98,903 + 6,220 + 6922). 11. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS DELETED THE ADDITION. AGGRIEVED THE REVENUE IS IN APPEAL BEFORE US. 12. THE LD. DR HAS PRIMARILY REITERATED THE STAND S TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE LD. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE LD. CIT(A). 13. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT THE INTEREST ON VAT, TDS AND I NTEREST ON ENTRY TAX AND INTEREST ON PROFESSIONAL TAX ARE ALLOWABLE EXPENDIT URE U/S 37(1) OF THE ACT, AS THESE EXPENSES NORMALLY INCURRED BY THE ASSESSEE IN DOING THE BUSINESS. WE ALSO NOTE THAT THE INTEREST ON ARREARS OF SALES TAX IS COMPEN SATORY IN NATURE AND THEREFORE ALLOWABLE EXPENDITURE U/S 37(1) OF THE ACT AS HAS B EEN HELD BY THE HONBLE SUPREME COURT IN THE CASE OF LACHMANDAS MATHURDAS V S. CIT REPORTED IN 254 ITR 799 (SC) WHEREIN IT WAS HELD AS FOLLOWS: IN TAKING DECISION THE HIGH COURT HAD PLACED RELIAN CE ON ITS FULL BENCH'S DECISION IN SARAYA SUGAR MILLS (P.) LTD. V. CIT [1979] 116 ITR 387 (ALL.) . THE SAID JUDGMENT OF THE FULL BENCH HAD BEEN REVERSED BY THE LARGER BENCH OF THE HIGH COURT IN TRIVENI ENGG. WORKS LTD. V. CIT [1983] 144 ITR 732/15 TAXMAN 452 (ALL.) (FB) , WHEREIN IT HAD BEEN HELD THAT INTEREST ON ARREARS OF TAX IS COMPENSATORY IN NATURE AND NOT PENAL. THAT QUESTION HAD ALSO BEEN CONSIDERED BY THE SUPREME COURT IN SARAYA SUGAR MILLS (P.) LTD. V . CIT [CIVIL APPEAL NO. 830 M/S G.S.ATWAL & CO. (ENGG.) PVT. LTD. ITA NO.2414/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 5 55 5 OF 1979 DATED 29-2-1996]. IN THAT VIEW OF THE MATTE R, THE APPEAL WAS TO BE ALLOWED. THEREFORE CONSIDERING THE JUDGMENT OF THE HONBLE S UPREME COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) THEREFORE WE CONFIRM THE ORDER PASSED BY THE LD. CIT(A). 14. GROUND NO. 3 RAISED BY THE REVENUE RELATES TO D ISALLOWANCE MADE BY THE ASSESSING OFFICER UNDER THE HEAD INTEREST ON SERVIC E TAX AND SERVICE TAX RCM. 15. DURING THE ASSESSMENT PROCEEDINGS, ON PERUSAL O F THE BOOKS OF ACCOUNTS OF THE ASSESSEE, IT WAS NOTICED BY THE ASSESSING OFFICER T HAT THE ASSESSEE HAS DEBITED A SUM OF RS. 65,13,131/- UNDER THE HEAD INTEREST ON S ERVICE TAX AND RS. 67,360/- UNDER THE HEAD INTEREST ON SERVICE TAX RCM. THE ASS ESSEE DID NOT EXPLAIN THESE EXPENSES PROPERLY THEREFORE THE ASSESSING OFFICER M ADE THE ADDITION AMOUNTING TO RS. 65,80,491/- (RS. 65,13,131 +RS. 67,360/-). 16. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER THE ASSESSEE CARRIED THE MATTER IN APPEAL BEFORE THE LD. CIT(A) WHO HAS ALLOWED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF THE LD. CIT(A) THE REVENU E IS IN APPEAL BEFORE US. 17. THE LD. DR HAS PRIMARILY REITERATED THE STAND S TAKEN BY THE ASSESSING OFFICER WHICH WE HAVE ALREADY NOTED IN OUR EARLIER PARA AND THE SAME IS NOT BEING REPEATED FOR THE SAKE OF BREVITY AND ON THE OTHER HAND THE L D. COUNSEL FOR THE ASSESSEE HAS DEFENDED THE ORDER OF THE CIT(A). 18. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE NOTE THAT INTEREST ON SERVICE TAX IS AN ALLOWABLE EXPENDITURE. NOT ONLY THAT INTEREST ON SERVICE TAX IS COMPENSATORY IN NAT URE AND IT IS NOT IN THE NATURE OF PENALTY THEREFORE THE SAME IS ALLOWABLE EXPENDITURE AS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF LACHMANDAS MATHURADAS (SUPRA). THEREFORE M/S G.S.ATWAL & CO. (ENGG.) PVT. LTD. ITA NO.2414/KOL/2018 ASSESSMENT YEAR:2013-14 P PP PA AA AG GG GE EE E | || | 6 66 6 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE SUPREME COURT, WE DO NOT FIND ANY INFIRMITY IN THE ORDER PASSED BY THE LD. CIT(A) THEREFORE WE CONFIRM THE ORDER PASSED BY THE LD. CIT(A). 19. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. ORDER PRONOUNCED IN THE COURT ON 12.06.2019 SD/- ( A.T.VARKEY ) SD/- (A.L.SAINI) / JUDICIAL MEMBER / ACCOUNTANT MEMBER /KOLKATA; / DATE: 12/06/2019 ( SB, SR.PS ) COPY OF THE ORDER FORWARDED TO: 1. DCIT, CIRCLE-11(1), KOLKATA 2. M/S G.S. ATWAL & CO. (ENGG.) PVT. LTD. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. 6. GUARD FILE. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES