The Parbhani District Central Co-op. Bank Ltd., V. Assistant Commissioner of Income-tax,

ITA 2499/PUN/2016

• Counselvise Citation: [2019] 116 COUNSELVISE.COM (IT) 8115 (ITAT-PUNE)
• Duration Of Justice: 2 year(s) 8 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-07-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 27-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHRI
• Keywords: TDS
• Section: 43B; 143(3)

Judgement Text

] IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH B, PUNE BEFORE MS. SUSHMA CHOWLA, JM AND SHRI ANIL CHATURVEDI, AM . / ITA NO.2499/PUN/2016 / ASSESSMENT YEAR : 2012-13 THE PARBHANI DIST. CENTRAL CO - OPERATIVE BANK LTD., JAWAHARLAL NEHRU ROAD, PARBHANI 431401. PAN : AAAAT6996R. . / APPELLANT V/S THE ASST. COMMISSIONER OF INCOME TAX , JALNA CIRCLE, JALNA. . / RESPONDENT . / ITA NO.2567/PUN/2016 / ASSESSMENT YEAR : 2012-13 THE ASST. COMMISSIONER OF INCOME TAX, JALNA CIRCLE, JALNA. . / APPELLANT V/S THE PARBHANI DIST. CENTRAL CO-OPERATIVE BANK LTD., JAWAHARLAL NEHRU ROAD, PARBHANI 431401. PAN : AAAAT6996R. . / RESPONDENT ASSESSEE BY : SHRI NIKHIL PATHAK. REVENUE BY : SHRI PANKAJ GARG. / ORDER PER ANIL CHATURVEDI, AM : 1. THESE CROSS-APPEALS FILED BY ASSESSEE AND REVENUE E MANATE OUT OF THE ORDER OF COMMISSIONER OF INCOME-TAX (A) 1, AURAN GABAD DATED 31.08.2016 FOR A.Y. 2012-13. / DATE OF HEARING : 02.07.2019 / DATE OF PRONOUNCEMENT: 17.07.2019 2 2. THE RELEVANT FACTS AS CULLED OUT FROM THE MATERIAL ON R ECORD ARE AS UNDER :- ASSESSEE IS A CO-OPERATIVE SOCIETY STATED TO BE ENGAGE D IN THE BUSINESS OF BANKING. ASSESSEE ELECTRONICALLY FILED ITS RETURN OF INCOME FOR A.Y. 2012-13 ON 18.05.2013 DECLARING TOTAL INCOME OF RS.15,82,95,334/-. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER ASSESSMENT WAS FRAMED U/S 143(3) OF THE ACT VIDE ORDER D T.05.03.2015 AND THE TOTAL INCOME WAS DETERMINED AT RS.16,95,48,030/-. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFOR E LD.CIT(A), WHO VIDE ORDER DT.31.08.2016 (IN APPEAL NO.ABD/CIT(A)-1/72/201 5-2016) GRANTED SUBSTANTIAL RELIEF TO THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE AND REVENUE ARE NOW IN APPEAL BEFORE US. 3. THE SOLE GROUND RAISED BY THE ASSESSEE IN ITA NO.2499/PUN/2016 FOR A.Y. 2012-13 READS AS UNDER : THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) -1, AURANGABAD HAS ERRED IN FACTS AND ON LAW BY CONFIRMING THE ADDITIO N OF RS.13,45,843/- U/S 36(1)(VA). HENCE, THE SAID ADDITION OF RS.13,4 5,843/- NEEDS TO BE DELETED. 4. ON THE OTHER HAND, THE GROUNDS RAISED BY THE REVEN UE IN ITA NO.2567/PUN/2016 READ AS UNDER : 1. WHETHER ON FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) -1, WAS RIGHT IN HOLDING THAT THE INTEREST PAID BY THE ASSESSEE BANK DID NOT PARTAKE THE NATURE AND CHARACTER OF INTEREST, AS CO NTEMPLATED IN SECTION 194A, R.W.S. 2(28) OF THE ACT. 2. WHETHER THE EXPENSES CLAIMED BY THE ASSESSEE BAN K AT RS.65,42,033/- ON ACCOUNT OF INTEREST ON DELAYED G RATUITY PAYMENT IS A REVENUE RECEIPT ELIGIBLE TO INCOME TAX IN THE HANDS OF RECIPIENTS. IF YES ? THEN THE SAME IS SUBJECT TO TDS AS PER SECTION 194A OR NOT ? 5. WE FIRST PROCEED WITH THE APPEAL OF ASSESSEE IN ITA NO.2499/PUN/2016 FOR A.Y. 2012-13. 3 6. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO NOTIC ED THAT ASSESSEE HAD FAILED TO DEPOSIT THE EMPLOYEES CONTRIBUTION OF PROVIDENT FUND WITHIN THE DUE DATE PRESCRIBED BY THE ACT. HE NOT ICED THAT AMOUNT OF RS.13,45,843/- WAS DEPOSITED ON 27.04.2012 WH ICH WAS AFTER THE DUE DATE PRESCRIBED UNDER THE P.F. ACT. HE WA S OF THE VIEW THAT THE DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION OF P.F. WAS NOT ALLOWABLE U/S 43B OF THE ACT AND HE ACCORDINGLY MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATT ER BEFORE LD.CIT(A), WHO FOLLOWING THE ORDER OF HONBLE GUJARAT HIGH CO URT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION REPO RTED IN (41 TAXMANN.COM 100) AND THE DECISION OF HONBLE KERALA HIGH CO URT IN THE CASE OF CIT VS. MERCHEM LTD. REPORTED IN (378 ITR 443) U PHELD THE ORDER OF AO BY HOLDING THAT THE AMOUNT IS ALLOWABLE ONLY IF THE AMOUNT IS DEPOSITED BEFORE THE DUE DATE PRESCRIBED UNDER THE P.F. ACT. AGGRIEVED BY THE ORDER OF LD.CIT(A), ASSESSEE IS NOW BEFORE US. 7. BEFORE US, LD.A.R. REITERATED THE SUBMISSIONS MADE BEFORE AO AND LD.CIT(A) AND FURTHER SUBMITTED THAT THOUGH THERE WA S DELAY IN DEPOSITING EMPLOYEES SHARE OF P.F. CONTRIBUTION BUT THE SAME WAS DEPOSITED ON 27.04.2012 MUCH BEFORE THE DATE OF FILING OF RET URN OF INCOME WHICH WAS FILED ON 18.05.2013. HE THEREFORE RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V S. GHATGE PATIL TRANSPORTS LTD. REPORTED IN (2014) 368 ITR 749 SUB MITTED THAT THE ADDITION MADE BY THE AO AND UPHELD BY THE LD.CIT(A) BE DE LETED. LD. D.R. ON THE OTHER HAND, SUPPORTED THE ORDER OF LOWER AUTHORITIES. 4 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. THE ISSUE IN THE PRESENT GROUND IS WITH RESPECT TO DELAYED DEPOSIT OF EMPLOYEE CONTRIBUTION OF PROVIDENT FUND. IT IS AN UNDISPUTED FACT THAT THE AMOUNT OF EMPLOYEE CONTRIBUTION OF P.F. WAS DEPOSITED AFTER THE DUE DATE AS PRESCRIBED UNDER THE P.F. ACT BUT HOWEVER IT WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RET URN. WE FIND THAT HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. G HATGE PATIL TRANSPORTS LTD. (SUPRA) AFTER RELYING ON THE DECISION OF HONBLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LTD., REPORTED IN (200 9) 319 ITR 306 (SC) HAS HELD THAT NO DISALLOWANCE IS CALLED FOR WHEN TH E ASSESSEE HAS DEPOSITED THE EMPLOYEE PF CONTRIBUTION BEFORE THE DU E DATE OF FILING OF RETURN OF INCOME. IN VIEW OF THE AFORESAID FACTS AND RELYING ON THE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF C IT VS. GHATGE PATIL TRANSPORTS LTD., (SUPRA), WE HOLD THAT IN THE PRESENT CASE SINCE THE EMPLOYEE CONTRIBUTION OF PF HAS BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, NO ADDITION IS CALLED FOR AND THEREFORE DIRECT ITS DELETION. THUS, THE GROUND OF THE ASSESSEE IS ALLOWED. 9. IN THE RESULT, THE APPEAL OF ASSESSEE IN ITA NO.2499/PUN/2016 FOR A.Y. 2012-13 IS ALLOWED. 10. NOW WE TAKE UP REVENUES APPEAL IN ITA NO.2567/PUN /2016 FOR A.Y. 2012-13. 11. BOTH THE GROUNDS BEING INTER-CONNECTED ARE CONSIDERED TOGE THER. 12. DURING THE COURSE OF ASSESSMENT PROCEEDINGS AND ON PERUSING THE PROFIT & LOSS ACCOUNT, AO NOTICED THAT ASSESSEE HAD CLAIMED 5 INTEREST EXPENSES OF RS.65,42,033/- ON ACCOUNT OF INTERE ST ON GRATUITY PAYMENT. THE ASSESSEE WAS ASKED TO EXPLAIN ITS ALLOWABILIT Y AND WHETHER THE TDS WAS DEDUCTED ON SUCH PAYMENTS. TO THE QUERY OF THE AO, ASSESSEE INTER-ALIA SUBMITTED THAT DUE TO THE FINANCIAL POSITION OF THE BANK, 50% OF THE GRATUITY WAS PAID IN EARLIER YEAR AN D AS PER THE COURTS ORDER, THE PAYMENT OF GRATUITY WAS MADE ALONG WITH INTEREST. IT WAS FURTHER SUBMITTED THAT NO TDS WAS DEDUCTED AS THE PAYMENT OF GRATUITY WAS NOT COVERED U/S 194A OF THE ACT. THE SUB MISSIONS OF THE ASSESSEE WERE NOT FOUND ACCEPTABLE TO THE AO AS THE A O WAS OF THE VIEW THAT ASSESSEE WAS REQUIRED TO DEDUCT TDS ON THE DELAY ED PAYMENT OF INTEREST. HE THEREFORE HELD THAT SINCE THE ASSESSEE HAS FAILED TO DEDUCT THE TDS, THE INTEREST OF RS.65,42,033/- CLAIMED BY THE AS SESSEE IS NOT ALLOWABLE AS DEDUCTION. HE ACCORDINGLY MADE ITS ADDITION. AGGRIEVED BY THE ORDER OF AO, ASSESSEE CARRIED THE MATTER BEFOR E LD.CIT(A), WHO DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. AGGRIEVED BY THE ORDER OF LD.CIT(A), REVENUE IS NOW IN APPE AL BEFORE US. 13. BEFORE US, LD. D.R. SUPPORTED THE ORDER OF AO. LD.A.R. ON THE OTHER HAND REITERATED THE SUBMISSIONS MADE BEFORE AO AN D LD.CIT(A) AND SUPPORTED THE ORDER OF LD.CIT(A). 14. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL O N RECORD. WE FIND THAT LD.CIT(A) WHILE DECIDING THE ISSUE IN FAV OUR OF ASSESSEE HAS GIVEN A FINDING THAT THE PAYMENT OF INTEREST TO EMPLOYEES FOR DELAYED PAYMENT CONTRIBUTION WAS IN THE NATURE OF COM PENSATION / DAMAGES AND THE INTEREST WOULD NOT PARTAKE THE NATUR E AND CHARACTER OF INTEREST AS CONTEMPLATED U/S 194A R.W. SEC.2(28A) OF THE ACT AND 6 ACCORDINGLY ASSESSEE WAS NOT REQUIRED TO DEDUCT TDS O N SUCH INTEREST ON DELAYED PAYMENT OF GRATUITY. WHILE ARRIVING AT THE AFORE SAID CONCLUSION, LD.CIT(A) HAS ALSO RELIED ON VARIOUS DECISIONS REND ERED BY THE HONBLE HIGH COURTS IN THE ORDER. HE THEREAFTER DE LETED THE ADDITION MADE BY THE AO. BEFORE US, REVENUE HAS NOT PO INTED OUT ANY FALLACY IN THE FINDINGS OF LD.CIT(A). WE THEREFORE FIND NO REASON TO INTERFERE WITH THE ORDER OF LD.CIT(A). THUS, THE GROUNDS OF REVENUE ARE DISMISSED. 15. IN THE RESULT, THE APPEAL OF REVENUE IN ITA NO.2567/PUN/2016 FOR A.Y. 2012-13 IS DISMISSED. 16. TO SUM UP, THE APPEAL OF ASSESSEE IS ALLOWED AND TH E APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED ON 17 TH DAY OF JULY, 2019. SD/- SD/- ( SUSHMA CHOWLA ) ( ANIL CHATURVEDI ) ' / JUDICIAL MEMBER #' / ACCOUNTANT MEMBER PUNE; DATED : 17 TH JULY, 2019. YAMINI $%&'()(& / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT 3 . 4. 5. 6. CIT(A)-1, AURANGABAD. PCIT 1, AURANGABAD. '#$ %%&',) &', / DR, ITAT, B PUNE; $,-./ GUARD FILE. / BY ORDER , // TRUE COPY // /01%2&3 / SR. PRIVATE SECRETARY ) &', / ITAT, PUNE