ACIT Corporate Circle 5(2), CHENNAI V. Preludesys India Limited, CHENNAI

ITA 2594/CHNY/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 7458 (ITAT-CHENNAI)
• Duration Of Justice: 8 month(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 27-10-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R V AROON PRASAD
• Assessee Lawyers: M VEERABATHRAN PRASANTH
• Keywords: Business income; Question of law
• Section: 43B

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : CHENNAI . , , BEFORE SHRI ABRAHAM P.GEORGE, ACCOUNTANT MEMBER AND SHRI GEORGE MATHAN, JUDICIAL MEMBER ./I.T.A. NO.2594/CHNY/2017 / ASSESSMENT YEAR : 2014-2015. THE ASSISTANT COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE 5 (2) CHENNAI 600 034. VS. PRELUDESYS INDIA LTD, OLD NO.D-12, NEW NO.3/A3, FIRST CROSS ROAD, SIPCO IT PARK, SIRUSERI, KANCHEEPURAM, CHENNAI 603 103. [PAN AABCP 7252K] ( / APPELLANT) ( /RESPONDENT) ! ' # / APPELLANT BY : SHRI. R.V. AROON PRASAD, JCIT $%! ' # /RESPONDENT BY : SHRI. M. VEERABATHRAN PRASANTH, ADVOCATE. & ' ' () /DATE OF HEARING : 09-07-2018 *+ ' () /DATE OF PRONOUNCEMENT : 09-07-2018 / O R D E R PER ABRAHAM P. GEORGE, ACCOUNTANT MEMBER:- IN THIS APPEAL FILED BY THE REVENUE, WHICH IS DIR ECTED AGAINST AN ORDER DATED 31.07.2017 OF LD. COMMISSION ER OF INCOME TAX (APPEALS)-3, CHENNAI . ITA NO.2594/CHNY/2017 :- 2 -: 2. GROUNDS TAKEN BY THE REVENUE ARE REPRODUCED HEREUN DER:- 1. THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS CONTRARY TO LAW AND FACTS AND CIRCUMSTANCES OF THE CASE. 2.1 THE ID CIT(A) ERRED IN DELETING THE DISALLOWANCE U/S 36(1)(VA) MADE BY THE AO TO THE TUNE OF RS.17,97,617/- ON EMPLOYEE'S CONTRIBUTION TOWARDS PF/ ESI ON ACCOUNT OF BELATED REMITTANCE. 2.2 THE ID CIT(A) FAILED TO NOTE THAT AS PER THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS MADRAS RADIATORS AND PRESSING LIMITED (2003) 129 TAXMANN 709, THE EMPLOYEES' CONTRIBUTION RECEIVED BY THE EMPLOYER WOULD BE INCOME IN HIS HANDS AND THAT WOULD BE ALLOWED AS PERMISSIBLE DEDUCTION UNDER CLAUSE (VA) OF SEC.36(1) IN COMPUTING THE BUSINESS INCOME U/S 28, PROVIDED THE ASSESSEE CREDITS THE SAME TO THE RELEVANT FUND AS PER THE DUE DATES SPECIFIED. 2.3 THE ID CIT(A) OUGHT TO HAVE NOTED THAT AS PER THE DECISION OF THE HON BLE GUJARATH HIGH COURT IN THE CASE OF CIT II VS GUJARATH STATE ROAD TRANSPORT CORPORATION, AS PER THE DEFINITION OF 'INCOME' AS PER SEC.2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PF OR SUPERANNUATION FUND ETC., AS PER THE RELEVANT ACTS, IS TO BE TREATED AS INCOME AND THE EMPLOYER-ASSESSEE IS ELIGIBLE TO CLAIM DEDUCTION OF SUCH AMOUNT AS PER EXPLANATION TO SEC.36( L)(V) ONLY WHEN THE SAME IS CREDITED INTO THE RELEVANT FUND WITHIN THE DUE DATES SPECIFIED UNDER THOSE ACTS. 2.4 THE ID CIT(A) FAILED TO NOTE THAT IN THE CASE OF M/S GUJARATH STATE ROAD TRANSPORT CORPORATION, THE HON 'BLE GUJARATH HIGH COURT HAS CLEARLY DISCUSSED THAT THE HON'BLE APEX COURT IN THE CASE OF ALOM EXTRUSIONS LIMITED, NEVER HAD THE OCCASION TO CONSIDER THE DEDUCTION U 1 S 36( L)(VA) WITH RESPECT TO EMPLOYEES' CONTRIBUTION AND THE ONLY CONTROVERSY BEFORE THE SUPREME COURT WAS ITA NO.2594/CHNY/2017 :- 3 -: WITH RESPECT TO THE AMENDMENT (DELETION) OF SECOND PROVISO TO SEC.43B OPERATIVE W.E.F 1.4.2004 OR WHETHER IT OPERATES RETROSPECTIVELY W.E.F 1.4.1988? 2.5 THE ID CIT(A) FAILED TO NOTE THAT THE BOARD ITSELF HAS DIFFERENTIATED BETWEEN EMPLOYER'S CONTRIBUTION AND EMPLOYEES' CONTRIBUTION TO FUNDS, VIDE BOARD'S CIRCULAR NO. 22/2015 DATED 17-12-2015, WHEREIN IT HAS BEEN CLARIFIED THAT THE HON'BLE APEX COURT'S DECISION IN THE CASE OF CIT VS ALOM EXTRUSION LIMITED, HAS BEEN ACCEPTED WITH REGARD TO EMPLOYER'S CONTRIBUTION ONLY AND DOES NOT APPLY TO THE CLAIM OF DEDUCTION UNDER EMPLOYEES' CONTRIBUTION. 3. LD. COUNSEL FOR THE REVENUE SUBMITTED THAT REVENUE HAD NOT ACCEPTED THE JUDGMENT OF HONBLE JURISDICTIONAL HIG H COURT IN THE CASE OF CIT VS. INDUSTRIAL SECURITY & INTELLIGENCE INDIA P VT LTD. (TCS NO.585 & 586 OF 2015, DATED 24.07.2015). ACCORDING TO HIM, CONTRIBUTION BY THE EMPLOYEES, TOWARDS WELFARE FUNDS, REMITTED AF TER DUE DATE PRESCRIBED IN THE RESPECTIVE ENACTMENTS HAD TO BE D ISALLOWED U/S.36(I) (VA) OF THE ACT. RELIANCE WAS ALSO PLACED ON CBDT CIRCULAR NO.22/2015, DATED 17.12.2015. 4. PER CONTRA, LD. AUTHORISED REPRESENTATIVE STRONGLY SUPPORTED THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (AP PEALS). ITA NO.2594/CHNY/2017 :- 4 -: 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AND PERUSED THE ORDERS OF THE AUTHORITIES BELOW. WHAT HAS BEEN HE LD BY HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY & INTELLIGENCE INDIA PVT LTD. (SUPRA) IS REPRODUCED HEREUNDER:- 5. WE FIND THAT THE TRIBUNAL HAS RIGHTY RELIED ON THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS. ALOM EX TRUSIONS LTD, REPORTED IN 319 ITR 306, WHEREBY THE SUPREME C OURT HELD THAT OMISSION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT TO FIRST PROVISO BY FINANCE ACT, 2003 ARE CURATIVE IN NATURE AND ARE EFFECTIVE RETROSPECTIVELY. I.E. WITH EFFECT FROM 01.01.1988 I.E THE DATE OF INSERTION OF FIRST PROVISO. THE DELHI HIGH COURT IN THE CASE OF CIT VS. AMIL LT D, REPORTED IN 321 ITR 508 HELD THAT IF THE ASSESSEE HAD DEPOSITED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESI AFTER DUE DATE AS PRESCRIBED UNDER THE RELE VANT ACT, BUT BEFORE THE DUE DATE OF FILING OF RETURN UNDER T HE INCOME TAX ACT, NO DISALLOWANCE COULD BE MADE IN VIEPW OF THE PROVISIONS OF SECTION 43B AS AMENDED BY FINANCE ACT , 2003. 6.IN THE PRESENT CASE, THE ASSESSEE HAD REMITTED T HE EMPLOYEES CONTRIBUTION BEYOND THE DUE DATE FOR PAYM ENT, BUT WITHIN THE DUE DATE FOR FILING THE RETURN OF IN COME. HENCE, FOLLOWING THE ABOVE SAID DECISIONS, WE FIND NO REASON TO DIFFER WITH THE FINDINGS OF THE TRIBUNAL. ACCORD INGLY, WE FIND NO QUESTION OF LAW MUCH LESS ANY SUBSTANTIAL Q UESTION OF LAW ARISES FOR CONSIDERATION IN THESE APPEALS. HONBLE JURISDICTIONAL HIGH COURT HAD ALSO CONSIDER ED CBDT CIRCULAR NO.22/2015, DATED 17.12.2015 WHILE GIVING THE ABOVE JUDGMENT. IN THE CIRCUMSTANCES, WE DO NOT FIND ANY REASON TO INT ERFERE WITH THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEAL S). ITA NO.2594/CHNY/2017 :- 5 -: 6. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT AT THE TIME OF H EARING ON 9 TH JULY, 2018 AT CHENNAI. SD/- ( ) (GEORGE MATHAN) /JUDICIAL MEMBER SD/- ( . ! ' ) (ABRAHAM P. GEORGE) $ %& / ACCOUNTANT MEMBER - ' / CHENNAI . / DATED: 9 TH JULY, 2018. K V / ' $(0 1 2 1 ( / COPY TO: 1 . ! / APPELLANT 3. & 3( ( ) / CIT(A) 5. 167 $(8 / DR 2. $%! / RESPONDENT 4. & 3( / CIT 6. 79 :' / GF