Denis Chem Lab Limited, Gandhinagar V. The ACIT, Mehsana Circle, Mehsana

ITA 2668/AHD/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 7977 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-12-2017
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2012-2013
• Appeal Filed On: 21-09-2015
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: O P PATHAK JOIT
• Assessee Lawyers: PARTH PATEL
• Section: 43B

Judgement Text

, CH CHCH CH IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD . . , , BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER AND SHRI MAHAVIR PRASAD, JUDICIAL MEMBER ITA NO.2668/AHD/2015 (ASSESSMENT YEAR : 2012-13) DENIS CHEM LAB LTD. BLOCK NO.457, GIDC ESTATE, PHASE I, VILLAGE : CHHATRAL, TAL. KALOL, DIST. GANDHINAGAR. / VS. ACIT, MEHSANA CIRCLE, MEHSANA. ! ./ '#$# ./ PAN/GIR NO. : AAACD 4123 C ( %&!' / APPELLANT ) .. ( (!' / RESPONDENT ) %&!' ) / APPELLANT BY : SHRI PARTH PATEL, AR (!' * ) / RESPONDENT BY : SHRI O.P. PATHAK, JOIT.CIT + , * -. / DATE OF HEARING 29/11/2017 /012 * -. / DATE OF PRONOUNCEMENT 21/12/2017 # 3 / O R D E R PER MAHAVIR PRASAD, JUDICIAL MEMBER : THIS IS AN APPEAL BY THE ASSESSEE AGAINST THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) GANDHINAGAR, AHMEDABAD, VIDE APPEAL NO.CIT(A)/GNR/363/2014-15 DTD. 21/07/20 15 FOR ASSESSMENT YEAR (A.Y.) 2012-13, ON THE FOLLOWING GR OUNDS: ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 2 - 1. THE ORDER PASSED BY CIT(APPEALS) IS BAD IN LAW A ND ON FACTS AND HENCE, IT IS SUBMITTED THAT THE SAME BE CANCELL ED AND BE SUITABLY MODIFIED. 2. (A) THE LEARNED COMMISSIONER OF INCOME TAX (AP PEALS)- GANDHINAGAR, HAS ERRED IN LAW AND ON FACTS IN CONFI RMING THE ACTION OF THE AO IN MAKING ADDITION FOR A SUM OF RS .46,960/- BEING INTEREST U/S.244A ON INCOME TAX REFUND FOR A. Y. 2009-10. (B) THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS )- GANDHINAGAR GROSSLY ERRED IN LAW AND ON FACTS OF TH E CASE IN CONFIRMING THE IMPUGNED ADDITION IN UTTER DISREGARD TO THE FACT THAT AS PER THE RETURN OF INCOME FILED FOR A.Y.2009 -10, THOUGH THE APPELLANT HAS CLAIMED INCOME TAX REFUND, AS ON THE DATE OF FILING THE RETURN OF INCOME FOR A.Y.2012-13, THE AP PELLANT COMPANY HAS NOT BEEN SERVED WITH ANY INTIMATION U/S .143(1) OR ANY OTHER COMMUNICATION REGARDING THE GRANT OF INTE REST U/S.244A OF THE I.T. ACT FOR A.Y.2009-10 AND THE RE FUND IN QUESTION HAD BEEN DIRECTLY CREDITED BY THE DEPARTME NT TO THE BANK ACCOUNT AND THEREFORE THE APPELLANT COMPANY HA S NO KNOWLEDGE AS TO THE ELEMENT OF INTEREST U/S.244A IN THE AMOUNT OF REFUND CREDITED TO THE BANK ACCOUNT. (C) THE LEARNED COMMISSIONER OF INCOME TAX (APPEAL S)- GANDHINAGAR GROSSLY ERRED IN LAW AND ON FACTS OF TH E CASE IN CONFIRMING THE IMPUGNED ADDITION IN UTTER DISREGARD TO THE FACT THAT THE APPELLANT ASSESSEE WAS NOT PROVIDED WITH C OPY OF THE INTIMATION U/S.143(1) OR THE BREAK-UP OF THE REFUND CREDITED TO ITS BANK ACCOUNT FOR A.Y.2009-10 AND THAT IN SPITE OF T HE REQUEST MADE TO THE ASSESSING OFFICER AS WELL AS THE INCOME TAX AUTHORITY AT CENTRAL PROCESSING UNIT AT BANGALORE, NO BREAK-UP OF THE INCOME TAX REFUND AND AMOUNT OF INTEREST THE REON WAS FURNISHED TO THE ASSESSEE BY THE DEPARTMENT. (D) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )- GANDHINAGAR GROSSLY ERRED IN LAW AND ON FACTS OF TH E CASE IN CONFIRMING THE IMPUGNED ADDITION IN UTTER DISREGARD TO THE FACT THAT AS ON THE DATE OF FILING THE RETURN OF INCOME FOR THE YEAR ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 3 - UNDER APPEAL, THE FORM 26AS DID NOT INDICATE THE EL EMENT OF INTEREST GRANTED ON THE INCOME TAX REFUND FOR A.Y. 2009-10. IT IS THEREFORE PRAYED THAT THE IMPUGNED ADDITION M AY PLEASE BE DELETED. 3. (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPE ALS)- GANDHINAGAR GROSSLY ERRED IN LAW AND ON FACTS OF TH E CASE IN CONFIRMING THE ACTION OF THE AO IN MAKING DISALLOWA NCE/ADDITION FOR A SUM OF RS.14,56,844/- ON ACCOUNT OF ALLEGED L ATE PAYMENT OF EMPLOYEES' CONTRIBUTIONS OF PROVIDENT FUND AND ESIC (RS.13,76,928/- PROVIDENT FUND + RS.79,916/- ESIC) BY INVOKING SECTION 36(1)(VA) OF THE I.T. ACT IN UTTER DISREGAR D TO THE FACT THAT EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND AND ESIC HAD BEEN PAID BEFORE THE DUE DATE FOR THE FILING OF THE RETU RN OF INCOME U/S.139(1) AND THEREFORE THE ENTIRE AMOUNT IS ELIGI BLE FOR DEDUCTION U/S.43B OF THE I.T. ACT. (B) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS )- GANDHINAGAR GROSSLY ERRED IN LAW AND ON FACTS OF TH E CASE IN CONFIRMING THE IMPUGNED ADDITION IN UTTER DISREGARD TO THE RATIO OF THE FOLLOWING JUDGMENTS OF THE SUPREME COURT, HI GH COURTS AND ITAT WHICH WERE SPECIFICALLY BROUGHT HIS ATTENT ION: A) CIT VS. VINAY CEMENT COMPANY LIMITED (SC)213CTR 268 B) CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (S C) C) CIT VS. LAKHANI RUBBER WORKS 326 ITR 415 (P&H)(2010 ) D) PRECISION PRODUCTS VS. ACIT (ITA NO.4/AHD/2011)(AHD)(2012) E) SAI CONSULTING ENGINEERS (P) LIMITED. V. DCIT CIRCLE 8, ABD. ITA NO. 2262/AHD/2007 F) SABARI ENTERPRISES 298 ITR 141 (KAR) G) GEORGE WILLIAMSON 284 ITR 619 (GAU) H) SUNIL GOEL V. ACIT 118 TTJ (DEL) 415 I) CIT V. P.M. ELECTRONICS LIMITED. 15 DTR 258 (DE LHI HIGH COURT) J) CIT V. AIMIL LIMITED & ORS. (2010) 35 DTR (DEL) 68 (DELHI HIGH COURT) ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 4 - K) CIT V. ANZ INFORMATION TECHNOLOGY 318 ITR 123 (KARNATAKA) I) ADDITIONAL CIT V. VESTAS RRB INDIA LIMITED (200 5) 93 TTJ (DEL) 144 M) CIT V. KICHHA SUGAR COMPANY LTD. (2013) 356 ITR 351 (UTTARAKHAND-HC) N) CIT V. NIPSO POLYFABRIKS LTD. (2013) 350 ITR 327 (HP) O) CIT V. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD . (2013) 53 (I) ITCL 433 (RAJ-HC). P) COMMISSIONER OF INCOME-TAX, FARIDABAD VS. HEMLA EMBROIDERY MILLS (P) LTD., [2013] 37 TAXMANN.COM 16 0 (PUNJAB & HARYANA). Q) SPECTRUM CONSULTANTS (INDIA) PVT. LTD. VS. CIT (KARNATAKA HIGH COURT) R) HINDUSTAN ORGANIC LIMITED VS. CIT (BOMBAY HIGH C OURT) S) ESSAE TERAOKA PRIVATE LIMITED (2014) 266 CTR (KA R) 246 IT IS THEREFORE PRAYED THAT THE IMPUGNED ADDITION M AY PLEASE BE DELETED. 4. THE APPELLANT CRAVES LEAVE TO ADD AND OR ALTER A NY GROUND AT THE TIME OF HEARING OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THAT IN THIS CAS E, THE APPELLANT IS A LIMITED COMPANY INCORPORATED UNDER THE COMPANIES AC T, 1956 AND IS ENGAGED IN THE BUSINESS OF MANUFACTURING OF BULK DR UGS AND PHARMACEUTICAL PRODUCTS AND JOB WORK OF I.V. FLUIDS . FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, THE ASSESSEE COMPANY HAD FILED ITS RETURN OF INCOME ON 29/09/2012 DECLARING TOTAL INCOME OF RS.1 ,38,04,010/-. THE ASSESSEES CASE WAS SELECTED FOR SCRUTINY AND THE L EARNED ASSESSING OFFICER ISSUED NOTICE U/S.143(2). IN RESPONSE TO TH E NOTICE ISSUED, THE APPELLANT CAUSED APPEARANCE BEFORE THE ASSESSING OF FICER FROM TIME TO ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 5 - TIME AND FURNISHED ALL THE DETAILS AND INFORMATION. THEREAFTER, THE ASSESSING OFFICER FINALIZED, THE ASSESSMENT FOR THE YEAR UNDER CONSIDERATION DETERMINING TOTAL INCOME AT RS.1,59,0 7,810/-. IN THE ASSESSMENT ORDER, THE AO HAS MADE FOLLOWING ADDITIO NS/DISALLOWANCES: 1. ADDITION ON ACCOUNT OF INTEREST U/S.244A : 46,960 2. DISALLOWANCE FOR ALLEGED LATE PAYMENT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESIC U/S.36(1)(VA) : 14,56,844 3. DISALLOWANCE OUT OF SALES COMMISSION : 6,00,000 THEREAFTER, THE APPELLANT FILED FIRST STATUTORY APP EAL BEFORE THE LD.CIT(A)- GANDHINAGAR, WHEREIN HE HAD CONFIRMED THE ADDITIONS MADE BY THE AO ON ACCOUNT OF INTEREST U/S.244A OF RS.46,960/- AND DISALLOWANCE MADE U/S.36(L)(VA) OF RS.14,56,844/-. THE CIT(A) HAS DEL ETED THE DISALLOWANCE MADE BY THE AO OUT OF SALES COMMISSION OF RS.6,00,0 00/-. 3. WE HAVE GONE THROUGH THE RELEVANT RECORD AND IMP UGNED ORDER. SO FAR AS GROUND NO.1 AND 4 ARE GENERAL AND DOES NOT R EQUIRE ANY ADJUDICATION. 4. SO FAR AS GROUND NO.2 WITH REGARD TO CONFIRMING THE ADDITION FOR A SUM OF RS.46,960/- BEING INTEREST U/S.244A ON INCOM E TAX REFUND FOR A.Y.2009-10 IS CONCERNED. AO DURING THE COURSE OF A SSESSMENT PROCEEDING ON VERIFICATION OF THE DETAILS GENERATED THROUGH INCOME TAX ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 6 - DEPARTMENT NOTICED THAT APPELLANT RECEIVED RS.46,96 0/- ON 01/03/2012 AS INTEREST U/S.244A OF THE ACT ON REFUND. AO CONTENDE D THAT INTEREST RECEIVED U/S.244A OF THE ACT IS TAXABLE UNDER THE H EAD INCOME FROM OTHER SOURCES. IN THIS CASE, THOUGH THE REFUND OF RS.46,960/- WAS SHOWN IN THE RECORD OF INCOME TAX DEPARTMENT AND DURING T HE COURSE OF ASSESSMENT PROCEEDING ASSESSEE HAS SUBMITTED AFFIDA VIT OF MANAGING DIRECTOR OF THE COMPANY STATING THAT THE COMPANY IS NOT AWARE ABOUT THE DETAILS OF THE INTEREST IN THE ABSENCE OF ANY WORKI NG THEREOF OR STATEMENT THEREOF ISSUED BY THE DEPARTMENT. THE SAID REFUND W AS LESS AND THERE WERE ADJUSTMENT RELATING TO EARLIER YEAR FOR WHICH THE ASSESSEE HAD SEPARATELY WRITTEN TO THE DEPARTMENT. IN OUR OPINION, ASSESSEE HAS RECEIVED THE SAID INFO RMATION FROM THE ASSESSING OFFICER DURING THE COURSE OF ASSESSMENT P ROCEEDINGS WHICH TOOK PLACE DURING FINANCIAL YEAR 2014-15. THE SAID AMOUNT OF INTEREST HAS THEREFORE BEEN PROVIDED IN THE FINANCIAL YEAR 2015- 16, WHICH IS ALSO SUBJECT TO CERTAIN RECTIFICATION ON FACTUAL GROUNDS AS THE AMOUNT OF SET OFF OF DIFFERENT YEARS IS NOT CORRECT. THEY HAVE MADE S EPARATE ENTRY IN GENERAL VOUCHER DATED 01/04/2015 MENTIONING BEING THE JV P ASS FOR INTEREST RECEIVED FORM INCOME TAX DEP. FOR THE A.Y. 2009-10. INTEREST INCOME BOOKED IN F.Y. 2015-16. IN OUR CONSIDERED OPINION, IN SUCH CIRCUMSTANCES N O ADDITION CAN BE MADE. IN THE RESULT, THIS GROUND OF APPEAL IS IN FAVOUR OF THE ASSESSEE. ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 7 - 5. SO FAR AS GROUND NO.3 IS CONCERNED BEING LATE PA YMENT OF EMPLOYEES CONTRIBUTIONS OF PROVIDENT FUND AND ESIC BY INVOKING SECTION 36(1)(VA) OF THE I.T. ACT. ON VERIFICATION OF P&L ACCOUNT NOTICED THAT ASSESSEE HAD DEBITED RS.19,71,067/- TOWARDS CO NTRIBUTION TO PROVIDENT FUND AND OTHER FUNDS. HOWEVER, FROM THE D ETAILS OF PF CONTRIBUTION ANNEXED TO AUDIT REPORT, LD. AO NOTICE D THAT APPELLANT HAD DEPOSITED AMOUNTS OF RS.13,76,928/- AND RS.79,916/- TOWARDS PF AND ESIC LATE. HE ADDED RS.14,56,844/- INVOKING PROVISI ONS OF SECTION 36(1)(V)(A) OF THE ACT. WE HAVE CONSIDERED THE FACT S AND CIRCUMSTANCE AND GONE THROUGH THE IMPUGNED ORDER. IN OUR OPINION JURISDICTIONAL HIGH COURT IS VERY MUCH CLEAR ON THIS POINT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION, RELEVANT PARA OF THE SAME IS REPRODUCED HERE AS UNDER: ' SECTION 43B, READ WITH SECTION 36(1)(VA) OF THE INC OME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CERTAIN DEDUCTIONS TO BE AL LOWED ON ACTUAL PAYMENT (EMPLOYEE CONTRIBUTION) - WHETHER WHERE AN EMPLOYER HAS NOT CREDITED SUM RECEIVED BY IT AS EMPLOYEES' CONTRIBUT ION TO EMPLOYEES' ACCOUNT IN RELEVANT FUND ON OR BEFORE DUE DATE AS P RESCRIBED IN EXPLANATION TO SECTION 36(1)(VA), ASSESSES SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMOUNT THOUGH HE DEPOSITS SAME BE FORE DUE DATE PRESCRIBED UNDER SECTION 43B I.E., PRIOR TO FILING OF RETURN UNDER SECTION 139(1) - HELD, YES - ASSESSEE STATE TRANSPORT CORPO RATION COLLECTED A SUM BEING PROVIDENT FUND CONTRIBUTION FROM ITS EMPL OYEES - HOWEVER, IT HAD DEPOSITED LESSER SUM IN PROVIDENT FUND ACCOUNT - ASSESSING OFFICER DISALLOWED SAME UNDER SECTION 43B - HOWEVER, COMMIS SIONER (APPEALS) DELETED DISALLOWANCE ON GROUND THAT EMPLOYEE, CONTR IBUTION WAS DEPOSITED BEFORE FILING RETURN - WHETHER SINCE ASSESSES HAD NO DEPOSITED SAID CONTRIBUTION IN RESPECTIVE FUND ACCOUNT ON DAT E AS PRESCRIBED IN EXPLANATION TO SECTION 36(1)(VA), DISALLOWANCE MADE BY ASSESSING OFFICER WAS JUST AND PROPER - HELD, YES [PARA 8] [I N FAVOUR OF REVENUE]' ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 8 - 6. IN VIEW OF THE ABOVE JUDGMENT, WE CONFIRM THE IM PUGNED ORDER AND DISMISS THIS GROUND OF APPEAL. 7. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS P ARTLY ALLOWED. THIS ORDER PRONOUNCED IN OPEN COURT ON 21/12/2017 SD/- SD/- . . ( ) ( ) ( N.K. BILLAIYA ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD; DATED 21/12/2017 ! ' / COPY OF THE ORDER FORWARDED TO : 1. %&!' / THE APPELLANT 2. (!' / THE RESPONDENT. 3. 67- # # + 8- / CONCERNED CIT 4. # # + 8- (%&) / THE CIT(A) 5. 9:; -67 , # %&. %672 , % / DR, ITAT, AHMEDABAD 6. ;< =, / GUARD FILE. # $ / BY ORDER, (9&- - //TRUE COPY// %/$ &' ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD ITA NO.2668 /AHD/2015 DENIS CHEM LAB LTD. VS. ACIT A.Y. 2012-13 - 9 - 1. DATE OF DICTATION 15/12/2017 (DICTATION-PAD 4 PA GES ATTACHED AT THE END OF THIS APPEAL-FILE) 2. DATE ON WHICH THE TYPED DRAFT IS PLACED BEFORE THE DICTATING MEMBER 20/12/2017 3. OTHER MEMBER 4. DATE ON WHICH THE APPROVED DRAFT COMES TO THE SR.P. S./P.S.. 5. DATE ON WHICH THE FAIR ORDER IS PLACED BEFORE THE D ICTATING MEMBER FOR PRONOUNCEMENT 6. DATE ON WHICH THE FAIR ORDER COMES BACK TO THE SR.P .S./P.S . 7. DATE ON WHICH THE FILE GOES TO THE BENCH CLERK 8. DATE ON WHICH THE FILE GOES TO THE HEAD CLERK ... 9. THE DATE ON WHICH THE FILE GOES TO THE ASSISTANT RE GISTRAR FOR SIGNATURE ON THE ORDER.. 10. DATE OF DESPATCH OF THE ORDER