Secunderabad Hotels Private Limited , Secunderabad V. Asst. Commissioner of Income Tax, Circle-3(1), Hyderabad

ITA 268/Hyd/2020

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 2163 (ITAT-HYDERABAD)
• Duration Of Justice: 1 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB-B
• Assessment Year: 2018-2019
• Appeal Filed On: 17-03-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R MUJUMDAR
• Assessee Lawyers: P MURALI MOHANA RAO
• Keywords: Opportunity of being heard; Tax effect
• Section: 43B; 201; 139(1); 43; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD B BENCH : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S. GODARA, JUDICIAL MEMBER AND SHRI L.P. SAHU, ACCOUNTANT MEMBER ITA NO. 268 /HYD./20 20 ASSESSMENT YEAR: 201 8 - 19 M/S SECUNDERABAD HOTELS PRIVATE LTD. VS. ACIT, CIRCLE 3 ( 1 ) SECUNDERABAD HYDERABAD [PAN: AA I C S6896B ] (APPELLANT) (RESPONDENT) FOR APPELLANT : SRI P. MURALI MOHANA RAO, C.A. FOR RESPONDENT : S HRI R. MUJUMDAR, DR DATE OF HEARING : 15 /0 6 /2021 DATE OF PRONOUNCEMENT : 29 /06/2021 O R D E R PER S.S. GODARA, J.M. THIS ASSESSEES APPEAL FOR A.Y. 201 8 - 19 ARISES AGAINST THE COMMISSIONER OF INCOME TAX (APPEALS) [CIT(A)] - 3 , HYDERABADS ORDER DATED 26.02.2020 PASSED IN CASE NO. 19799 /201 9 - 20 IN PROCEEDINGS U/S 14 3( 1 ) OF THE INCOME TAX ACT, 1961 [IN SHORT THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. ASSESSEE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN ITS APPEAL. THE ORDER OF THE LD. CIT (A) - I, HYDERABAD IS ERRONEOUS BOTH ON FACTS AND IN LAW, TO THE EXTENT THE ORDER IS PREJUDICIAL TO THE INTEREST OF THE APPELLANT. 2. THE LD. CIT (A) ERRED IN DISMI SSING THE APPEAL OF THE APPELLANT ON THE ISSUE OF ADD ITION TOW ARDS DISALLOWANCE OF PAYMENT OF EMPLOYEE CONTRI BUTION OF PF ITA 268 /HYD/ 2020 AY: 201 8 - 19 M/S SECUNDERABAD HOTESL PVT. LTD. , SECBAD. 2 AND ESI AMOUNTING TO RS. 40,31,798 / - WITHOUT AFFOR DING REASONABLE OPPORTUNITY OF BEING HEARD. [TAX EFFECT: RS.13,33,033/ - ] 3. THE LD. CIT (A) ERRED IN DISMISSING THE APPEAL OF THE APPELLANT ON THE ISSUE OF ADDITION TOWARDS DISALLOWANCE OF PAYMENT OF EMPLOYEE CONTRIBUTION OF PF AND ES I WITHOUT APPRECIATING THE FACTS OF THE CASE AND THE LEGAL POSITION AND MERELY STATING THAT THE PROVISIONS OF SECTION 43B OF THE ACT ARE NOT APPLICABLE IN RESPECT OF EMPLOYEE CONTRIBUTION. : [TAX EFFECT: RS.13,33,033/ - ] 4. THE LD. CIT (A) O UGHT TO HAVE APPRECIATED THE FAC T THAT THE PROVISIONS OF SECTION 43B PERMITS ALLOWANCE OF PAYMENTS MADE UP TO THE DUE DATE OF FILING THE RETURN OF INCOME AND THE SECTION 3 6(1)(VA) OF THE 1.T ACT SHOULD BE READ ALONG WITH SECTION 43 B OF THE 1. T ACT. [TAX EFFECT: RS.13,33,033/ - ] 5. THE LD. C I T (A) OUGHT TO HAVE FAIRLY APPRECIATED THE FACT THAT THE APPELLANT COMPANY HAS PAID EMPLOYEE CONTRIBUTION OF PF AND ES I , BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME AS LAID DOWN IN SECTION 139(1) OF THE ACT AND FURNISHED PROOF OF SUCH PAYMENTS AND T HEREFORE SUCH PAYMENTS ARE ALLOWABLE DEDUCTIONS U/ S 43 B OF THE ACT. [TAX EFFECT: RS.13,33,033/ - ] 6 . THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE PROVISIONS OF SECTION 43B HAVE NOT DIFFERENTIATED BETWEEN EMPLOYER' S CONTRIBUTION AND EMPL OYEE'S CONTRIBUTION AFTER THE OMISSION OF SECOND PROVISO OF SECTION 43B OF THE ACT BY THE FINANCE ACT, 2003, W.E. F . 1.04.2004. 7. THE LD. CIT (A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE PROVISIONS OF SECTION 43B ARE OVERRIDING PROVISIONS AND THE SAME ARE APPLICABLE EVEN TO THE PAYMENTS MADE BY THE APPELLANT TOWARDS EMPLOYEES CONTRIBUTION T PF AND ESI BEFORE THE DUE DATE OF FILING OF RETURN F INCOME, AS HELD BY THE HONBLE ITAT HYDERABAD AND OTHER COURTS OF LAW I NUMBER OF CASES 8. THE ASSESSEE MAY ADD ALTER, OR MODIFY OR SUBSTITUTE ANY OTHER POINTS TO THE GROUNDS OF APPEAL AT ANY TIME BEFORE AND OR AT THE TIME OF HEARING OF THE APPEAL. 2 . COMING TO THE SOLE SUBSTANTIVE ISSUE OF ESI/PF DISALLOWANCE OF RS. 13,33,033/ - , THE ASSESSEES AND REVENUES PLEA THAT THE SAME HAS BEEN PAID BEFORE THE DUE DATE OF FILING SEC. 139(1) RETURN AND AFTER THE DUE DATE PRESCRIBED IN THE CORRESPONDING STATUTES; RESPECTIVELY. WE NOTICE IN THIS FACTUAL BACKDROP THAT THE LEGISLATURE HAS N OT ONLY INCORPORATED NECESSARY AMENDMENTS IN SECTIONS 36(VA) AS WELL AS 43B VIDE FINANCE ACT, 2021 TO THIS EFFECT BUT ALSO THE CBDT HAS ISSUED MEMORANDUM OF EXPLANATION THAT THE SAME APPLIES W.E.F. 1.4.2021 ONLY. IT IS FURTHER NOT AN ISSUE THAT THE F OREGOING LEGISLATIVE AMENDMENTS HAVE PROPOSED EMPLOYER S CONTRIBUTION; DISALLOWANCE U/S 43B AS AGAINST EMPLOYEE S CONTRIBUTION U/S 36 (VA) OF THE ACT; RESPECTIVELY. HOWEVER, KEEPING IN MIND THE FACT THAT THE SAME HAS BEEN ITA 268 /HYD/ 2020 AY: 201 8 - 19 M/S SECUNDERABAD HOTESL PVT. LTD. , SECBAD. 3 CLARIFIED TO BE APPLICABLE ONL Y WITH PROSPECTIVE EFFECT FROM 1.4.2021, WE HOLD THAT THE IMPUGNED DISALLOWANCE IS NOT SUSTAINABLE IN VIEW OF ALL THESE LATEST DEVELOPMENTS EVEN IF THE REVENUES CASE IS SUPPORTED BY THE FOLLOWING CASE LAWS. (I) CIT VS. MERCHEM LTD, [2015] 378 ITR 443(KER ) ; (II) CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (2014) 366 ITR 170 (GUJ.); (III) CIT VS. SOUTH INDIA CORPORATION LTD. (2000) 242 ITR 114 (KER); (IV.) CIT VS. GTN TEXTILES LTD. (2004) 269 ITR 282 (KER); (V) CIT VS. JAIRAM & SONS [2004] 269 ITR 285 (KER) THE IMPUGNED ESI/PF DISALLOWANCE IS DIRECTED TO BE DELETED THEREFORE. THIS ASSESSEES APPEAL IS ALLOWED IN ABOVE TERMS. ORDER PRONOUNCED IN OPEN COURT ON 29 /06/2021. SD/ - SD/ - (L.P. SAHU) (S.S. GODARA) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 29 TH JUN E, 2021 *GMV COPY OF ORDER FORWARDED TO: 1. M/S SECUNDERABAD HOTELS PVT. LTD., C/O P. MURALI & CO., CHARTERED ACCOUNTANTS, 6 - 3 - 6 55/2/3 , SOMAJIGUDA, HYDERABAD 500 0 82, TELANGANA 2. ACIT, CIRCLE 3(1), HYDERABAD 3. JCIT, RANGE 3 , HYDERABAD 4 CIT(A) - 3 , HYDERABAD 5 PR.CIT - 3 , HYDERABAD . 6 D.R. ITAT HYDERABAD 7 GUARD FILE