M/s. U.P.Cooperative Processing & Cold Storage Federation Ltd., Lucknow V. Asstt. Commissioner of Income Tax, Lucknow

ITA 280/LKW/2013

• Counselvise Citation: 28023714 RSA 2013
• Duration Of Justice: 2 year(s) 1 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2015
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Next Hearing Date: 13-04-2015
• Assessment Year: 2008-2009
• Appeal Filed On: 22-04-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: SWATI RATNA
• Keywords: Opportunity of being heard
• Section: 43B

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI A.K. GARODIA, ACCOUNTANT MEMBER ITA NO.280/LKW/2013 ASSESSMENT YEAR:2008 - 09 A.C.I.T., RANGE - II, LUCKNOW. VS M/S U.P. CO - OPERATIVE PROCESSING & COLD STORAGE FEDERATION LTD., 19 - A, VIDHAN SABHA MARG, LUCKNOW. PAN:AAACU3507F (RESPONDENT) (APPELLANT) SHRI P. K. KAPOOR, C.A. APPELLANT BY SMT. SWATI RATNA, D. R. RESPONDENT BY 13/04/2015 DATE OF HEARING 16 /06/2015 DATE OF PRONOUNCEMENT O R D E R PER A. K. GARODIA, A.M. THIS IS ASSESSEES APPEAL DIRECTED AGAINST THE ORDER PASSED BY LEARNED CIT(A) - I, LUCKNOW DATED 06/02/2013 FOR THE ASSESSMENT YEAR 2008 - 09. 1. BECAUSE THE LEARNED ASSESSING OFFICER AND THE LEARNED CIT(A) - I, LUCKNOW HAVE ERRED IN LAW AS WELL AS IN FACTS IN CONFIRMING THE AMOUNT OF RS.36,00,000/ - BEING PROVISION FOR AUDITOR'S FEES AS MADE FOR THE YEAR 2007 - 2008 RELEVANT TO ASSESSMENT YEAR 2008 - 2009. THE LEARNED CIT(A) HAS ALSO NOT CON SIDERED THIS FACT THAT THE ASSESSEE HAS PAID A SUM OF RS.43,47,846 / - OUT OF THE OPENING BALANCE APPEARING IN THE LEDGER A/C OF AUDITOR'S FEE. FURTHER LEARNED CIT(A) - I, LUCKNOW HAS NOT GIVEN WEIGHTAGE TO THIS FACT AND LEGAL STATUS THAT PROVISION OF AUDIT FE E DOES NOT COME UNDER THE AMBIT OF 43B OF THE I.T. ACT 1961. 2 2. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE COPY OF RELEVANT PAGES OF THE LEDGER OF THE ASSESSEE ARE AVAILABLE ON PAGE NO. 46 AND FROM THE SAME IT CAN BE SEEN THAT THE PROVISIO N OF RS. 46 L ACS WAS MADE FOR AUDIT FEES FOR ASSESSMENT YEAR 2004 - 05, 2005 - 2006 AND 2006 - 2007. HE ALSO SUBMITTED THAT IF THE PROVISION IS MADE, THE CLAIM OF THE ASSESSEE SHOULD BE ALLOWED. HE ALSO SUBMITTED THAT ON PAGES 40 & 41 IS A LETTER FROM CHIEF AU DIT OFFICER, CO - OPERATIVE SOCIETY AND PANCHAYAT, U.P. DATED 17/06/2009 FOR PAYMENT OF AUDIT FEES. 3. LEARNED D.R. OF THE REVENUE SUPPORTED THE ORDER OF LEARNED CIT(A). 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THE DECISION OF CIT(A) IS O N THE BASIS THAT THE EXPENDITURE ARE PERTAIN ING TO EARLIER YEAR S AND THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH ANY EVIDENCE TO SHOW THAT THE ABOVE EXPENSES HAVE CRYSTALLIZED IN THE PRESENT YEAR. WE FIND FORCE IN THE FINDING OF CIT(A) BECAUSE NO DOUBT , THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND THEREFORE, ANY EXPENSE OF EARLIER YEAR CAN BE ALLOWED IN THE PRESENT YEAR ONLY IF THE ASSESSEE IS ABLE TO ESTABLISH THAT THE EXPENSES HAVE CRYSTALLIZED IN THE PRESENT YEAR. THERE IS CLEAR FIND ING OF CIT(A) THAT SINCE THE ASSESSEE IS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING, THE EXPENSES OF EARLIER YEAR CANNOT BE ALLOWED IN THE PRESENT YEAR BECAUSE THE ASSESSEE HAD NOT BEEN ABLE TO FURNISH ANY EVIDENCE TO SHOW THAT THE ABOVE EXPENSES HAVE CRYST ALLIZED IN THE PRESENT YEAR. BEFORE US ALSO, NO SUCH EVIDENCE HAS BEEN BROUGHT ON RECORD BY THE ASSESSEE THAT THE EXPENSES HAVE CRYSTALLIZED DURING THE 3 PRESENT YEAR. WE, THEREFORE, DO NOT FIND ANY REASON TO INTERFERE IN THE ORDER OF CIT(A). ACCORDINGLY, THIS GROUND IS REJECTED. 5. GROUND NO. 2 IS AS UNDER: 2. BECAUSE THE LEARNED CIT(A) - I, LUCKNOW HAS WRONGLY CONFIRMED THE AMOUNT OF RS.10,28,714/ - BEING EPF AMOUNT, UNDER THIS IMPRESSION THAT THIS AMOUNT IS INTEREST AMOUNT WHICH WAS PAYABLE BY THE ASSESS EE. THE LEARNED CIT(A) ALSO IGNORED THIS FACT THAT SIMILAR NATURE OF ADDITION PERTAINING TO THE ASSESSMENT YEAR 2007 - 2008 HAS BEEN SET ASIDE BY THE HON'BLE I.T.A.T. A BENCH, LUCKNOW VIDE I.T.A. NO.228/LKW/2011 DATED 4 TH JULY, 2011. 6. IT WAS SUBMITTED BY LEARNED A.R. OF THE ASSESSEE THAT THE TRIBUNAL ORDER IN FIRST ROUND IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2007 - 08 IN I.T.A. NO.228 & 274/LKW/11 DATED 14/07/2011 IS AVAILABLE ON PAGES 78 TO 84 AND IN PARTICULAR OUR ATTENTION WAS DRA WN TO PARA 9 - 11 OF THIS TRIBUNAL ORDER AND IT WAS POINTED OUT THAT IN THAT ORDER, THE TRIBUNAL HAS RESTORED BACK THE MATTER TO CIT(A) FOR FRESH DECISION WITH THE DIRECTION THAT THE CIT(A) SHOULD FIND OUT AS TO WHETHER ANY AMOUNT IS REPRESENTING PANEL INTER EST ON EPF. HE FURTHER SUBMITTED THAT ACCORDINGLY IN THE PRESENT YEAR, A CLEAR FINDING IS GIVEN BY CIT(A) THAT THIS PAYMENT OF RS.10,28,714/ - IS NOT ON ACCOUNT OF INTEREST PAYMENT BUT THIS PAYMENT IS OF EARLIER YEARS AND THEREFORE, NO DISALLOWANCE IS JUST IFIED. 7. LEARNED D. R. OF THE REVENUE SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW. 4 8. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FIND THAT THIS ISSUE WAS DECIDED BY LEARNED CIT(A) AS PER PARA 6 & 6.1 OF HIS ORDER, WHICH ARE REPRODUCED BELOW FOR TH E SAKE OF READY REFERENCE: - 6. GROUND NO. 3: DURING THE ASSESSMENT PROCEEDING THE AO OBSERVED THAT TOTAL PROVIDENT FUND DEDUCTION MADE BETWEEN APRIL, 2007 TO MARCH, 2008 WAS RS.68,28,955/ - WHEREAS THE AMOUNT DEPOSITED WAS RS.58,00,241/ - . THE AO ADDED THE DIFFERENCE OF RS.10,28,714/ - AS PENAL INTEREST WHICH WAS NOT ALLOWABLE. THE APPELLANT IN THE WRITTEN SUBMISSIONS DATED 15/01/2013 CONTENDED THAT AS PER COPY OF A/C OF STATEMENT OF EPF DEDUCTION AND ITS DEPOSITS, IT IS NOT APPARENT THAT THE APPELLANT HA S PAID ANY INTEREST ALONG WITH PAYMENT OF EPF. THE APPELLANT ALSO SUBMITTED THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER IS NOT IN ORDER. SIMILAR DISALLOWANCE OF RS.2,13,321/ - WAS MADE IN THE AY 2007 - 08 WHICH WAS DELETED BY CIT(A) - I, LUCKNOW VIDE HI S ORDER DATED 21.02.2011 BUT THE I.T.A.T. HAS SET ASIDE THIS ISSUE TO THE AO TO DECIDE IT AFRESH AFTER CALLING FOR THE DETAILS FROM THE ASSESSEE . IN THIS REGARD IT WAS SUBMITTED THAT THE ASSESSEE HAS PROVIDED MONTH WISE DETAILS OF EPF CONTRIBUTION AND ITS DATES OF DEPOSIT WHICH MAY BE CONSIDERED AND ADDITION OF RS.10,28,714/ - MADE ON ACCOUNT OF ALLEGED INTEREST PAYMENT TO THE TOTAL INCOME OF THE ASSESSEE MAY BE DELETED. THE SET ASIDE MATTER IS STILL UNDECIDED BY THE AO. THE APPELLANT IN ANOTHER SUBMISSION DATED 22.01.2013 CLAIMED THAT AS REGARDS THE AMOUNT OF RS.10,28,714/ - UNDER THE HEAD EPF IS NOT INTEREST PAYMENT BUT IT IS PAYMENT OF EARLIER YEARS' AMOUNT OF THOSE EMPLOYEES WHO WERE ON DEPUTATION FROM NIRMAN NIGAM LTD., RURAL ENGINEERING SERVICE & IRRIGATION DEPARTMENT. THUS , THE AMOUNT ADDED AS INTEREST TO TOTAL INCOME OF THE ASSESSEE IS APPARENTLY WRONG AS THERE WAS DEFAULT OF SOME DAYS ONLY NOT EVEN A COMPLETE MONTH. THE EPF AMOUNT AS CONTRIBUTED BY THE EMPLOYEE S IS PERMITTED TO BE DEPOSITED LATEST BY 20 TH DAY OF EVERY MONTH. UNDER THE CIRCUMSTANCES AS STATED ABOVE THE INTEREST AMOUNT AS ADDED TO THE TOTAL INCOME IS NOT JUSTIFIED ADDITION. 6.1 I HAVE CONSIDERED THE ASSESSMENT ORDER AND SUBMISSIONS MADE BY THE A PPELLANT. I HAVE ALSO GONE THROUGH THE ORDERS OF THE CIT(A) AND HON'BLE ITAT. THERE IS NO CLARITY IN THE SUBMISSIONS OF THE APPELLANT. NO EVIDENCE HAS BEEN FURNISHED TO SHOW THAT THE DI FF ERENCE REPRESENTED THE EARLIER YEARS' CONTRIBUTION TOWARDS EPF ACCOUN T OF THE EMPLOYEES WHO WERE ON THE DEPUTATION WITH THE APPELLANT. IT IS ALSO NOT CLEAR WHETHER THE AMOUNT HAS BEEN CREDITED TO THE ACCOUNT OF 5 EMPLOYEE IN THE RELEVANT FUND. IN VIEW OF THE SAME , I CONFIRM THIS ADDITION TREATING IT AS INCOME U/S 2(24)(X) RW S 36( 1 )(VA) OF THE ACT. 8.1 FROM THE ABOVE PARAS FROM THE ORDER OF CIT(A), WE FIND THAT AS PER PARA 6 OF HIS ORDER, IT IS NOTED BY HIM THAT THE AMOUNT OF EPF DEDUCTION MADE BETWEEN APRIL, 2007 TO M ARCH, 2008 WAS RS.68,28,955/ - BUT AS PER PARA 6 OF THE ASSESSMENT ORDER, IT IS NOTED BY THE ASSESSING OFFICER THAT THE TOTAL DEDUCTION FROM APRIL 2007 TO MARCH 2008 WAS RS.58,00,241/ - AND THE AMOUNT DEPOSITED WAS RS.68,28,955/ - AND THEREFORE , THE DIFFERENCE OF RS.10,28,714/ - RELATES TO THE PENAL INTE REST WHICH IS NOT ALLOWABLE. AS PER THE DETAILS AVAILABLE IN PAPER BOOK ON PAGE NO. 49 ALSO, IT IS SEEN THAT THE AMOUNT OF PF DEDUCTION DURING APRIL 2007 TO MARCH 2008 WAS RS.58,00,241/ - BUT PAYMENT MADE WAS RS.68,28,955/ - . IN FACT ON 11/05/2007, THE ASS ESSEE HAS MADE PAYMENT OF RS.12,55,952/ - WHEREAS THE AMOUNT DEDUCTED WAS RS.3,51,592/ - AND IN MAY 2007 WAS RS.4,01,366/ - TOTALING TO RS.7,52,958/ - . THERE IS NO INDICATION IN THE ASSESSMENT ORDER AS TO ON WHAT BASIS , THE ASSESSING OFFICER HAS COME TO THE CONCLUSION THAT THE DIFFERENCE BEING EXCESS PAYMENT TO THE EXTENT OF RS.10,28,714/ - IS ON ACCOUNT OF PANEL INTEREST. THE FINDING OF CIT(A) IS TOTALLY OPPOSITE FROM THE ASSESSING OFFICER BECAUSE AS PER THE CIT(A), THE DEDUCTION MADE IS HIGHER AND THE AMOUN T PAID IS LOWER. THIS IS ALSO NOTED BY CIT(A) IN PARA 6.1 OF HIS ORDER THAT NO EVIDENCE HAS BEEN FURNISHED TO SHOW THAT THE DIFFERENCE REPRESENTED THE EARLIER YEARS' CONTRIBUTION TOWARDS EPF ACCOUNT OF THE EMPLOYEES WHO WERE ON THE DEPUTATION WITH THE ASS ESSEE. CONSIDERING ALL THESE FACTS, WE FEEL IT PROPER THAT THIS ISSUE SHOULD GO TO THE FILE OF CIT(A) FOR FRESH DECISION AFTER VERIFYING THE FACTS. THE CIT(A) SHOULD FIRST GIVE A CLEAR FINDING AS TO WHETHER THE AMOUNT PAID BY THE ASSESSEE IS LESS OR MORE THAN THE AMOUNT OF PF DEDUCTED DURING THE PRESENT YEAR. IF THE DEDUCTION IS MORE AND PAYMENT IS LESS THEN THE ASSESSEE HAS TO ESTABLISH THAT SHORT PAYMENT WAS PAID BY THE ASSESSEE IN THE NEXT YEAR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE PRESENT YEAR AS PER SECTION 43B AND IN THAT SITUATION ONLY , THE DEDUCTION CAN BE ALLOWED IN THE PRESENT YEAR. IF THIS IS FOUND THAT THE PAYMENT MADE IS MORE THAN THE DEDUCTION AND THE ASSESSEE IS 6 CLAIMING DEDUCTION FOR THE AMOUNT OF PAYMENT, THEN THE ASS ESSEE HAS TO ESTABLISH THAT SUCH EXCESS PAYMENT IS NOT ON ACCOUNT OF PANEL INTEREST BUT ON ACCOUNT OF CONTRIBUTION TOWARDS EPF FOR EMPLOYEES WHO WERE ON DEPUTATION AS HAS BEEN CLAIMED BY THE ASSESSEE. ACCORDINGLY, THE MATTER IS RESTORED TO CIT(A) FOR FRES H DECISION IN THE LIGHT OF ABOVE DISCUSSION AFTER PROVIDING ADEQUATE OPPORTUNITY OF BEING HEARD TO BOTH THE SIDES. 9. IN THE RESULT, THE APPEAL OF THE ASSESSEE STANDS PARTLY ALLOWED FOR STATISTICAL PURPOSES. (ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTION PAGE) SD/. SD/. (SUNIL KUMAR YADAV) ( A. K. GARODIA ) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 16 /06/2015 *C.L.SINGH COPY OF THE ORDER FORWARDED TO : 1.THE APPELLANT 2.THE RESPONDENT. 3.CONCERNED CIT 4.THE CIT(A) 5.D.R., I.T.A.T., LUCKNOW ASSTT. REGISTRAR