Applitech Solutions Ltd., Ahmedabad V. The ACIT.,(OSD) rANGE-1, Ahmedabad

ITA 2856/AHD/2010

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 9374 (ITAT-AHMEDABAD)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 26-11-2010
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: C
• Next Hearing Date: 19-11-2010
• Assessment Year: 2002-2003
• Appeal Filed On: 12-10-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Section: 43B; 139(1)

Judgement Text

ITA.NO.2856 /AHD/2010 ASSESSMENT YEAR: 2002-03 1 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD BENCH C BEFORE SHRI G.D. AGARWAL, VICE PRESIDENT A ND SHRI T.K. SHARMA JUDICIAL MEMBER. I. T. A. NO. 2856 /AHD/2010 ASSESSMENT YEAR :2002-03 APPLITECH SOLUTION LTD., 503, PARITOSH, NR. DARPAN ACADEMY, USMANPURA, AHMEDABAD. VS. ASSISTANT COMMISSIONER OF INCOME TAX (OSD) RANGE-1, INSURANCE BUILDING ASHRAM ROAD, AHMEDABAD. APPELLANT RESPONDENT. PAN NO: AABCA 8332P APPELLANT BY : SHRI P. M. MEHTA. RESPONDENT BY : SHRI SANJEEV KASHYAP, SR. D.R. ORDER PER SHRI T.K. SHARMA, JUDICIAL MEMBER. THIS APPEAL FILED BY THE ASSESSEE IS AGAINST THE OR DER DATED 31-8-2010 OF LD. C.I.T.(A)-VI, AHMEDABAD FOR THE ASSESSMENT YEAR 2002-03. 2. THE ONLY GROUND RAISED IN THIS APPEAL IS AS UNDE R :- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND WITHOUT PREJUDICE, THE LD. COMMISSIONER OF INCOME TAX(APPEA LS) HAS ERRED IN CONFIRMING THE DISALLOWANCE OF RS.17,21,934/- BEING EMPLOYEES CONTRIBUTION MADE TOWARDS PROVIDENT FUND. 3. BRIEFLY STATED THE FACTS ARE THAT IN THE ASSESSMENT ORDER, THE ASSESSING OFFICER DISALLOWED RS.17,21,934/- BEING EMPLOYEES C ONTRIBUTION TO PF. ON APPEAL, IN THE IMPUGNED ORDER THE LD. C.I.T.(A) CON FIRMED THE SAID DISALLOWANCE OBSERVING THAT ASSESSEE HAVING MADE PAYMENT BEYOND THE DUE DATE PRESCRIBED ITA.NO.2856 /AHD/2010 ASSESSMENT YEAR: 2002-03 2 UNDER THE PROVIDENT FUND ACT, THE SAME IS NOT ALLOW ABLE U/S. 36(1)(VA) OF THE I.T. ACT. AGGRIEVED WITH THE ORDER OF THE LD. C.I.T.(A), THE ASSESSEE IS IN APPEAL. 4. AT THE TIME OF HEARING ON BEHALF OF THE ASSESSEE SHRI P.M. MEHTA, APPEARED AND CONTENDED THAT FOLLOWING PAYMENTS WERE MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME FOR THE ASSESSM ENT YEAR 2002-03:- DATE OF PAYMENT. AMOUNT OF EMPLOYEES CONTRIBUTION (RS.) 17-8-2001 1,85,776 24-12-2001 1,94,211 24-12-2001 1,97,071 20-4-2002 1,95,385 12-4-2002 1,81,612 17-8-2002 1,98,997 TOTAL. 11,50,052/- 5. THE LD. COUNSEL OF THE ASSESSEE FURTHER SUBMITTE D THAT FINANCE ACT,2003 DELETED THE SECOND PROVISO AND AMENDED THE FIRST PR OVISO W.E.F. ASSESSMENT YEAR 2004-05 WHEREIN IT HAS BEEN STATED THAT IF PAY MENT OF PF CONTRIBUTION HAS BEEN MADE WITHIN THE DUE DATE OF FILING OF RETURN O F INCOME, THE SAME IS ALLOWABLE AS DEDUCTION U/S. 43B OF THE ACT. IT WAS CONTENDED THAT AFORESAID AMENDMENT SQUARELY APPLY TO EMPLOYEES CONTRIBUTION TO THE PF . AS IN THE CASE OF THE ASSESSEE, THE PAYMENT HAVE BEEN MADE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME, THE ADDITION MADE BY ASSESSING OF FICER AND CONFIRMED BYLD. C.IT.(A) U/S. 36(1)(VA) BE DELETED. IN SUPPORT OF THIS RELIANCE IS PLACED ON THE FOLLOWING DECISIONS :- (I) ARAVALLI MINERALS & CHEMICALS PVT. LTD., 292 ITR 36 1; WHEREIN THE HONBLE JODHPUR TRIBUNAL HAS DECIDED T HE ISSUE IN FAVOUR OF THE APPELLANT IN VIEW OF AMENDMENT TO SE CTION 43B OF THE ACT AND HELD THAT THE DEPOSITS TO EMPLOYEES PROVID ENT FUND WERE GOT CLEARED MUCH PRIOR TO DUE DATE UNDER SECTION 13 9(1) WAS ENTITLED TO DEDUCTION OF SUCH SUM. (II) SAI CONSULTING ENTINEERS PVT. LTD. VS. DCIT 10 TH AUGUST,2007 IN ITA NO.2262/AHD/07 ; WHEREIN THE HONBLE AHMEDABAD TRIBUNAL HAS DECIDED THE MATTER IN FAVOUR OF THE ASSESSEE AN D HELD THAT THE ITA.NO.2856 /AHD/2010 ASSESSMENT YEAR: 2002-03 3 EMPLOYEES CONTRIBUTION MADE BY THE ASSESSEE WERE W ITHIN THE DUE DATE OF FILING OF RETURN, DEDUCTION IS ALLOWABLE TO THE ASSESSEE. (III) GUJARAT CONTAINERS LTD., VS. ACIT IN ITA NO.2609/AH D/08 , DATED 2 ND MARCH,2009 WHEREIN THE HONBLE AHMEDABAD TRIBUNAL ; HAS OBSERVED THAT WHEN IT HAS NOT BEEN DISPUTED THAT EM PLOYEES CONTRIBUTIONS TO PF HAVING BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN UNDER SECTION 139(1) OF THE ACT, IT IS HELD THAT EMPLOYEES CONTRIBUTION TOWARDS PF (HAVING BEEN MADE WITHIN THE DUE DATE OF FILING OF RETURN OF INCOME FOR THE YEAR UNDER CO NSIDERATION), THERE IS NO GROUND FOR DISALLOWING THE SAME. (IV) CIT V/S. ALOM EXTRUSION LTD., (2009) 227 CTR(SC)-41 7: CIT V/S. VINAY CEMENT LTD., (2009) 313 ITR (ST)(SC: THE ISSUE BEFORE THEIR LORDSHIPS WAS REGARDING BUSI NESS DISALLOWANCE UNDER SECTION 43B OF THE ACT IN RELATI ON TO CONTRIBUTIONS TOWARDS PROVIDENT FUND VIS--VIS OMIS SION OF SECOND PROVISO OF SECTION 43B. THEY OBSERVED THAT RELAXATI ON ALLOWED BY THE FIRST PROVISO OF SECTION 43B WAS RESTRICTED ONL Y TO TAX, DUTY, CESS AND FEE AND DID NOT APPLY TO CONTRIBUTION TO L ABOUR WELFARE FUNDS. SINCE THE SECOND PROVISO RESULTED IN IMPLEME NTATION PROBLEMS, IT WAS DELETED BY FINANCE ACT, 2003 THERE BY EQUATING TAX, DUTY, CESS AND FEES WITH CONTRIBUTION TO WELFA RE FUNDS THUS,. OMISSION OF SECOND PROVISO AND THE CORRESPONDING AM ENDMENTS TO THE FIRST PROVISO BY FINANCE ACT, 2003 ARE CURATIVE IN NATURE AND ARE EFFECTIVELY RETROSPECTIVELY W.E.F.1 ST APRIL, 1988. IF THE CONTENTION OF THE DEPARTMENT THAT THE AMENDMENTS ARE EFFECTIVE PROSPECTIVELY IS ACCEPTED, IT WOULD CAUSE HARDSHIP AND INVIDIOUS DISCRIMINATION AMONG ASSESSEES AND ACCORDINGLY ALLOWED THE DEDUCTI ONS AS CLAIMED BY THE APPELLANT, SINCE SUCH CONTRIBUTIONS HAVING BEEN MADE BEFORE FILING OF RETURN OF INCOME, THEY WERE D EDUCTIBLE. 7. IN VIEW OF THE AFORESAID FACT AND JUDICIAL PRONO UNCEMENTS, COUNSEL OF THE ASSESSEE SUBMITTED THAT ASSESSEES CLAIM OF EMPLOYE ES CONTRIBUTION TOWARDS PF TO THE EXTENT OF RS.11,50,052/- IS ALLOWABLE IN VIE W OF THE AMENDMENT BY FINANCE ACT,2003, WHICH AMENDMENT HAS BEEN HELD AS CURATIVE AND APPLICABLE RESPECTIVELY W.E.F. 1-4-1988. 8. ON THE OTHER HAND, THE LD. D.R. VEHEMENTLY SUPPO RTED THE VIEW TAKEN BY THE LD. C.I.T.(A). HE POINTED OUT THAT SECTION 43B HAS NO APPLICATION WHATSOEVER, ITA.NO.2856 /AHD/2010 ASSESSMENT YEAR: 2002-03 4 FOR EMPLOYEES CONTRIBUTION BECAUSE IT IS GOVERNED BY PROVISIONS CONTAINED IN SECTION 36(1)(VA) OF THE ACT,1961. 9. IN REJOINDER, THE COUNSEL OF THE ASSESSEE RELIED ON THE JUDGEMENT OF HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. AIMIL LTD., (2010) 321 ITR- 508. HE SUBMITTED THAT IN THIS JUDGEMENT THE HONBL E DELHI HIGH COURT HAS SPECIFICALLY DEALT WITH THE EMPLOYEES CONTRIBUTION ALSO IN PARAGRAPH 19 ON PAGE 518 OF THE REPORT. THEREFORE, THE A.O. BE DIRECTED TO ALLOW THE EMPLOYEES CONTRIBUTION TO THE EXTENT IT IS PAID BEFORE THE DU E DATE FOR FILING THE RETURN OF INCOME. 10. AFTER HEARING BOTH THE SIDES WE HAVE CAREFULLY THROUGH THE ORDERS OF THE AUTHORITIES BELOW, AS WELL AS THE DECISION OF HONB LE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. AIMIL LTD., (SUPRA). IT IS PERTINENT TO NOTE THAT HONBLE DELHI HIGH COURT HAS SPECIFICALLY DEALT WITH THE EMPLOYEES CO NTRIBUTION ALSO WHICH IS EVIDENT FROM PARAGRAPH 19 ON PAGE-518 OF THE REPORT WHICH R EADS AS UNDER :- 19. WE MAY ONLY ADD THAT IF THE EMPLOYEES CONTRIB UTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR WHICH SPECIFIC PROVISIONS ARE MADE IN THE PROVI DENT FUND ACT AS WELL AS THE ESI ACT. THEREFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORESAID CONSEQUENCES. IN S O FAR AS THE INCOME TAX ACT IS CONCERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN BY THE SUPREME COURT IN VINAY CEMENT (2009) 313 ITR (ST.)1. 11. IN THE PRESENT CASE, ACCORDING TO THE LD. COUNS EL OF THE ASSESSEE, RS.11,50,052/- BEING EMPLOYEES CONTRIBUTION TO PF WERE PAID BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. THIS NEEDS VE RIFICATION AT THE END OF THE ASSESSING OFFICER. SUBJECT TO THIS VERIFICATION, AS SESSING OFFICER IS DIRECTED TO ALLOW THE EMPLOYEES CONTRIBUTION TO PF TO THE EXTE NT IT IS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME AS PER THE RATI O OF THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF C.I.T. VS. AIMIL LTD., (S UPRA). ITA.NO.2856 /AHD/2010 ASSESSMENT YEAR: 2002-03 5 12. IN THE RESULT, FOR STATISTICAL PURPOSES, THE AP PEAL OF THE ASSESSEE IS PARTLY ALLOWED. ORDER SIGNED, DATED AND PRONOUNCED IN THE COURT ON 26 TH DAY OF NOVEMBER, 2010. SD/- SD/- (G. D. AGARWAL) (T. K. SHARMA) VICE PRESIDENT JUDICIAL MEMBER. AHMEDABAD: ON THIS 26 TH DAY OF NOVEMBER, 2010. COPY OF THE ORDER FORWARDED TO:- 1. THE APPELLANT. 2. THE RESPONDENT 3. THE CIT CONCERNED. 4. THE LD. CIT (A)-VI,AHMEDABAD. 5. THE DR, AHMEDABAD BENCH 6. THE GUARD FILE. BY ORDER. DY./ASSISTANT REGISTRAR),ITAT.,AHMEDAB AD. DATE. INITIALS. 1. DRAFTED DICTATED ON 22 -11-2010 2. DRAFT PLACED BEFORE AUTHORITY. 23-11-20 10 3. DRAFT PROPOSED & PLACED BEFORE SECOND MEMBER. 24-11-2 010 4. DRAFT DISCUSSED/APPROVED BY SECOND MEMBER. 24-11- 2010 5. APPROVED DRAFT COMES TO P.S. 26-11-2010 6. KEPT FOR PRONOUNCEMENT ON 26-11-2010 7. FILE SENT TO THE BENCH CLERK. 26-11-20 10 8. DATE ON WHICH FILE GOES TO AR 9. DATE OF DISPATCH OF ORDER.