Thatiparthi Mohan Reddy,Chittoor, Hyderabad V. Income Tax Officer ,Ward 1(3) ,Tirupati , Tirupati

ITA 292/Hyd/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7061 (ITAT-HYDERABAD)
• Duration Of Justice: 1 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 09-07-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: WASEEMURREHMANDR
• Assessee Lawyers: C S SREE LEKHA
• Keywords: Revenue expenditure; Set aside
• Section: 43B; 139(1)

Judgement Text

ITA NO 292 OF 2021THATIPARTHI MOHAN REDDY CHITTOO R PAGE 1 OF 4 IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD SMC BENCH, HYDERABAD (THROUGH VIDEO CONFERENCING) BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.292/HYD/2021 ASSESSMENT YEAR: 2018-19 SHRI THATIPARTHI MOHAN REDDY, CHITTOOR PAN:ACCPR5574Q VS. INCOME TAX OFFICER WARD 1(3) TIRUPATI (APPELLANT) (RESPONDENT) ASSESSEE BY: SMT. C.S.SREE LEKHA REVENUE BY : SRI WASEEM-UR-REHMAN,DR DATE OF HEARING: 02/08/2021 DATE OF PRONOUNCEMENT: 30/08/2021 ORDER THIS IS ASSESSEES APPEAL FOR THE A.Y 2018-19 AGAIN ST THE ORDER, DATED 26.04.2019 PASSED BY THE NATIONAL FACE LESS APPEAL CENTRE (NFAC), NEW DELHI IN RESPECT OF THE APPEAL FILED BY THE ASSESSEE BEFORE THE CIT (A) TIRUPATI. 2. THE ONLY ISSUE IN THIS APPEAL IS THE DISALLOWANC E U/S 36(1)(VA) OF THE ACT OF DELAYED DEPOSIT TO PF & ESI CONTRIBUTION. I FIND THAT THAT THE A.Y BEFORE THE TRIBUNAL IS 2019-20 AN D UNDER THE FINANCE ACT OF 2021, EXPLANATION 5 TO SECTION 43B OF THE AC T HAS BEEN INTRODUCED AND ALSO EXPLANATION 2 TO CLAUSE (VA) OF SECTION 36(1) HAS BEEN INTRODUCED TO THE EFFECT THAT THE PROVISIONS O F SECTION 43B SHALL BE DEEMED TO NEVER HAVE BEEN APPLIED TO EMPLOYEES CON TRIBUTION TO PF & ESI PAID BEYOND THE DUE DATE UNDER THE RELEVANT ACT . THE APPLICABILITY OF THIS AMENDMENT RETROSPECTIVELY HAS BEEN CONSIDER ED BY THIS TRIBUNAL IN THE CASE OF LATE SMT. ANJALI DEVI MAJETI (REP. BY L/R MAJETI NAGARAJU) HYDERABAD VS. INCOME TAX OFFICER IN ITA NO. 95/HYD/2020 ITA NO 292 OF 2021THATIPARTHI MOHAN REDDY CHITTOO R PAGE 2 OF 4 DATED 19.5.2021 AND IT HAS BEEN HELD THAT THE AMEND MENT IS APPLICABLE PROSPECTIVELY. FOR READY REFERENCE, THE RELEVANT PO RTION OF THE ORDER IS REPRODUCED AS UNDER: 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE M ATERIAL ON RECORD, I FIND THAT THE COORDINATE BENCH OF THIS TR IBUNAL IN THE CASE OF ELICO LTD VS. ACIT IN I.T.A. NO. 1120/HYD/2016, DAT ED 18.11.2020 (TO WHICH THE JM IS A SIGNATORY), HAS DECIDED THE I SSUE AS UNDER: 3. GROUND NO.2 IS RELATED TO SUSTAINING OF ADDITION MADE BY THE AO OF RS.41,18,429/- AND RS.3,80,215/- BEING THE AMOUNT O F PF AND ESI RESPECTIVELY BY APPLYING THE PROVISIONS OF SECTION 36(1)(VA) OF THE INCOME TAX ACT [ACT]. 3.1. IN THE ASSESSMENT PROCEEDINGS, THE AO FOUND TH AT THE ASSESSEE HAS REMITTED THE SUM OF RS.41,18,429/- EMPLOYEES CONTRIBUTION TO WARDS PF BEYOND THE DUE DATE SPECIFIED UNDER THE EMPLOYEES PROVIDENT FUND ACT, H OWEVER, REMITTED THE SAME BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. SIMILARLY, THE ASSESSEE HAS REMITTED THE CONTRIBUTION TOWARDS ESI AMOUNTING TO RS.3,80,215/- BELATEDLY. HOWEVER, BOTH THE CONTRIBUTIONS I.E., EMPLOYEES CON TRIBUTION OF PF AS WELL AS THE ESI WERE REMITTED TO THE CONCERNED ACCOUNTS BEFORE THE DUE DATE OF FILING OF RETURNS OF INCOME U/S 139(1) OF THE ACT. THE AO VIE WED THAT AS THE AMOUNTS WERE PAID INTO THE RESPECTIVE ACCOUNTS BELATEDLY BEYOND THE DUE DATE SPECIFIED UNDER THE PROVISIONS OF THE RESPECTIVE STATUTES, THE AO M ADE THE ADDITION TO THE RETURNED INCOME OF THE ASSESSEE. 3.2. AGAINST THE ORDER OF AO, THE ASSESSEE PREFERRE D AN APPEAL BEFORE THE CIT(A) AND THE LD.CIT(A) IN HIS DETAILED ORDER, CONFIRMED THE ADDITION MADE BY THE AO, HOLDING THAT THE ASSESSEE HAVING NOT REMITTED THE C ONTRIBUTION TO THE RESPECTIVE ACCOUNTS BEFORE THE DUE DATES SPECIFIED UNDER THE A CT, THE SAME ARE NOT ALLOWABLE DEDUCTIONS U/S.43B OF THE ACT. HENCE, THE ASSESSEE PREFERRED APPEAL BEFORE THE TRIBUNAL, AGAINST THE ORDER OF LD.CIT(A). 3.3. DURING THE APPEAL HEARING, LD.AR ARGUED THAT T HE ASSESSEE HAS REMITTED THE CONTRIBUTIONS TO THE RESPECTIVE ACCOUNTS BEFORE THE DUE DATE OF FILING THE RETURN, THEREFORE REQUESTED TO SET ASIDE THE ORDER OF THE L OWER AUTHORITIES AND DELETE THE ADDITION MADE BY THE AO. 3.4. ON THE OTHER HAND, THE LD.DR SUBMITTED THAT TH E EPF IS IN RESPECT OF EMPLOYEES CONTRIBUTION, BOTH THE PF AND ESI ARE REQ UIRED TO BE ALLOWED AS DEDUCTIONS, IF THE SAME ARE REMITTED TO THE RESPECT IVE ACCOUNTS BEFORE THE DUE DATES, SPECIFIED IN THE RESPECTIVE ACT. SINCE THE A SSESSEE FAILED TO REMIT THE SAME BEFORE THE DUE DATE OF THE RESPECTIVE ACCOUNTS, AS PER THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT, THE AO MADE THE ADDITION AND THE LD.CIT(A) RIGHTLY SUSTAINED, HENCE, NO INTERFERENCE IS CALLED-FOR IN THE ORDER O F LD.CIT(A), HENCE ARGUED THAT THE APPEAL OF THE ASSESSEE DESERVED TO BE DISMISSED. 3.5. WE HAVE HEARD BOTH THE PARTIES THROUGH VIDEO C ONFERENCE AND GONE THROUGH THE MATERIAL PLACED ON RECORD. IN THE INSTANT CASE, THERE IS NO DISPUTE THAT THE AMOUNTS-IN-QUESTION WITH REGARD TO EPF AND ESI WERE REMITTED TO THE CONCERNED ACCOUNTS BEFORE THE DUE DATE OF FILING THE RETURN O F INCOME U/SN139(1). THIS, THE TRIBUNAL HAS CONSISTENTLY TAKEN A VIEW THAT IF THE PF AND ESI ARE REMITTED TO THE RESPECTIVE ACCOUNTS, THE SAME ARE REQUIRED TO BE AL LOWED AS DEDUCTION. IN THE CASE ITA NO 292 OF 2021THATIPARTHI MOHAN REDDY CHITTOO R PAGE 3 OF 4 OF KLR INDUSTRIES LTD., VS. DCIT (2017) [83 TAXMANN .COM 322] (HYD), THE TRIBUNAL HELD AS UNDER: '34. THE A.O. DISALLOWED THE EXPENDITURE CLAIMED BY OBSERVING THAT THE ASSESSEE HAS NOT REMITTED THE EMPLOYEES CONTRIBUTION TO PF A ND ESI WITHIN THE PRESCRIBED DATE AS MENTIONED IN SECTION 36(1)(VA). THOUGH, THE ASSESSEE DID NOT CHALLENGE THE DISALLOWANCE BEFORE LEARNED CIT(A) BUT HE RAISE D AN ADDITIONAL GROUND BEFORE US CHALLENGING THE SAID DISALLOWANCE. IT IS THE CON TENTION OF THE ASSESSEE THAT THE EMPLOYEES CONTRIBUTION TO ESI AND PF THOUGH, WAS NO T PAID WITHIN THE DUE DATE AS PRESCRIBED UNDER SECTION 36(1)(VA) BUT SUCH DUES HA VING BEEN PAID BEFORE THE DUE DATE OF FILING OF RETURN OF THE INCOME AS PRESCRIBE D UNDER SECTION 139(1), THE AMOUNT IS ALLOWABLE AS A DEDUCTION AS PER THE PROVI SIONS OF SECTION 43B. WE FIND MERIT IN THE AFORESAID SUBMISSIONS OF THE ASSESSEE. THERE ARE A NUMBER OF JUDICIAL PRECEDENTS ON THIS ISSUE WHEREIN IT IS HELD THAT IF THE EMPLOYEES CONTRIBUTION TO PF AND ESI IS PAID WITHIN THE DUE DATE OF FILING OF RE TURN OF INCOME UNDER SECTION 139(1), THEN, THE AMOUNT IS ALLOWABLE AS A DEDUCTIO N IN VIEW OF THE PROVISION OF SECTION 43B. IN VIEW OF THE AFORE SAID, WE DELET E THE ADDITION OF RS.2,07,209'. 3.5.1. SIMILARLY, HON'BLE PUNJAB & HARYANA HIGH COU RT IN THE CASE OF PR.CIT VS. RAJASTAN BEVERAGES CORPORATION LTD., (2017) [84 TAX MANN.COM 173] HELD THAT NO DISALLOWANCE CAN BE MADE IN RESPECT OF PF AND ESI U /S.36(1)(VA) OF THE ACT, IF THE SAME ARE DEPOSITED ON OR BEFORE THE DUE DATE OF FIL ING THE RETURN OF INCOME. FOR THE SAKE CLARITY AND CONVENIENCE WE EXTRACT RELEVANT PA RT OF THE ORDER OF THE HON'BLE RAJASTHAN HIGH AS UNDER: '5. SO FAR AS THE QUESTION RELATING TO PRIVILEGE FE ES AMOUNTING TO RS.26.00 CRORES IN THE INSTANT YEAR AS WELL AS THE DEDUCTION OF CLAIM OF RS.17,80,765/- ON ACCOUNT OF PROVIDENT FUND (PF) AND ESI IS CONCERNED, THIS COUR T HAS EXTENSIVELY CONSIDERED THE AFORESAID TWO QUESTIONS IN ASSESSEE'S OWN CASE VIDE JUDGMENT AND ORDER DT.26.05.2016 REFERRED TO (SUPRA) AND HAS HELD THAT THE PRIVILEGE FEES BEING A REVENUE EXPENDITURE, IS REQUIRED TO BE ALLOWED AS A REVENUE EXPENDITURE. THIS COURT IN THE AFORESAID CASE HAS ALSO ALLOWED THE CL AIM OF THE ASSESSEE, IN SO FAR AS PAYMENT OF PF & ESI ETC. IS CONCERNED, ON THE FINDI NG OF FACT THAT THE AMOUNTS IN QUESTION WERE DEPOSITED ON OR BEFORE THE DUE DATE O F FURNISHING OF THE RETURN OF INCOME AND TAKING IN CONSIDERATION JUDGMENT OF THIS COURT IN CIT V. STATE BANK OF BIKANER & JAIPUR [2014] 363 ITR 70/43 TAXMANN.COM 4 11/225 TAXMAN 6 (MAG.) (RAJ.) AND CIT V. JAIPUR VIDHUT VITARAN NIGAM LTD. [2014] 363 ITR 307/49 TAXMANN.COM 540/[2015] 228 TAXMAN 214 (MAG.) (RAJ.) AND ACCORDINGLY BOTH THE QUESTIONS ARE COVERED BY THE AFORESAID JUDGMENT AND AGAINST THE REVENUE'. AGAINST WHICH THE REVENUE HAS FILED SLP BEFORE THE HON'BLE SUPREME COURT, WHICH WAS DISMISSED BY THE HON'BLE APEX COURT IN (2017) [ 85 TAXMANN.COM 185].THEREFORE, TAKING THE CONSISTENT VIEW AND RESP ECTFULLY FOLLOWING THE VIEW TAKEN BY THE CO-ORDINATE BENCH OF THE ITAT IN THE CASE OF KLR INDUSTRIES LTD., VS. DCIT (SUPRA), WE HOLD THAT NO DISALLOWANCE COULD BE MADE IN RESPECT OF EMPLOYEES CONTRIBUTION OF PF AND ESI IF THE SAME ARE DEPOSITE D BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME. ACCORDINGLY, WE SET ASIDE THE ORDER OF LD.CIT(A) AND DELETE THE ADDITION MADE BY THE AO. THE APPEAL OF THE ASSE SSEE ON THIS GROUND IS ALLOWED. 5. RESPECTFULLY FOLLOWING THE SAME, I SET ASIDE THE ORDER OF THE CIT (A) AND DELETE THE ADDITION MADE BY THE ASSESSING OFFICER ON THIS ISSUE. ITA NO 292 OF 2021THATIPARTHI MOHAN REDDY CHITTOO R PAGE 4 OF 4 3. RESPECTFULLY FOLLOWING THE SAME, I HOLD THAT SIN CE THE ASSESSEE HAS DEPOSITED THE EMPLOYEES CONTRIBUTION T O THE PF AND ESI BEFORE FILING THE RETURN OF INCOME, THE SAME IS NOT TO BE DISALLOWED. ASSESSEES APPEAL IS ACCORDINGLY ALLOWE D. 4. IN THE RESULT, ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH AUGUST, 2021. SD/- (P. MADHAVI DEVI) JUDICIAL MEMBER HYDERABAD, DATED 30 TH AUGUST, 2021. VINODAN/SPS COPY TO: S.NO ADDRESSES 1 SRI THATIPARTHI MOHAN REDDY , C/O M.ANANDAM & CO. C.A, FLAT N O.7A, SURYA TOWERS, SP ROAD, SECUNDERABAD 500003 2 INCOME TAX OFFICER WARD 1 ( 3 ) TIRUPATI 3 CIT (A)-NATIONAL FACELESS APPEAL CENTRE, DELHI 4 CIT (A)-TIRUPATI 5 DR, ITAT HYDERABAD BENCHES 6 GUARD FILE BY ORDER