IECS LIMITED EMPLOYEE PF COVERED UNDER FPS, NEW DELHI V. DCIT, CPC, BANGLORE

ITA 2922/DEL/2018

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 8172 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 24-04-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: ROHIT JAIN
• Section: 154; 143(3); 143(1); 143(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘C’ : NEW DELHI) BEFORE SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER and SHRI KULDIP SINGH, JUDICIAL MEMBER (THROUGH VIDEO CONFERENCE) ITA No.2922/Del./2018 (ASSESSMENT YEAR : 2014-15) IECS Limited Employee PF covered vs. DCIT, CPC, Under FPS, Bangalore. 5, Community Centre, New Friends Colony, New Delhi – 110 065. (PAN : AAATI5611D) (APPELLANT) (RESPONDENT) ASSESSEE BY : Shri Rohit Jain, Advocate Ms. Deepashree Rao, CA REVENUE BY : Shri Umesh Takyar, Senior DR Date of Hearing : 10.11.2021 Date of Order : 18.11.2021 O R D E R PER KULDIP SINGH, JUDICIAL MEMBER : Appellant, IECS Limited Employee PF covered under FPS (hereinafter referred to as ‘the assessee’) by filing the present appeal sought to set aside the impugned order dated 30.03.2018 passed by the Commissioner of Income-tax (Appeals), Ghaziabad qua the assessment year 2014-15 on the grounds inter alai that :- ITA No.2922/Del./2018 2 “1. On the facts and circumstances of the case and in law, the order 04/06/2016 passed u/s 154 by the Learned assessing officer is wrong and bad in law. 2. On the facts and circumstances of the case and in law, the Learned assessing officer has erred in making an addition of Rs.60,88,057/- as income of the assessee by treating the exempt income u/s 10(25) earned by approved provident fund as taxable income and the learned CIT Appeals has erred in upholding the addition. 3. On the facts and circumstances of the case and in law, the Learned assessing officer has erred in making an addition of Rs.60,88,057/- as income of the assessee by treating the exempt income u/s 10(25) as taxable income ignoring certificate issued by Commissioner of Income Tax Meerut for recognition as Approved Provident Fund and the learned CIT Appeals has erred in upholding the addition. 4. On the facts and circumstances of the case and in law, the Learned CIT Appeals has erred in upholding the addition of Rs.60,88,057/- as income of the assessee by treating the exempt income earned from approved provident fund as taxable income on factually incorrect appraisal of facts. 5. On the facts and circumstances of the case and in law, the Learned CIT Appeals has erred in confirming the addition of Rs.60,88,057/- as income of the assessee by treating the exempt income earned from approved provident fund as taxable income ignoring exemption claimed u/s 10(25) without giving sufficient opportunity to the assessee of being heard rendering the order wrong and bad in law.” 2. Briefly stated the facts necessary for adjudication of the controversy at hand are : Assessee is a recognised provident fund under section 17(1) of the Employees Provident Fund Act, 1952 having been set up in 1976 in order to maintain provident fund account of the employees of Indo Euro Chemical Services Limited, a limited company engaged into the business of manufacture and trade of specialty chemicals. Assessee company got registered under Rule 3 (1) – Part A of Fourth Schedule of the Income-tax Act, 1961 (for ITA No.2922/Del./2018 3 short ‘the Act’) vide order No.24(4)/Mnt/Judl/75 dated 03.03.1979 in the name of “Indo Euro Chemical Services Limited Employees Provident Fund Covered Under FPS” to take effect from 01.04.1976. For the year under consideration i.e. AY 2014-15, assessee company filed return of income on 30.03.2015 in the abbreviated name as “IECS Ltd. Employees P.F. covered under FPS” declaring nil income after claiming exemption u/s 10(25)(ii) of the Act qua interest income of Rs.60,88057/-. Rectified return filed by the assessee u/s 139(9) of the Act was processed by Central Processing Centre in terms of section 143(1) of the Act at the income of Rs.60,88,057/- as against nil income declared by the assessee by denying the claim of exemption made by the assessee u/s 10(25)(ii) of the Act. Thereafter, assessee filed rectification application dated 26.05.2016 to rectify the adjustment made in the intimation dated 16.03.2016 to accept the returned income of the assessee, which was disposed off vide order dated 04.06.2016 by rejecting the request of the assessee on the ground that the assessee has failed to specify the details of approving authority and the section under which exemption was claimed in SCH Part-A GEN and SCH of the return form, 3. Assessee carried the matter before the ld. CIT (A) by way of filing application u/s 154 of the Act who has dismissed the same. ITA No.2922/Del./2018 4 Feeling aggrieved by the order passed by the ld. CIT(A), the assessee has come up before the Tribunal by way of filing the present appeal. 4. We have heard the ld. Authorized Representatives of the parties to the appeal, gone through the documents relied upon and orders passed by the revenue authorities below in the light of the facts and circumstances of the case. 5. Undisputedly, assessee, IECS Limited Employee Provident Fund covered under FPS is a recognised provident fund u/s 17(1) of the Employees Provident Fund Act, 1952 and duly registered under Rule 3(1) – Part A of Fourth Schedule of the Act vide order no.24(4)/Mrt/Judl/75 dated 03.03.2009. It is also not in disputed that assessee’s income is exempted u/s 10(25)(ii) of the Act qua the interest income. It is also not in dispute that for the year under consideration i.e. AY 2014-15, assessee filed return in the abbreviated name i.e. “IECS Ltd. Employees P.F. Covered under FPS” declaring nil income after claiming exemption u/s 10(25)(ii) of the Act. 6. When we examine the impugned order passed by the ld. CIT(A) in the light of the aforesaid undisputed facts, it is apparent on record that denial of exemption u/s 10(25)(ii) of the Act of the assessee from the interest income is solely on the ground of not filing return in the complete name of the assessee i.e. Indo Euro Chemical ITA No.2922/Del./2018 5 Services Limited Employees Provident Fund covered under FPS rather filed the return in the abbreviated name as “IECS Ltd. Employees P.F. Covered under FPS”. Moreover, adjustment made by the Revenue Department by denying the exemption claimed by the assessee u/s 10(25)(ii) of the Act cannot be and shall not be subject matter of section 143(1) of the Act. This can only be done u/s 143(3) of the Act. Because u/s 143(1) returned filed by the assessee should be accepted. So, we are of the considered view that when undisputedly assessee has been accorded registration under Rule 3(1) – Part A of the Fourth Schedule of the Act vide order dated 03.03.1979 (supra), there is no scope for the Revenue to deny the exemption claimed u/s 10(25)(ii) of the Act on hyper technical grounds. 7. Hon’ble Delhi High Court while deciding the identical issue in case of Easter Industries Ltd. vs. UOI 349 ITR 324 (Del.) held that, “where it is evident from the return as filed along with the documents in support thereof that a claim of the assessee is inadmissible, only then an adjustment under the said proviso can be made. If proof in support of the claim is not furnished by the assessee, then, for the lack of proof, no disallowance or an adjustment can be made. The only option which is open to the Income-tax Officer in such a case is that he can require the assessee ITA No.2922/Del./2018 6 to furnish proof in which case he will presumably have to issue notice u/s 143(2) of the Act.” 8. In the instant case, it is also undisputed fact that no notice u/s 143(2) of the Act was ever issued to the assessee rather arbitrarily declined to accept the exempt income of Rs.60,88,057/- which was claimed as exempt u/s 10(25)(ii) of the Act by the assessee and the same has been adjusted against the income of the assessee and assessment has been framed at Rs.60,88,057/- as against nil income claimed by the assessee in its return. 9. So, in view of the matter, we are of the considered view that ld. CIT (A) has erred in dismissing the rectification application filed by the assessee u/s 154 of the Act by denying a relief otherwise available to the assessee u/s 10(25)(ii) of the Act. So, we direct the AO to allow relief to the assessee by allowing exemption u/s 10(25)(ii) of the Act after due verification qua the abbreviated name mentioned by the assessee in its return in the light of the order for according exemption to the assessee vide order dated 03.03.1979 (supra). Resultantly, the appeal filed by the assessee is allowed. Order pronounced in open court on this 18 TH day of November, 2021. SD/- SD/- (N.K. BILLAIYA) (KULDIP SINGH) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated the 18 TH day of November, 2021/TS ITA No.2922/Del./2018 7 Copy forwarded to: 1.Appellant 2.Respondent 3.CIT 4.CIT(A), Ghaziabad. 5.CIT(ITAT), New Delhi. AR, ITAT NEW DELHI.