ITO, Ward-2(4), Hyderabad, Hyderabad V. Toshali Cements Private Limited, Hyderabad, Hyderabad

ITA 293/HYD/2017

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 2435 (ITAT-HYDERABAD)
• Duration Of Justice: 3 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2012-2013
• Appeal Filed On: 21-02-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: L R AMJI RAO
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES B (SMC), HYDERABAD BEFORE SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER I.T.A. NO. 293/HYD/2017 ASSESSMENT YEAR: 2012-13 INCOME TAX OFFICER, WARD-2(4), HYDERABAD VS M/S. TOSHALI CEMENTS PVT. LTD., HYDERABAD [PAN: AABCT8989K] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI L. RAMJI RAO, DR FOR ASSESSEE : NONE DATE OF HEARING : 14-06-2017 DATE OF PRONOUNCEMENT : 16-06-2017 O R D E R THIS IS AN APPEAL BY REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS)-2, HYDERABAD, DATED 28-12-2016 ON THE ISSUE WHETHER THE CIT(A) IS CORREC T IN LAW HOLDING THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TOWA RDS EPF AND ESI BY THE EMPLOYER-ASSESSEE, WHICH IS NOT IN CO NSONANCE WITH THE EXPLANATION TO SECTION 36(1)(VA) OF THE INCOME TAX ACT [ACT], IS ENTITLED FOR DEDUCTION U/S. 43B OF THE ACT? 2. THE ONLY ISSUE WHICH IS CONTENDED IS WITH REFERENC E TO ALLOWANCE OF AN AMOUNT OF RS. 1,29,986/- DISALLOWED BY THE ASSESSING OFFICER (AO) AND TREATED AS INCOME U/S. 2( 24)(X) OF THE ACT AS ASSESSEE HAS REMITTED THE EMPLOYEES CONTRIBUTION BELATEDLY AFTER THE DUE DATE. THE LD.CIT(A) FOLLOWING THE CO-OR DINATE BENCH DECISION IN THE CASE OF NUZIVEDU SWATI COSTAL CONSORTI UM [62 I.T.A. NO. 293/HYD/2017 M/S. TOSHALI CEMENTS PVT. LTD., :- 2 - : TAXMAN 258] HAS ALLOWED THE DEDUCTION. REVENUE IS AGG RIEVED AND RAISED THE GROUND ACCORDINGLY. 3. LD.DR PLACED ON RECORD THE LETTER OF THE AO TO SUBMI T THAT THOUGH THE MANDATORY LIMIT PRESCRIBED BY THE CBDT TO PRE FER SECOND APPEAL IS BELOW THE APPEAL FILING LIMIT, APPEA L HAS BEEN FILED ON THE BASIS OF CIRCULAR NO. 25 OF 2015 UNDER 8(B). IT WAS SUBMITTED THAT THE BOARD CIRCULAR NO. 22 OF 2015 IS NOT APPLICABLE TO THE CLAIM OF DEDUCTION OF PAYMENT OF EMPLOYEES SHA RE OF EPF AND ESI WHICH IS GOVERNED BY SECTION 36(1)(VA) AND N OT SECTION 43B. CONSIDERING THE EXPLANATION GIVEN BY THE AO, THE APPEAL IS ADMITTED. 4. ASSESSEE WAS NOT REPRESENTED BY ANYBODY, EVEN THOU GH THE CASE WAS POSTED ON 06-06-2017 AND 13-06-2017. THE C ASE WAS ADJOURNED TO NEXT DAY SO AS TO ENABLE THE DR TO EXPLAIN THE ISSUE INVOLVED. THE CASE WAS HEARD ON 14-06-2017 EX-PARTE ASSESSEE. 5. IT WAS THE CONTENTION OF DR THAT AS PER THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT, THE BELATED PAYMENT OF EMP LOYEES CONTRIBUTION WOULD BE AN INCOME U/S. 2(24)(X). THERE FORE, THE PROVISIONS OF SECTION 43B ARE NOT APPLICABLE. HE REL IED ON THE DECISION OF THE HON'BLE GUJARAT HIGH COURT IN THE CAS E OF GUJARAT STATE ROAD TRANSPORT CORPORATION. HE ALSO FURTHER RELIE D ON THE CO-ORDINATE BENCH DECISIONS IN THE CASE OF ITO VS. L KP SECURITIES LTD., IN ITA NO. 638/MUM/2012 DT. 17-05-2013 AND THE DECISION IN THE CASE OF DCIT VS. M/S. BENGAL CHEMICALS & PHA RMACEUTICALS LTD., IN ITA NO. 1680/KOL/2010 DT. 07-01-2011 IN SUPP ORT OF THE CONTENTION THAT THE AMOUNT CANNOT BE ALLOWED U/S. 43B. I.T.A. NO. 293/HYD/2017 M/S. TOSHALI CEMENTS PVT. LTD., :- 3 - : 6. I HAVE CONSIDERED THE CONTENTIONS OF LD.DR AND PERU SED THE FACTS ON RECORD. EVEN THOUGH ASSESSEE HAS PAID THE EM PLOYEES CONTRIBUTION WITHIN THE MONTH, BUT AFTER THE DUE DATE INCL UDING THE GRACE PERIOD, AO HAS ALLOWED THE AMOUNTS PERTAINING TO EMPLOYERS CONTRIBUTION U/S. 43B, BUT TREATED THE AMOUNT AS INCOME U /S. 2(24)(X). LD.CIT(A) FOLLOWING THE DECISION OF THE C O-ORDINATE BENCH IN THE CASE OF NUZIVEDU SWATI COSTAL CONSORTIUM [62 TAX MAN 258] GIVEN IN THE CONTEXT OF SECTION 263, ALLOWED THE ASSESS EES APPEAL ON THE ISSUE. 7. THE LAW ON THE ISSUE IS THAT THE EMPLOYEES CONTRIBU TION WHICH IS NOT PAID WITHIN THE DUE DATES INCLUDING THE G RACE PERIOD IS TO BE TREATED AS INCOME . THE EMPLOYERS CONTRIBUTION WHICH IS MATCHING WITH THE EMPLOYEES CONTRIBUTION IS HOWEVER, GOVERNED BY THE PROVISIONS OF SECTION 43B AND IS ALLOWABLE, IF IT IS PAID WITHIN THE DUE DATE OF FILING THE RETURN, CONSEQUENT TO THE AMEN DMENT TO PROVISIONS OF SECTION 43B. THUS, THESE TWO AMOUNTS STAN D ON A DIFFERENT FOOTING. HOWEVER, THERE IS CONFLICT IN THE JU DICIAL PRONOUNCEMENTS ON THE SUBJECT. 8. THE HON'BLE KARNATAKA HIGH COURT IN THE CASE OF CI T VS. SABARI ENTERPRISES [298 ITR 141] (KAR) AND IN THE CA SE OF SPECTRUM CONSULTANTS INDIA (P.) LTD., VS. CIT [34 TAXMA NN.COM 20] (KARNATAKA) HAS ALLOWED THE DEDUCTION ON EMPLOYEES CONTRIBUTION ALSO, REMITTED AFTER DUE DATES PRESCRIBED UNDER THE S AID STATUTES, BUT BEFORE DUE DATE FOR FILING RETURN OF INCOME U/S. 139(4). SIMILAR VIEW WAS HELD IN THE FOLLOWING CASES: I.T.A. NO. 293/HYD/2017 M/S. TOSHALI CEMENTS PVT. LTD., :- 4 - : I. CIT VS. KICHHA SUGAR COMPANY LTD (ITA NO. 50 OF 200 9) (UTTARAKHAND HC); II. CIT VS. AIMIL LTD., [321 ITR 508] (DEL); III. CIT VS. NIPSO POLYFABRICKS LTD., [350 ITR 327] (HP); IV. CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANDH LTD [TAXMANN.COM 616] (RAJ); V. CIT VS. HEMLA EMBROIDERY MILLS (P) LTD., [37 TAXMANN. COM 160 (P&H); 8.1. HOWEVER, THE HON'BLE KERALA HIGH COURT IN THE CA SE OF CIT VS. MERCHEM LTD., [378 ITR 443], TOOK A DIFFERENT VIEW AN D HELD AS UNDER: HELD: SECTION 36(1)(VA) AND SECTION 43B OPERATE IN DIFFERENT FIELD I.E., SECTION 36(1)(VA) PROVIDES DEDUCTION IN RESPE CT OF EMPLOYEES CONTRIBUTION TO PF AND ESI, WHEREAS SECTION 43B PRO VIDES DEDUCTION IN RESPECT OF EMPLOYERS CONTRIBUTION. THERE WAS NO IND ICATION IN SECTION 43B AS IT STOOD PRIOR TO THE AMENDMENT AND THEREAFTER A LSO TO DEFACE SECTION 36(1)(VA) AND THE EXPLANATION THERETO FROM THE INCO ME TAX ACT. ASSESSEE WAS ENTITLED TO GET THE DEDUCTION OF THE AMOUNTS AS PROVIDED UNDER SECTION 36(1)(VA) ONLY IF THE AMOUNTS SO RECEIVED FROM THE EMPLOYEES WAS PAID WITHIN THE DUE DATE AS PROVIDED UNDER THE RELEVANT STATUTE. SINCE REMITTANCE OF EMPLOYEES CONTRIBUTION TO PF AND ESI HAD BEEN DELAYED BEYOND THE DUE DATE PRESCRIBED UNDER THE RESPECTIVE ACTS, THEREFORE, ASSESSEE WAS NOT ENTITLED TO DEDUCTION UNDER SECTIO N 36(1)(VA). 8.2. THERE IS NO JURISDICTIONAL HIGH COURT JUDGMENT S O FAR ON THIS ISSUE. IN VIEW OF THE CONFLICTING JUDGMENTS, I AM OF THE VIEW THAT THE JUDGMENT WHICH IS IN FAVOUR OF ASSESSEE SHOULD BE FOLLOWED, AS A JUDICIAL PRINCIPLE. MOREOVER, MAJORITY OF THE HIGH COURTS HAVE HELD THE ISSUE IN FAVOUR OF ASSESSEE. CONSEQUENTLY, I AM OF THE OPINION THAT THERE IS NO NEED TO MODIFY THE ORDER OF THE CIT(A), ALLOWING THE DEDUCTION WHICH WAS PAID WITHIN THE DUE DA TE FOR FILING THE RETURN U/S. 139(1) (IN FACT EVEN PAID DURI NG THE YEAR OF I.T.A. NO. 293/HYD/2017 M/S. TOSHALI CEMENTS PVT. LTD., :- 5 - : ACCOUNT ITSELF BUT AFTER THE DUE DATE). THERE IS NO MERIT IN REVENUES CONTENTIONS. GROUND IS THEREFORE, DISMISSE D. 9. IN THE RESULT, APPEAL OF REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 16 TH JUNE, 2017 SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER HYDERABAD, DATED 16 TH JUNE, 2017 TNMM COPY TO : 1.THE INCOME TAX OFFICER, WARD-2(4), HYDERABAD. 2. M/S. TOSHALI CEMENTS PVT. LTD., RAJAPRASADAM, BESIDE JAIN HERITAGE SCHOOL, 6 TH FLOOR, SOUTH WING, HYDERABAD. 3. COMMISSIONER OF INCOME TAX(APPEALS)-2, HYDERABAD . 4. THE PR. COMMISSIONER OF INCOME TAX-2, HYDERABAD. 5. D.R. ITAT, HYDERABAD. 6. GUARD FILE.