The Asstt. Commissioner of Income-tax, Jammu V. M/s. Jamkash Vehicleades Pvt. Ltd, Jammu

ITA 303/ASR/2014

• Counselvise Citation: 30320914 RSA 2014
• Duration Of Justice: 1 year(s) 6 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-12-2015
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 30-11-2015
• Assessment Year: misc
• Appeal Filed On: 07-05-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SHARDA
• Keywords: Retrospective amendment
• Section: 43B; 37(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH, AMRITSAR (JAMMU CAMP; JAMMU ) BEFORE SH. A.D.JAIN, HONBLE JUDICIAL MEMBER AND SH. T.S.KAPOOR, HONBLE ACCOUNTANT MEMBER I.T.A NO 303(ASR)/2014 ASSESSMENT YEAR: 2010-11 THE ACIT, CIRCLE-2, JAMMU. VS. M/S JAMKASH VEHICLEADES PVT. LTD., B. C. ROAD, JAMMU PAN: AAACJ4126D (APPELLANT) (RESPONDENT) APPELLANT BY: SH. R.K.SHARDA (DR.) RESPONDENT BY: SH. R.K.GUPTA (C.A) DATE OF HEARING: 30.11.2015 DATE OF PRONOUNCEM ENT: 02.12.2015 ORDER PER T.S.KAPOOR (A.M): THIS IS AN APPEAL FILED BY THE REVENUE AGAI NST THE ORDER OF CIT(A) DATED 12.2.2014, FOR THE ASST. YEAR 2010-11. 2. THE REVENUE HAS TAKEN THE FOLLOWING GROUNDS OF A PPEAL. (I) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE U/S 43B FOR LATE DEPOSITS OF ESI AND EMPLOYEES CONTRIBUTION TO THE PF. (II) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD. CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE ON ACCOUNT INTEREST PAID TO SALES TAX ON ACCOUNT OF DELAYED PAYMENTS OF TAX. (III) ON THE FACTS AND CIRCUMSTANCES WHETHER THE LD . CIT(A) WAS RIGHT IN NOT CONSIDERING THE FACTS THAT THE PAYMENTS/EXPENSES CL AIMED U/S 37(1) OF THE I.T. ACT, 1961 REVEALS THAT SUCH AMOUNT WAS PENAL IN NAT URE AND IT WAS AN OBLIGATION ON THE PART OF THE ASSESSEE TO PAY THE T AXES WITHIN THE STIPULATED TIME. 2. ITA NO.30 3 (ASR)/2014 ASST. YEAR 2010-14 3. AT THE OUTSET, THE LEARNED DR IN RESPECT OF GROU NDS OF APPEAL HEAVILY RELIED UPON THE ORDER OF ASSESSING OFFICER AND SUBM ITTED THAT THE LEARNED CIT(A) HAS WRONGLY PASSED THE ORDER AND THEREFORE, THE ORDER OF ASSESSING OFFICER SHOULD BE UPHELD. 4. THE LEARNED AR, ON THE OTHER HAND, HEAVILY RELIE D UPON THE ORDER OF LEARNED CIT(A) AND ALSO RELIED UPON THE VARIOUS CAS E LAWS AS PLACED IN PAPER BOOK PAGE 1 TO 40. 5. WE HAVE HEARD THE RIVAL PARTIES AND HAVE GONE TH ROUGH THE MATERIAL PLACED ON RECORD. AS REGARDS FIRST GROUND OF APPEAL REGARDING ADDITION MADE BY THE ASSESSING OFFICER U/S 43B, WE FIND THAT THE LEA RNED CIT(A) HAS ALLOWED THE RELIEF BY HOLDING AS UNDER: 5.2 THE A.O HAS ADDED RS.2,39,869/- TO THE INCOME OF THE APPELLANT U/S 2(24)(X) READ WITH SEC. 36(1)(VA) OF THE INCOME TAX ACT,1961 ON THE GROUND THAT THIS AMOUNT REPRESENTS RS.1,71,512/- ON ACCOUNT OF EMPLOYESSS CONTRIBUTION TO PF & RS.68357/- ON ACCO UNT OF EMPLOYEES CONTRIBUTION TO ESI WHICH HAVE NOT BEEN DEPOSITED O N OR BEFORE THE DUE DATE SPECIFIED IN THE RESPECTIVE ACTS. HOWEVER, IT IS AN ADMITTED FACT THAT SUCH CONTRIBUTION OF THE EMPLOYEES HAVE BEEN DEPOSI TED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME. FURTHER, SECTIO N 43B OF THE INCOME TAX ACT, 1961 STANDS AMENDED AND THE EMPLOYERS CONTRIB UTION IF MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME IS NOW ALLOWABLE. NOW, IT IS ALSO A FACT BEYOND DOUT THAT THE EMPLOYERS AS WELL AS EMPLOYEES CONTRIBUTION TO ANY FUND HAVE TO BE DEPOSITED TOGET HER AND NOT IN ISOLATION. NOW WHEN SECTION 43B STANDS AMENDED THE SECTION 36(1)(VA) CANNOT BE READ IN ISOLATION OF THIS AMENDMENT. THE ASSESSEE HAS TO BE GIVEN THE BENEFIT FOR THIS AMENDMENT THAT IF EMPLOY EES CONTRIBUTION IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME ALONG WITH THE EMPLOYERS CONTRIBUTION THEN SUCH EMPLOYEES CONTRIBU TION MAY NOT BE TREATED AS INCOME OF THE ASSESSEE. EVEN THE ISSUE I S COVERED BY THE JURISDICTIONAL BENCH OF HONBLE ITAT, AMRITSAR IN T HE CASE OF ASST. 3. ITA NO.30 3 (ASR)/2014 ASST. YEAR 2010-14 COMMISSIONER OF INCOME TAX RANGE-II, JALANDHAR VS. M/S PROXIMA STEEL FORGE P. LTD.(SUPRA). IN THIS CASE THE HONBLE ITAT HAS CONFIRMED THE ACTION OF CIT(A) FOR HAVING DELETED THE ADDITION MA DE BY THE A.O IN VIEW OF PROVISIONS OF SECTION 2(24)(X) READ WITH SEC. 36 (1)(VA) OF THE INCOME TAX ACT, 1961. THE HONBLE ITAT HAS HELD THAT SINCE TH E SECOND PROVISO TO SEC. 43B WHICH READS AS FOLLOWS-PROVIDED FURTHER TH AT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B) SHA LL BE ALLOWED UNLESS SUCH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY CHEQU E OR DRAFT OR ANY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB-SECTION(1) OF SEC.36 AND WHERE S UCH PAYMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALI ZED WITHIN FIFTEEN DAYS FROM THE DATE HAS BEEN DELETED BY THE FINANCE ACT,2003, W.E.F. 01.04.2004 AND THE ASSESSEE IS REQUIRED TO MAKE PAY MENT BEFORE FINISHING OF RETURN OF INCOME AS PER SUB-SEC.(1) OF SEC. 139 OF THE INCOME TAX ACT. IN THE PRESENT CASE, THE DUE DATE FOR FILI NG THE RETURN OF INCOME WAS 31.10.2004 AND THE PAYMENT OF EPF WAS MADE BEFO RE 31.10.2004 AS EVIDENCE FROM CHART IN THE FACTS OF THE CASE. AS SU CH, THE ASSESSEE HAS MADE THE PAYMENT WITHIN THE DUE DATE AS MENTIONED I N THE PROVISO TO SE. 43B OF THE ACT AND THE ASSESSEE IS ENTITLED FOR DED UCTION AND CANNOT BE TREATED AS INCOME OF THE ASSESSEE. HENCE, THE LEARN ED CIT(A) WAS JUSTIFIED IN ALLOWING THE GROUND OF THE ASSESSEE. THE HONBLE ITAT PLACED RELIANCE ON THE JUDGMENT OF HONBLE UTTRAKHAND HIGH COURT IN THE CASE OF CIT VS. DESH RAKSHAK AUSH DHALAYA REPORTED IN (2008) 218 CTR7, WHEREIN IT HAS BEEN HELD THAT: HELD, WHEN SEC. 43B WAS INCORPORATED IN THE INCOME TAX ACT, 1961 AND CONTAINED THE SECOND PROVISO. THE INTENTION OF THE LEGISLATURE APPEARS TO BE THAT THE DEDUCTION SHOULD BE ONLY GIVEN IF THE D EPOSITS ARE MADE WITHIN DUE DATES UNDER THE ENACTMENT UNDER WHICH TH E SAME WERE REALIZED FROM EMPLOYEES AND REQUIRED TO BE DEPOSITE D SO THAT EMPLOYERS MAY NOT EARN INTEREST ETC. IN HIS OWN ACCOUNT AND D EPRIVE THE GOVT. OF THE SAME. HOWEVER, LATER THE LEGISLATURE APPEAR TO HAVE REALIZED THAT WHENEVER SUCH AMOUNT IS DEPOSITED UNDER THE GOVT. T REASURY, IN ANY CASE IT CANNOT BE SAID TO BE TAXABLE INCOME OF THE EMPLOYER/ASSESSEE, AND HAS TO BE DEDUCTED. THIS MIGHT BE REASON DUE TO WHICH THE LEGISLATURE OMITTED SECOND PROVISO TO SEC. 43B THRO UGH FINANCE ACT,2003 WHICH CAME INTO FORCE W.E.F. 1 ST APRIL, 2004. EXPRESSLY IT IS NOT PROVIDED IN THE FINANCE ACT,2003 THAT THE DELETION IS RETROS PECTIVE OR NOT. THE AMENDMENT WHICH SIMPLY REMOVES THE AMBIGUITY, AND C URATIVE IN NATURE, 4. ITA NO.30 3 (ASR)/2014 ASST. YEAR 2010-14 IMPLIEDLY HAS RETROSPECTIVE EFFECT. THE DELETION TO SECOND PROVISO TO SEC. 43B IS RETROSPECTIVE IN NATURE. THAT BEING SO, IT C ANNOT BE SAID THAT TRIBUNAL HAS COMMITTED ANY ERROR IN LAW IN DELETING THE ADDITION OF RS.298924/- MADE BY THE AO WHICH WAS DEPOSITED BY T HE ASSESSEE ON ACCOUNT OF PROVIDENT FUND DEDUCTION OF ITS EMPLOYEE S, IN THE GOVT. ACCOUNT. SIMILAR TYPE OF DISALLOWANCE HAS ALREADY BEEN DELET ED BY ME IN ORDER PASSED IN THE CASE OF JAMMU RURAL BANK IN APPEAL NO .84/11-12 PERTAINING TO ASSESSMENT YEAR 2009-10. RESPECTFULLY FOLLOWING THE DECISION OF JURISDICTION AL BENCH OF ITAT, AMRITSAR THE ADDITION MADE BY A.O. BY TREATING EMPL OYEESS CONTRIBUTION TO PF & ESI AS INCOME OF THE APPELLANT IN VIEW OF P ROVISIONS OF SEC. 2(24)(X) READ WITH SEC. (36)(VA) OF THE INCOME TAX ACT, 1961 IS HEREBY DELETED AS SUCH CONTRIBUTION AMOUNTING TO RS.2,39,8 69/- HAS BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME. WE FIND THAT THE LEARNED CIT(A) HAS RELIED UPON THE AMENDMENT TO PROVISO OF SECTION 43B THROUGH FINANCE ACT., 2003. WE ALSO FIN D THAT IT IS A UNDISPUTED FACT THE DUES WERE DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME TAX. THEREFORE, THE LEARNED CIT(A) HAS RIGHTLY DELE TED THE ADDITION AND WE DO NOT FIND ANY INFIRMITY IN THE SAME, THEREFORE, GROU ND NO.1 IS DISMISSED. 6. GROUND NO. 2 AND 3 RELATES TO THE GRIEVANCE OF REVENUE WITH THE ACTION OF LEARNED CIT(A) BY WHICH HE HAD DELETED THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF DISALLOWANCE OF INTEREST PAID TO SALE TAX DEPARTMENT ON ACCOUNT OF DELAY OF PAYMENT OF TAX. THE LEANED CIT(A) HAS RECORDED HIS FINDINGS IN THIS RESPECT IN PARA 5.5 WHICH IS REPRODUCED AS BELOW. 5.5 IN RESPECT OF RS.30,03,418/- PAID ON ACCOUNT O F SALES TAX INTEREST AND PENALTY THE APPELLANT HAS PRODUCED LEDGER ACCOU NT & EVIDENCES IN SUPPORT OF ITS CLAIM THAT A SUM OF RS.22,63,818/- O UT OF IT IS ON ACCOUNT OF INTEREST FOR DELAYED PAYMENTS OF SALES TAX. FOR CLAIMING THIS 5. ITA NO.30 3 (ASR)/2014 ASST. YEAR 2010-14 DEDUCTION, THE APPELLANT HAS RELIED ON THE JUDGMENT S OF HONBLE APEX COURT IN THE CASE OF MAHALAKSHMI SUGAR MILLS CO. VS . CIT(1980) 123 ITR 429 & PRAKASH COTTON MILLS PVT. VS. CIT(1993) 201 I TR 684. THE LAW IS WELL SETTLED ON THIS ISSUE THAT IF THE E XPENDITURE IS COMPENSATORY IN NATURE, THE DEDUCTION U/S 37(1) OF THE INCOME TAX ACT, 1961 HAS TO BE ALLOWED. THE APPELLANT HAS PAID INTE REST FOR DELAYED PAYMENTS THAT BECOME DUE BECAUSE THE SALES TAX DEPA RTMENT TO WHOM PAYMENT IS TO BE MADE HAS NOT BEEN GIVEN MONEY ON D UE. THE INTEREST IN THE COMMERCIAL WORLD IS UNDERSTOOD AS RETURN OR COM PENSATION FOR RETENTION OF MONEY BELONGING TO OTHERS. IN VIEW OF THE ABOVE & ABOVEMENTIONED DECISIONS OF APEX COURT, THE A.O IS DIRECTED TO ALLOW DEDUCTION U/S 37(1) IN RESPECT OF PAYMENTS MADE TOWARDS INTEREST AMOUNTING TO RS.22,63,818/- OUT OF TOTAL DISALLOWANCE OF RS.30,03,418/-. THE BALANCE ADDITION OF RS.7,39, 600/- IS HEREBY CONFIRMED. WE FIND THAT THE ASSESSEE HAS PAID INTEREST ON SALE TAX DUES FOR DELAY IN DEPOSIT OF THE SAME WHICH IS A COMPENSATORY IN NATU RE AND IS NOWHERE IN THE FORM OF PENALTY. THE LEARNED CIT(A) HAS ALREADY CON FIRMED THE AMOUNT REPRESENTING PENALTY. IN VIEW OF THE ABOVE, WE DO N OT SEE ANY INFIRMITY IN THE ORDER OF LEARNED CIT(A), HENCE GROUND NO.2 AND 3 AR E ALSO DISMISSED. 7. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 2 ND DECEMBER, 2015. SD/- SD/- (A.D.JAIN) (T.S.KAPOOR) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 02.12. 2015 PK/PS COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE: 2. THE 3. THE CIT(A) 6. ITA NO.30 3 (ASR)/2014 ASST. YEAR 2010-14 4. THE CIT 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.