ACCME (URVASHI PUMPS) ENGINEERS PVT. LTD., Jaipur V. INCOME TAX OFFICER, WARD-4-2, Jaipur

ITA 316/JPR/2019

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 4404 (ITAT-JAIPUR)
• Duration Of Justice: 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-02-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 07-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: CHANCHAL MEENA J DHK
• Keywords: Revenue expenditure; TDS; Set aside
• Section: 40(a)(ia); 250; 139(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH A , JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE : SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA NO. 316/JP/2019 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2014-15 M/S. ACCME (URVASHI PUMPS) ENGINEERS (P) LTD. A-407, A/A ROAD NO. 14 VKI AREA, JAIPUR CUKE VS. THE ITO WARD- 4(2) JAIPUR LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO .: AABCA 5655 R VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPO NDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ROHAN SOGANI, CA JKTLO DH VKSJ LS@ REVENUE BY : MS. CHANCHAL MEENA, JCIT-DR LQUOKBZ DH RKJH[K@ DATE OF HEARING : 25/02/2020 ?KKS'K .KK DH RKJH[K@ DATE OF PRONOUNCEMENT : 27 /02/2020 VKNS'K@ ORDER PER VIJAY PAL RAO, JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST T HE ORDER OF LD. CIT(A)-2, JAIPUR DATED 24-01-2019 FOR THE ASSESSM ENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS. 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F AO IN MAKING DISALLOWANCE OF RS. 1,53,053/- U/S 40(A)(IA) OF THE I.T. ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILL EGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 2 MAY PLEASE BE GRANTED BY QUASHING THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT(A) HAS ERRED IN CONFIRMING THE ACTION O F AO IN MAKING A DISALLOWANCE OF RS. 2,67,338/- U/S 36(1)(V A) OF THE I.T. ACT, 1961. THE ACTION OF THE LD. CIT(A) IS ILL EGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE DISALLOWANCE MADE BY THE AO AND CONFIRMED BY THE LD. CIT(A). 2.1 THE GROUND NO. 1 OF THE ASSESSEE IS REGARDING D ISALLOWANCE OF INTEREST PAID TO M/S. RELIANCE CAPITAL LTD. AND M/S . HDB FINANCIAL SERVICES LTD. FOR WANT OF TDS U/S 40(A)(IA) OF THE ACT. 2.2 THE LD.AR OF THE ASSESSEE SUBMITTED THAT THE AS SESSEE PAID INTEREST OF RS. 1,53,053/- TO THESE TWO NBFCS THOUGH WITHOUT DEDUCTION OF TDS. HOWEVER, SINCE THE INTEREST WAS PAID TO NBFCS AND T HOSE NBFCS HAVE INCLUDED THIS AMOUNT IN THEIR INCOME AND FILED THE RETURN OF INCOME. THEREFORE, AS PER SECOND PROVISO TO SECTION 40(A)(I A) OF THE ACT, NO DISALLOWANCE IS CALLED FOR. THE LD.AR OF THE ASSESS EE THUS RELIED ON VARIOUS DECISIONS OF THIS TRIBUNAL 2.3 ON THE OTHER HAND, THE LD. DR SUBMITTED THAT TH E ASSESSEE HAD FAILED TO FURNISH THE CERTIFICATE IN FORM NO. 26A TO SUPPO RT ITS CLAIM THAT NBFCS HAVE INCLUDED THIS AMOUNT IN THE INCOME DECLARED IN THE RETURN OF INCOME ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 3 FILED U/S 139(1) OF THE ACT. THEREFORE, IN THE ABSE NCE OF ANY SUCH CERTIFICATE, THE SECOND PROVISO TO SECTION 40(A)(I A) OF THE ACT CANNOT BE APPLIED. THE LD. DR THUS RELIED ON THE ORDERS OF TH E LOWER AUTHORITIES. 2.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIALS AVAILABLE ON RECORD. THERE IS NO DISPUTE THAT THE ASSESSEE HAS PAID INTEREST OF RS. 2,507/- TO M/S. RELIANCE CAPIT AL LTD. AND RS. 1,52,803/- TO M/S. HDB FINANCIAL SERVICES LTD. TOTA L AMOUNTING TO RS. 1,53,053/- WITHOUT DEDUCTION OF TDS. THE AO DISALLO WED THE SAID AMOUNT BY INVOKING THE PROVISIONS OF SECTION 40(A)( IA) OF THE ACT. THOUGH THE ASSESSEE CLAIMED THE BENEFIT OF SECOND P ROVISO TO SECTION 40(A)(IA) OF THE ACT, HOWEVER, THE LD. CIT(A) HAS C ONFIRMED THE DISALLOWANCE MADE BY THE AO IN PARA 3.3 OF HIS ORDE R AS UNDER:- 3.3 I HAVE PERUSED THE FACTS OF THE CASE THE ASS ESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE SEC OND GROUND RELATES TO NON-DEDUCTION OF TDS ON INTEREST PAID BY THE ASSESSEE COMPANY TO NBFCS, RELIANCE CAPITAL AND M/S. HDB FINANCIAL SERVICES LTD. AO ON OBSERVING THE FACTS THAT NO TDS WAS DEDUCTED, DISALLOWED THE ABOVE INTEREST EXPENSES U/S 40(A)(IA ) OF I.T. ACT, 1961. LD. AR OF THE ASSESSEE CONTENDED THAT THE AO HAS NO WHERE OBJECTED THE GENUINENESS OF THE EXPENDITURE MADE BY THE ASSESSEE COMPANY. ALSO, THE INCOME MUST HAVE CONSID ERED ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 4 BY THESE NBFCS WHILE COMPUTING THE TAXABLE INCOME F OR A.Y. 2014-15. IT IS ESTABLISHED THAT THE ASSESSEE COMPANY HAS NOT DEDUCTED TDS ON PAYMENTS MADE TO THESE NBFCS. ALSO, THE COMP ANY HAS FAILED TO FURNISH FORM 26A TO SUPPORT ITS CLAIM . THE LAW CLEARLY STATES THAT ON ACCOUNT OF NON-DEDUCTION OF TDS, THE PROVISIONS OF SECTION 40(A)(IA) SHALL COME INTO PLA Y. THUS, IN VIEW OF THE ABOVE, THE DISALLOWANCE MADE U/S 40(A)( IA) REQUIRES NO INTERVENTION. THE GROUND OF APPEAL IS DISMISSED. THE LD.AR HAS NOT DISPUTED THE FACT THAT THE ASSESS EE HAS NOT FILED THE REQUISITE CERTIFICATE IN THE FORM NO. 26A TO SHOW T HAT THESE RECIPIENT NBFCS HAVE INCLUDED THIS AMOUNT IN THEIR INCOME AN D FILED THE RETURN OF INCOME U/S 139(1) OF THE ACT. THOUGH THE ASSESSEE H AS NOT PRODUCED REQUISITE CERTIFICATE YET IT IS EXPECTED FROM THE N BFCS IN THE CASE IN HAND THAT THEY MUST HAVE FILED THEIR RETURN OF INCOME AN D CONSIDERED THIS AMOUNT OF INTEREST AS PART OF THE INCOME DECLARED B Y THEM. THEREFORE, THE MATTER IS SET ASIDE TO THE RECORD OF THE AO TO VERI FY THIS FACT AND THE ASSESSEE IS DIRECTED TO PRODUCE THE CERTIFICATE IN FORM NO. 26A BEFORE THE AO. NEEDLESS TO SAY THAT THE ASSESSEE BE GIVEN APPR OPRIATE OPPORTUNITY OF HEARING OF APPEAL BEFORE PASSING THE FRESH ORDER. THUS THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 5 3.1 THE GROUND NO. 2 OF THE ASSESSEE IS REGARDING D ISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PF & ESI ACT. 3.2 THE LD.AR OF THE ASSESSEE HAS POINTED OUT THAT THE PAYMENTS WERE MADE BY THE ASSESSEE BEFORE DUE DATE OF FILING OF R ETURN U/S 139(1) OF THE ACT. THE LD.AR OF THE ASSESSEE HAS REFERRED TO THE DETAILS OF PAYMENTS IN THE MONTH OF JULY, 2013 TO MARCH 2014 AND SUBMITTED THAT THE ISSUE IS COVERED BY VARIOUS DECISIONS OF HON'BLE JURISDICTI ONAL HIGH COURT AS WELL AS DECISION OF THIS TRIBUNAL DATED 24-04-2019 IN THE CASE OF RAJASTHAN COTTAGE INDUSTRIES VS ITO (ITA NO. 983/JP /2018 FOR THE ASSESSMENT YEAR 2013-14). 3.3 ON THE OTHER HAND, THE LD. DR HAS RELIED ON THE ORDERS OF THE AUTHORITIES BELOW AND ALSO RELIED ON THE DECISION O F HON'BLE KERALA HIGH COURT IN THE CASE OF CIT VS MERCHAM LTD. 378 ITR 44 3 (KER.). 3.4 WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WEL L AS RELEVANT MATERIALS AVAILABLE ON RECORD. AT THE OUTSET, WE NO TE THAT IDENTICAL ISSUE HAS BEEN CONSIDERED BY THIS TRIBUNAL IN THE CASE OF RAJASTHAN COTTAGE INDUSTRIES VS ITO (SUPRA) IN PARA 2 AS UNDER:- 2. THE ONLY ISSUE IN THIS APPEAL IS REGARDING DISALL OWANCE OF EMPLOYEES CONTRIBUTION TO PF & ESI AFTER THE DUE DA TE OF PAYMENT AS PER RESPECTIVE ACTS PF & ESI HOWEVER, IT WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U /S 139(1) OF THE ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 6 ACT. THE LD. CIT(A) HAS ACCEPTED THE FACT THAT THE AS SESSEE HAS PAID THE CONTRIBUTION TOWARDS TO PF & ESI PRIOR TO D UE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT BU T THE CLAIM WAS DISALLOWED ON THE BASIS OF THE DECISION OF HONBLE J URISDICTIONAL HIGH COURT IN CASE OF IN CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED IN DB ITA NO. 10,11 & 12/2018 DATED 13.03.2018 WHICH WAS MISUNDERSTOOD BY THE LD. CIT(A). WE NOTE THAT THERE WAS TYPOGRAPHICAL MISTAKE IN THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WH EREAS THE HONBLE HIGH COURT HAS FOLLOWED THE EARLIER DECISION IN CASE OF CIT VS. JAIPUR VIDYUT VITRAN NIGAM LTD. 363 ITR 307. THE LD. AR HAS POINTED OUT THAT THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. 250 TAXMANN 32 HAS BEEN UPHELD BY THE HONBLE SUPREME COURT REPORTED IN 250 TAXMANN 16. TH US, THE ISSUE IS COVERED BY A SERIES OF DECISIONS OF HONBL E JURISDICTIONAL HIGH COURT INCLUDING THE DECISION IN CASE OF PCIT VS . RAJASTHAN STATE BEVERAGES CORPORATION LTD. (SUPRA) AS HELD IN PARA 5 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 I N 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 REQU IRED TO BE ALLOWED AS A REVENUE EXPENDITURE. THIS COURT IN TH E AFORESAID CASE HAS ALSO ALLOWED THE CLAIM OF THE ASS ESSEE, IN SO FAR AS PAYMENT OF PF & ESI ETC. IS CONCERNED, ON THE FINDING OF FACT THAT THE AMOUNTS IN QUESTION WERE DE POSITED ON OR BEFORE THE DUE DATE OF FURNISHING OF THE RETU RN OF ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 7 INCOME AND TAKING IN CONSIDERATION JUDGMENT OF THIS COURT IN COMMISSIONER OF INCOME TAX VS. STATE BANK OF BIKA NER & JAIPUR AND COMMISSIONER OF INCOME TAX VS. JAIPUR V IDYUT VITARAN NIGAM LTD. (2014) 363 ITR 70 (RAJ.) AND ACCORDINGLY BOTH THE QUESTIONS ARE COVERED BY THE A FORESAID JUDGMENT AND AGAINST THE REVENUE. THE SAID DECISION WAS CHALLENGED BY THE REVENUE BEFOR E THE HONBLE SUPREME COURT BUT THE SLP FILED BY THE REVE NUE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT REPORTE D 250 TAXMANN 32. ACCORDINGLY, DISALLOWANCES/ADDITIONS MA DE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF & ESI IS DELETED AND CLAIM OF THE ASSESSEE IS ALLOWED. THUS IT IS APPARENT THAT THIS ISSUE HAS BEEN DECIDE D BY THE HON'BLE JURISDICTIONAL HIGH COURT IN FAVOUR OF THE ASSESSEE IN NUMBER OF CASES AS REFERRED IN THE ABOVE CITED DECISIONS. FURTHER, THE HON'BLE SUPREME COURT HAS ALSO DISMISSED SLP FILED BY THE REVENUE IN CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. (SUPRA). HENCE, IN VIEW OF THE BINDING PRECEDENTS OF HON'BLE JURISDICTIONAL HI GH COURT AS WELL AS THE DECISION OF THIS TRIBUNAL (SUPRA), WE DECIDE THIS I SSUE IN FAVOUR OF THE ASSESSEE AND CONSEQUENTLY THE ADDITION MADE BY THE AO IS DELETED. THUS GROUND NO. 2 OF THE ASSESSEE IS ALLOWED. ITA NO.316/JP/2019 M/S. ACME (URVASHI PUMPS) ENGINEERS PVT.LTD. , WARD- 4(2), JAIPUR 8 4.0 IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 27 /02/202 0. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 27/02/ 2020 *MISHRA VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1 VIHYKFKHZ@ THE APPELLANT- M/S. ACCME (URVASHI PUMPS) ENGINEER S (P) LTD., JAIPUR 2 IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 4(2), JAIPUR 3. VK;DJ VK;QDRVIHY ) @ CIT(A), 4. VK;DJ VK;QDR@ CIT, 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE (ITA NO. 316/JP/2019) VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASSISTANT. REGISTRAR