DCIT, CIR-4(2), KOLKATA, Kolkata V. M/s Teesta Valley Tea Co. Ltd., Kolkata

ITA 318/KOL/2015

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 1518 (ITAT-KOLKATA)
• Duration Of Justice: 2 year(s) 5 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-09-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: C
• Assessment Year: 2002-2003
• Appeal Filed On: 30-03-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 6; 139

Judgement Text

, C , IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA BENCH C KOLKATA BEFORE SHRI N.V.VASUDEVAN, JUDICIAL MEMBER AND SHRI WASEEM AHMED, ACCOUNTANT MEMBER ITA NO. 318 / KOL / 2015 ASSESSMENT YEAR :2002-03 DCIT, CICLE-4(2), P-7, CHOWRINGHEE SQUARE, KOLKATA-69 V/S . M/S TEESTA VALLEY TEA CO. LTD., 3,N.S./ ROAD, KOLKATA-700001 [ PAN NO.AAACT 9762 D ] /APPELLANT .. / RESPONDENT /BY APPELLANT NONE /BY RESPONDENT NONE /DATE OF HEARING 25-07-2017 !' /DATE OF PRONOUNCEMENT 01-09-2017 / O R D E R PER WASEEM AHMED, ACCOUNTANT MEMBER:- THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-2, KOLKATA DAT ED 29.12.2014. ASSESSMENT WAS FRAMED BY ACIT, CIRCLE-4, KOLKATA U/ S 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT ) VIDE HIS ORDER DATED 31.03.2005 FOR ASSESSMENT YEAR 2002-03. 2. AT THE TIME OF HEARING NONE APPEARED FROM SIDE O F REVENUE AS WELL AS ASSESSEE IN SPITE OF ISSUE OF NOTICE. THERE WAS NO REQUEST FOR ADJOURNMENT AS WELL FROM EITHER SIDE. HOWEVER WE FIND THAT THE APP EAL CAN BE DECIDED ON THE BASIS OF MATERIALS AVAILABLE ON RECORD AND WITHOUT THE ASSISTANCE OF EITHER SIDE I.E. REVENUE OR ASSESSEE. ITA NO.318/KOL/2015 A.Y. 2002-03 DCIT CIR.4(2) KOL. VS. M/S TEESTA VALLEY TEA CO. LTD. PAGE 2 3. FIRST ISSUE RAISED BY REVENUE IN THIS APPEAL IS THAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY ASSESSING OFFICER ON ACCOUNT OF CAPITAL EXPENDITURE FOR 18,31,210//- ONLY. 4. BRIEFLY STATED FACTS ARE THAT ASSESSEE IS A LIMI TED COMPANY AND ENGAGED IN THE BUSINESS OF CULTIVATION AND MANUFACTURING OF TEA. THE ASSESSEE IN THE YEAR UNDER CONSIDERATION HAS CLAIMED FOLLOWING EXPE NSES IN ITS PROFIT AND LOSS ACCOUNT:- S.NO. PARTICULARS TV GARDEN GIELLE GARDEN SOIL CULTIVATION 8,18,244 9,66,541 PLANTING 33,308 5,095 MAKING SHADE 7,897 125 8,59,449 9,71,761 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, ASSESS ING OFFICER OBSERVED THAT THESE EXPENSES ARE CAPITAL IN NATURE AND ACCOR DINGLY SOUGHT CLARIFICATION FROM THE ASSESSEE. BUT NO DETAILS WERE SUBMITTED BY THE ASSESSEE TO THE AO SUGGESTING THAT THERE HAS BEEN EXTENSION IN PLANTIN G. THEREFORE, THE SAME WAS DISALLOWED AND ADDED TO THE TOTAL INCOME OF ASS ESSEE. 5. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT THE EXPEN SE WERE INCURRED IN RELATION TO SOIL CULTIVATION, PLANTING AND MAKING S HEDS. AS SUCH NO EXPENDITURE WAS INCURRED IN THE EXTENSION/ EXPANSION OF PLANTAT ION. THERE WAS NO INCREASE IN THE AREA UNDER THE PLANTATION. LD. CIT(A) AFTER CONSIDERING SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY AO BY OBSERVI NG AS UNDER:- 3.2 I HAVE EXAMINED THE SUBMISSION OF THE AR OF THE APPELLANT AS WELL AS THE ASSESSMENT ORDER. FROM THE ASSESSMENT ORDER IT IS A PPARENT THAT THE AO HAS NOT BROUGHT ANY EVIDENCE ON RECORD TO ESTABLISH THA T THERE HAS BEEN ANY EXTENSION OR EXPANSION OF PLANTATION TO NEW AREAS B EFORE CONCLUDING THAT THE EXPENDITURE IS CAPITAL IN NATURE AND INVOKING THE R ATIO OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF THE TASATI TEA COMPANY LTD. T HE APPELLANT ON THE OTHER HAND HAS BROUGHT ENOUGH EVIDENCE ON RECORD TO ESTAB LISH THAT NO EXPANSION AND EXTENSION OF PLANTATION HAS TAKEN PLACE DURING THE YEAR. IT HAS BEEN HELD BY THE HIGH COURT OF KOLKATA IN THE CASE OF TASATI TEA THAT ONLY IF THERE IS AN EXTENSION OR EXPANSION OF PLANTATION TO NEW AREAS, SUCH RELATABLE EXPENSES CAN BE HELD TO BE CAPITAL IN NATURE. THEREFORE, I A M OF THE VIEW THAT THE EXPENDITURE OF RS.18,31,210/- SPENT ON SOIL CULTIVA TION, PLANTING AND MAKING SHADE CANNOT BE HELD TO BE CAPITAL EXPENDITURE. ACC ORDINGLY, GROUND NO.1 OF ITA NO.318/KOL/2015 A.Y. 2002-03 DCIT CIR.4(2) KOL. VS. M/S TEESTA VALLEY TEA CO. LTD. PAGE 3 THE APPEAL IS ALLOWED AND EXPENDITURE OF RS.18,31,2 10/- IS HELD TO BE REVENUE EXPENDITURE. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 6. HAVING PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE WAS NO EXPANSION IN THE AREA OF PLANTATION THEREFORE TH E PRINCIPLE LAID DOWN BY THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF TASAH TEA COMPANY LTD. REPORTED IN 262 ITR 380 (CAL) IS SQUARELY APPLICABL E IN THIS CASE. THE RELEVANT EXTRACT IS REPRODUCED BELOW:- IT IS NOT AN INVESTMENT OF FRESH CAPITAL UNLESS IT IS UTILIZED FOR THE PURPOSE OF EXPANDING THE PLANTATION. RESPECTFULLY FOLLOWING THE SAME, WE FIND NO REASON TO INTERFERE IN THE ORDER OF LD. CIT(A). WE UPHOLD THE SAME. HENCE, THIS GROUND OF REVENUE IS DISMISSED. 7. NEXT ISSUE RAISED BY REVENUE IN THIS APPEAL IS T HAT LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE AO FOR 12,09,355/- ON ACCOUNT OF DELAYED DEPOSITED IN EMPLOYEES P.F ACCOUNT. 8. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, AO OBSERVED THAT ASSESSEE HAS FAILED TO DEPOSIT THE EMPLOYEE CONTRIB UTION TO PF ACCOUNT WITHIN THE DUE DATE. THEREFORE, THE AO MADE THE ADDITION O F 12,09,355/- TO THE TOTAL INCOME OF ASSESSEE. 9. AGGRIEVED, ASSESSEE PREFERRED AN APPEAL BEFORE L D. CIT(A). THE ASSESSEE BEFORE LD. CIT(A) SUBMITTED THAT EMPLOYEES CONTRIBUTION TO PF ACCOUNT WAS DEPOSITED AFTER THE DUE DATE BUT BEFORE FURNISHING THE INCOME TAX RETURN AS SPECIFIED U/S. 139 OF THE ACT. ACCORDINGL Y THE LD. CIT(A) AFTER CONSIDERING THE SUBMISSION OF ASSESSEE DELETED THE ADDITION MADE BY THE AO. THE REVENUE, BEING AGGRIEVED, IS IN APPEAL BEFORE U S. 10. HAVING PERUSED THE MATERIAL AVAILABLE ON RECORD INCLUDING THE ORDER OF AUTHORITIES BELOW. THE ONLY ISSUE TO BE RESOLVED IS WHETHER THE ASSESSEE WOULD BE ENTITLED TO CLAIM DEDUCTION FOR THE EMPLOY EES' CONTRIBUTION MADE TO PF AFTER THE DUE DATE PRESCRIBED UNDER THE PF ACT, BUT BEFORE THE DUE DATE PRESCRIBED FOR FILING OF INCOME-TAX RETURN IN THE L IGHT OF THE PROVISIONS CONTAINED ITA NO.318/KOL/2015 A.Y. 2002-03 DCIT CIR.4(2) KOL. VS. M/S TEESTA VALLEY TEA CO. LTD. PAGE 4 IN SECTION 36(1)( VA ) OF THE ACT AND SECTION 43B( B ) OF THE ACT. IN THIS REGARD WE NOTE THAT SECTION 6 OF PROVIDENT FUND ACT PROVIDES FOR CONTRIBUTION AND THE MANNER IN WHICH SUCH CONTRIBUTION SHALL BE MADE. PA RAGRAPH 30 OF THE PF SCHEME PROVIDES FOR PAYMENT OF CONTRIBUTIONS. AS PE R THE SAID SCHEME, THE EMPLOYER AT THE FIRST INSTANCE SHALL MAKE THE TOTAL CONTRIBUTION INCLUDING EMPLOYEES' SHARE. PARAGRAPH 32 PROVIDES FOR RECOVER Y OF MEMBER SHARE OF CONTRIBUTION AND AS PER THE SCHEME, THE EMPLOYER CA N RECOVER THE EMPLOYEES' SHARE FROM THE WAGES PAID TO THE EMPLOYEE. THEREFOR E, AS PER THE PF ACT AND SCHEME OF CONTRIBUTIONS, THE CONTRIBUTIONS MEANS AN D INCLUDE BOTH EMPLOYEES' AND EMPLOYER'S SHARE. SIMILARLY, SECTION 2( C ) OF THE PROVIDENT FUND ACT DEFINES THE CONTRIBUTION TO MEAN A CONTRIBUTION PAYABLE IN RESPECT OF A MEMBER UNDER THE SCHEME OR THE CONTRIBUTION PAYABLE IN RESPECT O F AN EMPLOYEE TO WHOM THE SCHEME APPLIES. THERE IS A PRESCRIBED MODE OF PAYME NT OF CONTRIBUTIONS UNDER THE PF ACT. UNDER THE SAID ACT, THE EMPLOYER SHALL CONTRIBUTE BOTH EMPLOYEES AND EMPLOYER SHARE ALONG WITH ADMINISTRAT IVE CHARGES BEFORE THE DUE DATE SPECIFIED UNDER THE PF ACT. THE ACT PRESCR IBED ONLY ONE DUE DATE FOR DEPOSITING THE CONTRIBUTION I.E. 15TH OF SUBSEQUENT MONTH WITH THE GRACE PERIOD OF 5 DAYS WHICH INDICATES THAT THERE IS NO DIFFEREN CE BETWEEN EMPLOYEE AND EMPLOYER CONTRIBUTION. IF THE LEGISLATURE INTENDS T O DIFFERENTIATE EMPLOYEES AND EMPLOYER CONTRIBUTION, THEN THERE WOULD HAVE BEEN T WO DUE DATES LIKE IN THE CASE OF INCOME TAX ACT. THEREFORE, FROM THE ABOVE, IT IS CLEAR THAT THE PROVIDENT FUND ACT DOES NOT DIFFERENTIATE EMPLOYEES AND EMPLOYER CONTRIBUTION AND CONTRIBUTION MEANS BOTH EMPLOYEES AND EMPLOYER CONTRIBUTION UNDER THE PF SCHEME. 10.1 SECTION 43B OF THE ACT PROVIDES FOR CERTAIN DE DUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT BASIS. SUB CLAUSE ( B ) OF SECTION 43B OF THE ACT COVERS ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY W AY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUI TY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES. THE PROVISO TO SE CTION PROVIDES THAT ANY SUM PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE OF F URNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN NO DISALLOWANCE CAN BE MADE UNDER THE PROVISIONS ITA NO.318/KOL/2015 A.Y. 2002-03 DCIT CIR.4(2) KOL. VS. M/S TEESTA VALLEY TEA CO. LTD. PAGE 5 OF SECTION 43B OF THE ACT. A CAREFUL CONSIDERATION OF SECTION 43B OF THE ACT, IT IS CLEAR THAT AN EXTENSION IS GRANTED TO THE ASSESS EE TO MAKE THE PAYMENT OF PF CONTRIBUTIONS OR ANY OTHER FUND TILL THE DUE DAT E OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT. THEREFORE, IN OUR OPI NION, THERE IS NO DIFFERENCE BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION TO PF A ND IF SUCH CONTRIBUTION IS MADE ON OR BEFORE THE DUE DATE OF FURNISHING RET URN OF INCOME U/S 139(1) OF THE ACT, THEN DEDUCTION IS TO BE ALLOWED UNDER THE PROVISIONS OF SECTION 43B OF THE ACT. 10.2 THE HON'BLE KARNATAKA HIGH COURT, IN THE CASE OF ESSAE TERAOKA (P.) LTD. V. DY. CIT [2014] 366 ITR 408/222 TAXMAN 170 (MAG.)/43 TAXMANN.COM 33 TOOK THE VIEW THAT THE WORD CONTRIBUTION OCCURRING IN SECTION 43B OF THE ACT WOULD INCLUDE EMPLOYEES' CONTRIBUTION TO PF IN THE LIGHT OF THE DEFINITION OF THE WORD CONTRIBUTION AS PER THE PROVISIONS OF SECTION 2( C ) OF THE PF ACT. AS PER THE SAID SECTION, CONTRIBUTION WOULD MEAN BOTH EMPL OYER'S CONTRIBUTION AND EMPLOYEES' CONTRIBUTION. ACCORDINGLY, IT WAS HELD T HAT THE PROVISIONS OF SECTION 43B OF THE ACT ALLOWING DEDUCTION FOR PAYMENT MADE BEFORE THE DUE DATE OF FILING OF INCOME-TAX RETURN CANNOT BE IGNORED. SIMI LARLY, THE ITAT HYDERABAD TRIBUNAL IN THE CASE OF TETRA SOFT (INDIA) (P.) LTD. V. ACIT [2015] 70 SOT 66/61 TAXMANN.COM 299 HELD THAT WHEN ASSESSEE REMITTED EMPLOYEES' CONTRI BUTION TO PF WITHIN DUE DATE OF FILING RETURN OF INCOME U/ S 139(1) OF THE ACT, AMOUNT OF EMPLOYEES' CONTRIBUTION TO PF CANNOT BE DISALLOWED. SIMILAR VIEW WAS UPHELD BY THE CHENNAI BENCH OF THE ITAT, IN THE CASE OF ASSTT. CIT V. FARIDA SHOES (P.) LTD. [2016] 46 CCH 29. THE COORDINATE BENCH HELD THAT I F ASSESSEE HAD NOT DEPOSITED EMPLOYEES' CONTRIBUTION TOWARDS PROVI DENT FUND UP TO THE DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE, BUT BEFO RE DUE DATE OF FILING OF RETURN NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SECTION 43B OF THE ACT. IN THE CASE OF CIT V. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. [2013] 35 TAXMANN.COM 616/217 TAXMAN 64 (MAG.)/[201 4] 366 ITR 163 (RAJ.) , THE HON'BLE HIGH COURT OF RAJASTHAN, AFTER REFERRIN G TO THE APEX COURT DECISION IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. [2009] 319 ITR 306/185 TAXMAN 416 & CIT V. VINAY CEMENT LTD. [2007]213CTR 268 (SC) HELD THAT THE ITA NO.318/KOL/2015 A.Y. 2002-03 DCIT CIR.4(2) KOL. VS. M/S TEESTA VALLEY TEA CO. LTD. PAGE 6 DEDUCTIONS SHOULD BE ALLOWED FOR THE PAYMENT OF EMP LOYEES' CONTRIBUTION MADE BEFORE THE DUE DATE OF FILING OF RETURN. SIMIL ARLY, IN THE CASE OF CIT V. STATE BANK OF BIKANER, THE HON'BLE RAJASTHAN HIGH COURT HELD THAT CONTRIB UTION PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACT, B UT BEFORE FILING THE RETURN OF INCOME U/S 139(1) OF THE ACT CANNOT BE DISALLOWED U /S 43B OF THE ACT AND OR U/S 36(1)( VA ) OF THE ACT. 10.3 CONSIDERING THE FACTS AND CIRCUMSTANCES OF THI S CASE AND ALSO FOLLOWING THE JUDICIAL PRECEDENTS AS DISCUSSED ABOVE, WE ARE OF THE VIEW THAT THERE IS NO DISTINCTION BETWEEN EMPLOYEES' AND EMPLOYER CONTRIB UTION TO PF, AND IF THE TOTAL CONTRIBUTION IS DEPOSITED ON OR BEFORE THE DU E DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT, THEN NO DISALLOWANCE CAN BE MADE TOWARDS EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND. HENCE, W E ARE INCLINED NOT TO INTERFERE IN THE ORDER OF LD. CIT-A. HENCE THE GROU ND OF APPEAL FILED BY THE REVENUE IS DISMISSED. 11. IN THE RESULT, REVENUES APPEAL STANDS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT 01 /09/2017 SD/- SD/- ($%&) ( %&) (N.V.VASUDEVAN) (WASEEM AHMED) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) KOLKATA, *DKP, SR.P.S (%)*- 01 / 09 /201 7 / COPY OF ORDER FORWARDED TO:- 1. /APPELLANT-DCIT, CIRCLE-4(2), P-7, CHOWRINGHEE SQUAR E, KOLKATA-69 2. /RESPONDENT- M/S TEESTA VALLEY TEA CO. LTD. 3, N.S.R OAD, KOLKATA-001 3.)2)3 4 / CONCERNED CIT KOLKATA 4. 4- / CIT (A) KOLKATA 5.789$$3 , 3 , / DR, ITAT, KOLKATA 6.9;<=> / GUARD FILE. BY ORDER/ %, /TRUE COPY/ SR. PRIVATE SECRETARY, HEAD OF OFFICE/DDO 3 ,