M/S Synbiotics Ltd, Baroda V. The A C I T Baroda Cir -4, Baroda

ITA 3356/AHD/2002

• Counselvise Citation: 335620514 RSA 2002
• Duration Of Justice: 9 year(s) 2 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 13-01-2012
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: D
• Next Hearing Date: 11-01-2012
• Assessment Year: 1994-1995
• Appeal Filed On: 29-10-2002
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S PARIDA
• Assessee Lawyers: MEHUL K PATEL
• Section: 43B; 40A(3); 234B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH AHMEDABAD (BEFORE SHRI BHAVNESH SAINI, JM AND SHRI A. K. GARO DIA, AM) ITA NO.3356/AHD/2002 A. Y.: 1994-95 SYNBIOTIC LIMITED, WADI WADI, BARODA 390 023 PA/GIR NO.31-009. CX-9519 VS THE INCOME TAX OFFICER, WARD 4(2), 4 TH FLOOR, AAYAKAR BHAVAN, RACE COURSE CIRCLE, BARODA (APPELLANT) (RESPONDENT) APPELLANT BY SHRI MEHUL K. PATEL, AR RESPONDENT BY SHRI S. S. PARIDA, CIT DR DATE OF HEARING: 11-01-2012 DATE OF PRONOUNCEMENT: 13-01-2012 O R D E R PER BHAVNESH SAINI: THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF THE LEARNED CIT(A)-II I, BARODA DATED 08-08-2002, FOR ASSESSMENT YEAR 1994-95. 2. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF BO TH THE PARTIES AND PERUSED THE FINDINGS OF THE AUTHORITIES BELOW. 3. ON GROUND NO1, THE ASSESSEE CHALLENGED THE DISAL LOWANCE OF RS.2,25,000/- U/S 40A(3) OF THE IT ACT. THE AO OBSE RVED THAT THE AMOUNT IS PAID IN CASH TO THE DEALING COMPANIES AGA INST PURCHASES FOR WHICH NO JUSTIFICATION HAS BEEN GIVEN AS TO WHE THER THE PAYMENT IS ITA NO.3356/AHD/2002 SYNBIOTICS LTD. VS ACIT, CIR-4, BARODA 2 COVERED UNDER RULE 6 DDJ OF THE IT RULES, THEREFORE , DISALLOWANCE IN A SUM OF RS.2,39,000/- WAS MADE. IT WAS SUBMITTED B EFORE THE LEARNED CIT(A) THAT THE PAYMENTS ARE NOT MADE AGAI NST PURCHASES NOT AGAINST EXPENDITURE. IN FACT PAYMENTS HAVE BEEN MADE TO SARABHAI CHEMICALS OF RS.2,25,000/- AND TO SARABHAI M. CHEMICALS OF RS.14,000/- WHICH IS A DIVISION OF ASE. THE AMOU NT PAID TO SARABHAI CHEMICALS REPRESENTED THE COMMISSION REFUN DED TO T4HEM EARLIER RECEIVED FROM THEM FOR TEMPORARY FINANCIAL REQUIREMENT. THE SECOND AMOUNT WAS ALSO THE SAME. THE AMOUNTS HAVE B EEN DEBITED IN THE BOOKS OF ACCOUNTS. THE LEARNED CIT(A) ON GOI NG THROUGH THE DETAILS SUBMITTED IN THE PAPER BOOK BEFORE HIM FOUN D THAT THE FIRST PAYMENT OF RS.2,25,000/- IS THE AMOUNT OF REIMBURSE MENT FOR PAYMENT OF SALARY AND WAGES ETC. THEREFORE, IT IS C OVERED BY THE PROVISIONS OF SECTION 40A (3) OF THE IT ACT. THEREF ORE, SMALL ADDITION OF RS.14,000/- WAS DELETED AND ADDITION WAS RESTRIC TED TO RS.2,25,000/-. 4. ON CONSIDERATION OF THE RIVAL SUBMISSIONS, WE DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). THE LEARNED CIT(A) FOUND THAT PAYMENTS HAVE BEEN MADE F OR EXPENDITURE IN WHICH NO JUSTIFICATION IS GIVEN. DURING THE COUR SE OF ARGUMENTS THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT SUBSTANT IATE THE GROUND OF APPEAL THROUGH ANY EVIDENCE OR MATERIAL ON RECOR D. IN THE ABSENCE OF ANY CHALLENGED TO THE ADDITION, THIS GROUND OF A PPEAL OF THE ASSESSEE IS ACCORDINGLY DISMISSED. ITA NO.3356/AHD/2002 SYNBIOTICS LTD. VS ACIT, CIR-4, BARODA 3 5. ON GROUND NO.2, THE ASSESSEE CHALLENGED CANTEEN EXPENSES OF RS.63,686/-. THE AO NOTED THAT THE ASSESSEE HAS DEB ITED ENTERTAINMENT EXPENSES AS WELL AS CANTEEN EXPENSES IN THE BOOKS OF ACCOUNTS. THE TOTAL ENTERTAINMENT EXPENSES WAS WORK ED OUT AT RS.1,37,373/- AND ACCORDINGLY DISALLOWANCE OF RS.63 ,686/- WAS MADE U/S 37 (2) OF THE IT ACT. THE LEARNED CIT(A) CONSID ERING THE EXPENDITURE CONSIDERED BY THE TAX AUDITOR AS ENTERT AINMENT EXPENSES AND FURTHER THAT THESE AMOUNTS SPENT ON GU EST HOUSE ARE NOT ALLOWABLE AND FURTHER THAT POSSIBILITY OF INCLU SION OF ENTERTAINMENT EXPENSES IN CANTEEN EXPENSES CANNOT BE RULED OUT CO NFIRMED THE ADDITION OF RS.63,686/-. THE LEARNED COUNSEL FOR TH E ASSESSEE COULD NOT CONTRIBUTE ANYTHING ON THIS ISSUE AND AS SUCH W E DO NOT FIND ANY JUSTIFICATION TO INTERFERE WITH THE ORDER OF THE LE ARNED CIT(A). THIS GROUND OF APPEAL OF THE ASSESSEE IS ACCORDINGLY DIS MISSED. 6. ON GROUND NO.3, THE ASSESSEE CHALLENGED THE DISA LLOWANCE U/S 43B (B) OF THE IT ACT AND EMPLOYERS CONTRIBUTION T O PF ETC. OF RS.16,59,020/-. THE AO DISALLOWED THE ABOVE AMOUNT BEING THE BELATED PAYMENT OF EMPLOYERS CONTRIBUTION TO PF. T HE AO OBSERVED THAT ACCORDING TO SECTION 43B, THE ASSESSEE HAS TO CREDIT ITS CONTRIBUTION TO PF ETC. WITHIN 15 DAYS FROM THE CLO SE OF THE MONTH IN WHICH SALARY OF THE EMPLOYEES ARE DUE FOR DISBURSEM ENT. BUT THE SAME HAS NOT BEEN DONE. BY TENDERING CHEQUES ON 23- 11-1993 IN RESPECT OF SALARY FOR THE MONTH OF OCTOBER, 1993 IT IS LATE BY 8 DAYS. SIMILAR IS THE CASE IN RESPECT OF CONTRIBUTION TO E SI, LABOUR WELFARE FUND AND SUPERANNUATION FUND. SUCH BELATED PAYMENTS CONNECTED TO THE ABOVE AMOUNT WHICH WAS DISALLOWED BY THE AO. IT WAS SUBMITTED ITA NO.3356/AHD/2002 SYNBIOTICS LTD. VS ACIT, CIR-4, BARODA 4 BEFORE THE LEARNED CIT(A) THAT THE PERIOD OF CONTRI BUTION TO PF WOULD ALSO INCLUDE GRACE PERIOD. FURTHER SUBMISSIONS WERE ALSO MADE WITH REGARD TO THE FAILURE ON THE PART OF THE AO TO CONS IDER WAGES PAYABLE TO THE EMPLOYEES IN A PARTICULAR MONTH. THE LEARNED CIT(A) FOLLOWING THE ORDER OF THE TRIBUNAL IN THE CASE OF SARABHAI M ACHINERIES ETC. HELD THAT SINCE THE DUE DATE WITHIN WHICH EMPLOYER S CONTRIBUTION TO PF HAS TO BE DEPOSITED TO BE RECKONED AS 20 TH DAY FROM THE END OF THE MONTH TO WHICH THE SALARY RELATES. THEREFORE, T HE AO WILL RECALCULATE THE AMOUNT OF THE DISALLOWANCE KEEPING IN VIEW THE OBSERVATIONS OF THE TRIBUNAL. 7. THE ASSESSEE ALSO RAISED ADDITIONAL GROUNDS OF A PPEAL STATING THEREIN THAT BY AMENDMENT TO SECTION 43B (B) MADE B Y FINANCE ACT 2003 PROVIDING THAT CONTRIBUTION PAID ON OR BEFORE THE DUE DATE FOR FILING RETURN OF INCOME, THOUGH NOT PAID WITHIN THE DUE DATE AS PROVIDED IN THE RELEVANT ACT, IS NOT DISALLOWABLE I S RETROSPECTIVE IN OPERATION AND IS APPLICABLE TO THE ASSESSMENT YEAR UNDER APPEAL. IT IS STATED THAT SINCE THE CONTRIBUTION WAS PAID ON O R BEFORE THE DUE DATE OF FILING OF THE RETURN, THEREFORE, CLAIM OF T HE ASSESSEE MAY BE ALLOWED AS PER THE AMENDED PROVISIONS OF THE LAW. T HE LEARNED COUNSEL FOR THE ASSESSEE RELIED UPON THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION LTD., 3 19 ITR 306 IN WHICH IT WAS HELD THAT OMISSION OF THE SECOND PROVISO TO SECTION 43B OF THE ACT BY THE FINANCE ACT 2003, OPERATED RE TROSPECTIVELY W. E. F. 1.4.1988 AND NOT PROSPECTIVELY FROM 1.4.04 . THE LEARNED COUNSEL FOR THE ASSESSEE HOWEVER, SUBMITTED THAT TH E MATTER MAY BE ITA NO.3356/AHD/2002 SYNBIOTICS LTD. VS ACIT, CIR-4, BARODA 5 REMANDED TO THE FILE OF THE AO FOR VERIFICATION OF THE DATES OF PAYMENT ON THIS ISSUE. THE LEARNED DR HAS NO OBJECTION TO T HE SAME. 8. ON CONSIDERATION OF THE SUBMISSIONS OF THE PARTI ES IN THE LIGHT OF THE AMENDED PROVISIONS CONTAINED IN SECTION 43B OF THE IT ACT AND IN THE LIGHT OF THE DECISION OF THE HONBLE SUPREME CO URT IN THE CASE OF ALOM EXTRUSION LTD. (SUPRA), WE SET ASIDE THE ORDER S OF THE AUTHORITIES BELOW AND RESTORE THIS ISSUE TO THE FILE OF THE AO TO RE-DECIDE THE ISSUE IN THE LIGHT OF THE ABOVE DECISION OF THE HON BLE SUPREME COURT AND THE AMENDED PROVISIONS OF SECTION 43B OF THE IT ACT. THE AO SHALL VERIFY THE DATES OF PAYMENT AND SHALL PASS TH E ORDER ACCORDINGLY BY GIVING REASONABLE SUFFICIENT OPPORTUNITY OF BEIN G HEARD TO THE ASSESSEE. IN THE RESULT, GROUND NO.3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 9. ON GROUND NO.4, THE ASSESSEE CHALLENGED LEVY OF INTEREST U/S 234B OF THE IT ACT WHICH ACCORDING TO THE LEARNED C OUNSEL FOR THE ASSESSEE IS CONSEQUENTIAL AND MANDATORY IN NATURE. ACCORDINGLY THIS GROUND OF APPEAL IS DISMISSED. 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- (A. K. GARODIA) ACCOUNTANT MEMBER (BHAVNESH SAINI) JUDICIAL MEMBER LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/ LAKSHMIKANT DEKA/- -- - ITA NO.3356/AHD/2002 SYNBIOTICS LTD. VS ACIT, CIR-4, BARODA 6 COPY OF THE ORDER FORWARDED TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT CONCERNED 4. THE CIT(A) CONCERNED 5. THE DR, ITAT, AHMEDABAD 6. GUARD FILE BY ORDER D Y. REGISTRAR, ITAT, AHMEDABAD