Kalinga Institute of Social Sciences (KISS), Bhubaneswar V. JCIT, Range-2, Bhubaneswar

ITA 337/CTK/2016

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 6124 (ITAT-CUTTACK)
• Duration Of Justice: 4 year(s) 13 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-09-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 12-09-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: S K AGARWA L LA
• Keywords: Capital asset; Depreciation; Capital expenditure
• Section: 43B; 40A(3); 12A; 12AA; 201; 192; 43; 13; 32; 147; 12; 139

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL CUTTACK BENCH CUTTACK BEFORE SHRI C.M. GARG, JM & SHRI L.P. SAHU, AM . / ITA NO. 337 /CTK/201 6 ( / ASSESSMENT YEAR : 20 1 1 - 2012 ) KALINGA INSTITUTE OF SOCIAL SCIE NCES (KISS), KIIT CAMPUS - 10, PLOT NO.582/1540, PATIA, BHUBANESWAR - 751007 VS. JCIT, RANGE - 2, BHUBANESWAR ./ PAN NO. : A A AAK 7721 R ( / APPELLANT ) .. ( / RESPONDENT ) /ASSESSEE BY : SHRI S.K.AGARWALLA, CA /REVENUE BY : SHRI S .M. K ESHKAMAT , CIT DR / DATE OF HEARING : 24 / 09 /20 20 / DATE OF PRONOUNCEMENT : 25 / 0 9 /20 20 / O R D E R PER L.P.SAHU , A M : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST T HE ORDER OF CIT(A) - 3 , BHUBANESWAR , DATED 03.05.2016 FOR THE ASSESSMENT YEAR 201 1 - 201 2 ON THE FOLLOWING GROUNDS OF APPEAL : - 1. THAT, THE LD. AUTHORITIES BELOW ARE NOT CORRECT IN DISALLOWING THE CAPITAL EXPENDITURE OF RS. 7,94,06,622 AS APPLICATION OF INCO ME WITHIN THE MEANING OF SECTION 11 OF THE ACT IN VIEW OF THE FACT AS PER THE AMENDED PROVISIONS OF SECTION 12A OF THE ACT, THE APPELLANT ENJOYS THE DEEMED REGISTERED U/S 12AA OF THE ACT. THEREFORE THE ADDITIONS OF RS. 7,94,06,622 IS LIABLE TO BE DELETED. 2. THAT, THE FORUM BELOW ARE WRONG IN NO T ALLOWING THE DEPRECIATION OF RS. 14,99,740 WHICH IS LIABLE TO BE DELETED. 3. THAT, THE LD. ASSESSING OFFICER IS WRONG AND THE LD. COMMISSIONER OF LNCOME TAX (APPEALS) IS NOT CORRECT IN ENDORSING THE DISALLOWA NCE OF RS. 16,09,533 U/S 40A(3) OF THE ACT IN VIEW OF THE FACT THAT, THE SAID EXPENDITURE HAD BEEN INCURRED FOR PURCHASE OF VEGETABLES AND CHICKEN, WHICH ARE COVERED UNDER THE INCOME TAX RULES 6DD(E) AS ITA NO. 337 /CTK/201 6 2 EXCEPTION TO THE SECTION 40A(3) OF THE ACT. THEREFORE THE ADDITIONS OF RS. 16,09,533 IS ILLEGAL AND LIABLE TO BE DELETED. 4. THAT, THE LD. AUTHORITIES BELOW ERRED IN FACTS IN CIRCUMSTANCES IN MAKING ADHOC DISALLOWANCE OF RS. 3,67,309, AT THE RATE OF 10% OF THE EXPENDITURE INCURRED UNDER THE HEAD 'GARDENING E XPENSES & CULTURAL EXPENSES'. THEREFORE THE ADDITIONS OF RS. 3,67,309 IS ILLEGAL AND LIABLE TO BE DELETED. 5. THAT, THE LD. AUTHORITIES BELOW ARE NOT CORRECT IN DISALLOWING THE EMPLOYEES CONTRIBUTION TO EPF AMOUNTING TO RS. 17,46,576 U/S 36(L)(VA) OF THE ACT IN VIEW OF THE FACT THAT THE SAME HAD BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME AND THEREFORE THE SAME IS LIABLE TO BE DELETED. 6. FOR THESE AMONG OTHER GROUNDS IF ANY TO BE ARGUED AT THE TIME OF H EARING. 2. BRIEF FACTS OF T HE CASE ARE THAT THE ASSESSEE IS A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION ACT, 1860 ON 01.07.2008. THE ASSESSEE FILED HIS RETURN OF INCOME ON 30.09.2011 DECLARING LOSS OF RS.9,39,49,067/ - . THE RETURN OF INCOME WAS SELECTED FOR SCRUTINY AND STA TUTORY NOTICES WERE ISSUED TO THE ASSESSEE. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AO CALLED FOR SOME DOCUMENTS WHICH WERE FURNISHED ON VERIFICATION OF THE MEMORANDUM OF ASSOCIATION AND CERTIFICATE OF REGISTRATION GRANTED U/S.12AA OF THE INCOME T AX ACT, 1961, WHICH WAS DULY GRANTED BY THE COMMISSIONER OF INCOME TAX, BHUBANESWAR ON 14.09.2011 W.E.F. 01.04.2011. THUS, IT WAS NOTICED BY THE AO THAT THE SOCIETY WAS REGISTERED FOR THE PERIOD FROM 01.04.2011 AND ONWARDS. FURTHER ON SCRUTINY OF INCOME T AX RETURN IT WAS FOUND BY THE AO THAT THE ASSESSEE HAD CLAIMED EXEMPTION U/S.11 OF THE INCOME TAX ACT, 1961 TO THE TUNE OF RS.7,94,06,622/ - WHEREAS THE SOCIETY HAD NOT FULFILLED THE CONDITIONS STIPULATED U/S.12A OF THE INCOME TAX ACT ITA NO. 337 /CTK/201 6 3 BECAUSE IT WAS NOT REG ISTERED U/S.12AA OF THE ACT FOR RELEVANT ASSESSMENT YEAR. ACCORDINGLY, THE AO TREATED IT AS AN AOP. ON FURTHER SCRUTINY OF AUDITED ACCOUNTS THE ASSESSEE HAD SHOWN GROSS RECEIPTS TO THE TUNE OF RS.17,64,53,608/ - IN ITS INCOME AND EXPENDITURE ACCOUNT AND HE HAS CLAIMED TO HAVE BEEN SPENT A SUM OF RS.19,12,96,053/ - , THEREBY THERE WAS A SHORTAGE OF RS.1,45,42,445/ - . ACCORDINGLY, THE ASSESSEE HAS CLAIMED EXEMPTION OF INCOME CHARGEABLE U/S.11 OF THE ACT OF RS.7,94,06,622/ - RESULTING INTO TOTAL LOSS OF RS.9,39,49 ,067/ - . THE ASSESSEE WAS ISSUED SHOW CAUSE NOTICE STATING THAT WHEY THE CAPITAL EXPENDITURE CLAIMED AS APPLICATION OF INCOME SHOULD NOT BE DISALLOWED. IN RESPONSE TO THE SAME, THE ASSESSEE SUBMITTED REPLY ON 15.01.2014. AFTER CONSIDERING THE WRITTEN SUBMIS SIONS OF THE ASSESSEE, THE AO DID NOT CONVINCE WITH THE SUBMISSION OF THE ASSESSEE BECAUSE THE SOCIETY WAS GOT REGISTERED U/S.12AA OF THE ACT W.E.F. 01.04.2011, THEREFORE, THE CAPITAL EXPENDITURE CLAIMED BY THE ASSESSEE AS APPLICATION OF INCOME TO THE TUNE OF RS.7,94,06,622/ - WAS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. 3. ON FURTHER SCRUTINY OF ACCOUNTS IT WAS NOTICED THAT THE ASSESSEE HAS CLAIMED DEPRECIATION OF RS. 1,23,52,356/ - OUT OF WHICH RS.1,08,52,616/ - WAS FOUND BY THE AO THAT IT WAS CLAIMED AS P ER THE PROVISIONS OF SECTION 32 OF THE ACT. THEREFORE, THE AO DISALLOWED THE EXCESS DEPRECIATION OF RS.14,99,740/ - AND ADDED TO THE TOTAL INCOME OF ITA NO. 337 /CTK/201 6 4 THE ASSESSEE. THE AO FURTHER NOTICED THAT THE ASSESSEE HAS VIOLATED THE PROVISIONS OF SECTION 40A(3) OF THE ACT. IN THIS REGARD, A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AND IN RESPONSE TO WHICH THE ASSESSEE SUBMITTED HIS WRITTEN REPLY WHICH READS AS UNDER : - IN PARA NO.4 OF THE QUESTIONNAIRE ISSUED, YOUR HONOUR HAS RAISED THE ISSUED REGARDING DISALLOWANC E OF EXPENSES U/S.40A(3) OF THE ACT. FOR THIS Q UERY IT IS SUBMITTED THAT, THE ASSESSEE HAS MADE THE ADVANCE CASH PAYMENTS TO ITS EMPLOYEES FOR THE PURCHASE OF VEGETABLES AND CHICKENS AND THE EMPLOYEES OF THE ASSESSEE USED TO PURCHASE THE VEGETABLE AND CHIC KEN FROM THE MARKET. SO THE ADVANCE CASH PAYMENT TO EMPLOYEES FOR PURCHASE IS NOT COMING UNDER THE PURVIEW OF THE PROVISIONS OF SECTION 40A(3) READ WITH RULE 6DD OF THE INCOME TAX RULES. FURTHER IN SOME CASES THE ASSESSEE DIRECTLY MADE THE PAYMENTS FOR PUR CHASE OF VEGETABLES, FRUITS & CHICKENS ETC FROM SOME VENDORS WHO BELONGS TO UNORGANIZED SECTORS AND THEY DON'T ACCEPT THE CHEQUES. AS PER THE RULE 6DD(E)(I) & RULE 6DD(E)(II) OF THE IT RULES PAYMENTS MADE FOR PURCHASE OF AGRICULTURAL AND ANIMAL HUSBANDRY P RODUCTS ARE NOT TO BE DISALLOWED U/S.40A(3) OF THE ACT IN VIEW OF THE FACT THAT THE VEGETABLES, FRUITS ARE COMING UNDER THE AGRICULTURAL PRODUCTS AND CHICKENS ARE COMING UNDER THE ANIMAL HUSBANDRY PRODUCTS. THEREFORE WE PRAY YOUR HONOUR NOT TO DISALLOW THE EXPENSES UNDER SECTION 40A(3) OF THE ACT.' THE AO DULY CONSIDERED THE SUBMISSIONS OF THE ASSESSEE BUT HE WAS NOT SATISFIED THAT THE ASSESSEE HAS MADE ADVANCE PAYMENT TO THE EMPLOYEES FOR MAKING PURCHASE AND HE NOTED THAT THE ASSESSEE HAS DEBITED EXPENDIT URE ON ACCOUNT OF DIET ON A SINGLE DAY MORE THAN RS.20,000/ - WHICH WAS PAID TO THE VENDORS. THEREFORE, HE DENIED TO GIVE BENEFIT OF RULE 6DD(E)(I) & RULE 6DD(E)(II) OF THE I.T.RULES, 1962, THEREBY DISALLOWING TO THE TUNE OF RS.16,09,53 3 / - . THE AO FURTHER N OTICED THAT THE ASSESSEE HAS DEBITED GARDENING EXPENSES OF RS. 11 ,50,395/ - AND CULTURAL FUNCTION EXPENSES OF RS.25,22,694/ - . IN THIS REGARD, THE AO ASKED FOR VERIFICATION OF BILLS AND VOUCHERS AND THE ITA NO. 337 /CTK/201 6 5 ASSESSEE SUBMITTED THAT THE GARDENING EXPENSES HAS BEEN INCURRED FOR MAINTENANCE OF THE GARDEN ADJACENT TO THE SCHOOL BUILDING AND IN RESPECT OF CULTURAL EXPENSES, THE AR OF THE ASSESSEE PRODUCED BILLS AND VOUCHERS WHICH WAS EXAMINED BY THE AO AND HE FOUND THAT THERE WAS SELF - MADE CASH VOUCHERS PRODUCED BY TH E LD. AR OF THE ASSESSEE. ACCORDINGLY, HE WAS NOT SATISFIED AND DISALLOWED 10% OF THE TOTAL EXPENDITURE. THEREAFTER HE DISALLOWED A SUM OF RS.3.67.309/ - . ON FURTHER SCRUTINY OF ACCOUNTS IT WAS NOTICED THAT THE ASSESSEE HAS MADE CONTRIBUTION TO PROVIDENT FU ND OF RS.17,46,576/ - , WHICH WAS NOT WITHIN THE STIPULATED TIME AS PER SECTION 36(1)(VA) OF THE ACT. IN THIS REGARD, THE ASSESSEE SUBMITTED THAT THE ASSESSEE HAS PAID THE ENTIRE LIABILITY BEFORE FILING OF THE RETURN OF INCOME. ACCORDINGLY, THE ASSESSEE IS E LIGIBLE FOR DEDUCTION U/S.43B OF THE ACT. THE AO AFTER REFERRING TO SECTION 36(1)(VA) & 2(24) OF THE ACT, HE DISALLOWED THE EMPLOYEES CONTRIBUTION WHICH WAS NOT PAID WITHIN THE DUE DATE RESULTING INTO DISALLOWANCE OF RS.17,46,576/ - . 4. FEELING AGGRIEVED F ROM THE ABOVE ADDITIONS MADE BY THE AO , THE ASSESSEE APPEALED BEFORE THE CIT(A) AND THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE , FINDINGS OF THE AO AND RELYING SOME CASE LAWS, DISMISSED THE APPEAL OF THE ASSESSEE. 5. NOW, AGAINST THE ORDER OF CIT(A), THE ASSESSEE IS IN FURTHER APPEAL BEFORE THE INCOME TAX APPELLATE TRIBUNAL. ITA NO. 337 /CTK/201 6 6 6. LD. AR SUBMITTED THAT THE ASSESSEE GOT REGISTERED AS PER SECTION 12AA OF THE INCOME TAX ACT W.E.F.01.04.2011 BUT DUE TO AMENDMENT IN SECTION 12A W.E.F.01.10.2014 THE ASSESSEE MUST BE GIVEN BENEFIT OF THE BENEFICIAL PROVISION WHICH WAS NOT IN THE LEGISLATURE BUT SUBSEQUENTLY IT HAS BEEN AMENDED IN THE INTEREST OF THE ASSESSEE. THEREFORE, HE IS ELIGIBLE FOR PRIOR TO REGISTRATION U/S.12A OF THE ACT. HE ALSO SUBMITTED THA T ON THE DATE OF AMENDMENT THE CASE OF THE ASSESSEE WAS PENDING BEFORE THE CIT(A) AND, THEREFORE, THE ASSESSMENT ORDER HAS BEEN MERGED WITH THE CIT(A). ACCORDINGLY, LD. AR SUBMITTED THAT THE PENDING BEFORE THE CIT(A) MUST BE TREATED AS ASSESSMENT IS PENDIN G. IN SUPPORT OF HIS ARGUMENTS, HE RELIED ON THE FOLLOWING CASE LAWS, WHICH ARE PLACED IN THE PAPER BOOK : - I) SHYAM MANDIR COMMITTEE VS. ACIT, (2016) 49 ITR (TRIB) 0462; II) S NDP YOGAM VS. ADIT(EX EMPTION) (2016) 161 ITD 001(COCHIN) 7. FURTHER, IN RESPECT OF DEPRECIATION, LD. AR SUBMITTED THAT THE ASSESSEE HAS RIGHTLY CLAIMED THE SAME AND IN RESPECT OF DISALLOWANCE U/S.40A(3) OF THE ACT, HE REITERATED THE SUBMISSION MADE BEFORE THE CIT(A) AND SUBMITTED THAT THERE WAS NO ANY VIOLATION OF PROVISIONS OF INCOM E TAX ACT WHILE MAKING PAYMENT TO THE VEGETABLE VENDORS AND FOR PURCHASE FOR AGRICULTURAL AND ANIMAL HUSBANDRY PRODUCTS TOWARDS THE MEALS PROVIDED TO THE STUDENTS, AS THE SOCIETY IS RUNNING A RESIDENTIAL SCHOOL AND THERE IS NO POSSIBLE TO PURCHASE IN BULK OF QUANTITY FOR KEEPING FOUR TO FIVE DAYS OF HUGE AMOUNT AND GREEN ITA NO. 337 /CTK/201 6 7 GROCERY AND CHICKEN CENTRES ARE DENIED TO ACCEPT THE PAYMENT IN CHEQUE, THEREFORE, THERE WAS NECESSARY TO MAKE PAYMENT IN CASH BUT THE ENTRY HAS BEEN MADE MORE THAN RS.20,000/ - AS ADVANCE GIVEN TO THE EMPLOYEES FOR PURCHASE OF THE VEGETABLES AND FRUITS. THE SITUATION ON WHICH THE ASSESSEE HAS INCURRED EXPENDITURE FALLS UNDER RULE 6DD(E)(I) & 6DD(E)(II) OF THE ACT, THEREFORE, THE AO HAS NOT SPECIFICALLY POINTED OUT THAT WHICH VOUCHERS ARE NO T RELIABLE, HENCE, THE LUMPSUM ADDITION IS NOT SUSTAINABLE IN THE EYES OF LAW. HE SHOULD HAVE SPECIFICALLY POINTED OUT IN RESPECT OF VOUCHERS WHICH HAS BEEN ENTERED INTO THE LEDGER BOOKS. FURTHER IN RESPECT OF ADDITION OFRS.17,46,576/ - , LD. AR SUBMITTED TH AT THE ASSESSEE HAD DISCHARGED HIS LIABILITY BEFORE FILING THE INCOME TAX RETURN, THEREFORE, HE IS ELIGIBLE FOR DEDUCTION U/S.43B OF THE ACT. 8. ON THE OTHER HAND, LD.DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND IN RESPECT OF GROUND NO.1 HE SUBMITTED T HAT THE ASSESSEE SOCIETY GOT REGISTERED ON 19.07.2011 BY THE CIT, W.E.F.01.04.2011, THEREFORE, THE LD. CIT HAS GRANTED REGISTRATION ONLY FOR THE ASSESSMENT YEAR 2012 - 2013 BUT NOT FOR THE ASSESSMENT YEAR 2011 - 2012. THEREFORE, THE ASSESSEE CANNOT CLAIM THE B ENEFIT OF SECTION 11 OF THE INCOME TAX ACT. THE ASSESSEE IS ALSO NOT ELIGIBLE FOR THE AMENDED PROVISION IN SECTION 12AA OF THE ACT BECAUSE THERE IS SUBSEQUENTLY MENTIONED IN THE ACT THAT IT WILL COME INTO EFFECT FROM 01.10.2014 AND ON THE DATE OF ITA NO. 337 /CTK/201 6 8 AMENDMENT , THERE WAS NO ASSESSMENT PENDING BEFORE THE AO. IN SUPPORT OF HIS ARGUMENTS, HE RELIED ON THE FOLLOWING CASE LAWS, WHICH ARE PLACED IN THE PAPER BOO K : - I) U.P.FOREST CORPORATION, [2017] 165 TAXMAN 533 (SC) II) LANGAR COMMITTEE HANUMAN MANDIR [2018] 92 TA XMANN.COM 408 (AMRITSAR - TRIB) . THEREFORE, LD. DR SUBMITTED THAT THE ASSESSEE IS NOT ELIGIBLE FOR GRANTING EXEMPTION U/S.11 OF THE INCOME TAX ACT AND THE LOWER AUTHORITIES ARE JUSTIFIED TO HOLD THAT THE ASSESSEE IS NOT ELIGIBLE FOR APPLICATION OF INCOME ON FIXED ASSETS AS DONE BY HIM. IN RESPECT OF OTHER ADDITIONS HE RELIED ON THE ORDERS OF LOWER AUTHORITIES AND FURTHER SUBMITTED THAT THE ORDERS OF THE AUTHORITIES BELOW SHOULD NOT BE DISTURBED. 9 . AFTER HEARING BOTH THE SIDES AND PERUSING THE ENTIRE MATE RIAL AVAILABLE ON RECORD, WE NOTICE THAT IN RESPECT OF GROUND NO.1 REGARDING DISALLOWANCE OF CAPITAL EXPENDITURE OF RS.7,94,06,622/ - , WE OBSERVE THAT THE REGISTRATION CERTIFICATE GRANTED BY THE SOCIETY REGISTERING AUTHORITY FROM WHICH IT IS CLEAR THAT THE SOCIETY HAS GOT REGISTERED ON 01.07.2008 AND APPLIED REGISTRATION IN FORM NO.10A U/S.12A(A) OF THE ACT ON 19.07.2011. THE CIT AFTER CONSIDERING THE APPLICATION OF THE ASSESSEE GRANTED REGISTRATION ON 14.09.2011 STATING THEREIN THAT IT WILL EFFECTIVE FROM 0 1.04.2011. WE HAVE TO DECIDE THE CASE FOR THE ASSESSMENT YEAR 2011 - 2012, WHICH IS NOT COVERED UNDER THE EFFECTIVE DATE OF REGISTRATION GRANTED U/S.12AA OF THE INCOME TAX ACT. WE ALSO ITA NO. 337 /CTK/201 6 9 NOTED THAT THE ASSESSEE HAS CLAIMED BENEFIT OF SECTION 11 OF THE ACT FOR THE INVESTMENT IN FIXED ASSETS TO THE TUNE OF RS.7,94,06,622/ - . WE NOTED FROM THE ARGUMENTS OF THE LD. AR THAT THE ASSESSEE HIMSELF GOT THE BENEFIT FOR THE PREVIOUS YEARS ALSO IS NOT CORRECT BECAUSE ON THE DATE OF REGISTRATION THERE WAS NO ANY ASSESSMENT P ENDING. FOR MORE CLARIFICATION, WE WOULD LIKE TO REPRODUCE THE DETAILS OF THE MOVEMENT OF CASE OF ASSESSEE AS UNDER : - 1. FINANCIAL YEAR 2010 - 2011 2. ASSESSMENT YEAR 2011 - 2012 3. RETURN OF INCOME FILED ON 30.09.2011 4. APPLICATION FOR REGISTRATION U/S.1 2A FILED BEFORE CIT(E) 19.07.2011 5. REGISTRATION GRANTED U/S.12A OF THE ACT 14.09.2011 6. CIT(E) GRANTED REGISTRATION W.E.F. 01.04.2011 7. SCRUTINY NOTICE U/S.143(2) OF THE ACT ISSUED ON 30.09.2012 8. ASSESSMENT COMPLETED U/S.143(3) OF THE ACT DENYING THE EXEMPTION U/S.11 OF THE ACT FOR APPLICATION OF INCOME ON INVESTMENTS ON FIXED ASSETS TO THE TUNE OF RS. 7,94,06,622/ - . 25.02.2014 9. AMENDMENT IN THE ACT W.E.F. 01.10.2014 10. DATE OF INSTITUTION OF APPEAL BEFORE CIT(A) 24.0 3 .2014 11. ORDER PASSED B Y CIT(A) 03.05.2016 WE ALSO NOTICED FROM THE ASSESSMENT ORDER THAT THE FIRST NOTICE WAS ISSUED TO THE ASSESSEE U/S.143(2) OF THE ACT ON 11.09.2012 AND THE REGISTRATION WAS GRANTED ON 14.09.2011. WE ALSO REFER TO SECTION 12A OF THE ACT WHICH READS AS UNDE R : - [ CONDITIONS FOR APPLICABILITY OF SECTIONS 11 AND 12 . ] 1 2A. [(1)] THE PROVISIONS OF SECTION 11 AND SECTION 12 SHALL NOT APPLY IN RELATION TO THE INCOME OF ANY TRUST OR INSTITUTION UNLESS THE FOLLOWING CONDITIONS ARE FULFILLED, NAMELY: ( A ) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IN THE PRESCRIBED FORM AND IN THE PRESCRIBED MANNER TO THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER BEFORE THE 1ST DAY OF JULY, 1973, OR BEFORE THE EXPIRY OF A PERIOD OF ONE YEAR FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION, [WHICHEVER IS LATER AND SUCH TRUST OR INSTITUTION IS ITA NO. 337 /CTK/201 6 10 REGISTERED UNDER SECTION 12AA ] : [ PROVIDED THAT WHERE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION IS MADE AFTER THE EXPIRY OF THE PERIOD AFORESAID, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION, ( I ) FROM THE DATE OF THE CREATION OF THE TRUST OR THE ESTABLISHMENT OF THE INSTITUTION IF THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER IS, FOR REASONS TO BE RECORDED IN WRITING, SATISFIED THAT THE PERSON IN RECEIPT OF THE INCOME WAS PREVENTED FROM MAKING THE APPLICATION BEFORE THE EXPIRY OF THE PERIOD AFORESAID FOR SUFFICIENT REASONS; ( II ) FROM THE 1ST DAY OF THE FINANCIAL YEAR IN WHICH THE APPLICATION IS MADE, IF THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER IS NOT SO SATISFIED:] [ PROVIDED FURTHER THAT THE PROVISIONS OF THIS CLAUSE SHALL NOT APPLY IN RELATION TO ANY APPLICATION MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007;] [( AA ) THE PERSON IN RECEIPT OF THE INCOM E HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION ON OR AFTER THE 1ST DAY OF JUNE, 2007 IN THE PRESCRIBED FORM AND MANNER TO THE [PRINCIPAL COMMISSIONER OR] COMMISSIONER AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA ;] [( AB ) THE PERSON IN RECEIPT OF THE INCOME HAS MADE AN APPLICATION FOR REGISTRATION OF THE TRUST OR INSTITUTION, IN A CASE WHERE A TRUST OR AN INSTITUTION H AS BEEN GRANTED REGISTRATION UNDER SECTION 12AA OR HAS OBTAINED REGISTRATION AT ANY TIME UNDER SECTION 12A [AS IT STOOD BEFORE ITS AMENDMENT BY THE FINANCE (NO . 2) ACT, 1996 (33 OF 1996)], AND, SUBSEQUENTLY, IT HAS ADOPTED OR UNDERTAKEN MODIFICATIONS OF THE OBJECTS WHICH DO NOT CONFORM TO THE CONDITIONS OF REGISTRATION, IN THE PRESCRIBED FORM AND MANNER, WITHIN A PERIOD OF THIRTY DAYS FROM THE DATE OF SAID ADOPT ION OR MODIFICATION, TO THE PRINCIPAL COMMISSIONER OR COMMISSIONER AND SUCH TRUST OR INSTITUTION IS REGISTERED UNDER SECTION 12AA ;] ( B ) WHERE THE TOTAL INCOM E OF THE TRUST OR INSTITUTION AS COMPUTED UNDER THIS ACT WITHOUT GIVING EFFECT TO [THE PROVISIONS OF SECTION 11 AND SECTION 12 EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO INCOME - TAX IN ANY PREVIOUS YEAR], THE ACCOUNTS OF THE TRUST OR INSTITUTION FOR THAT YEAR HAVE BEEN AUDITED BY AN ACCOUNTANT AS DEFINED I N THE EXPLANATION BELOW SUB - SECTION (2) OF SECTION 288 AND THE PERSON IN RECEIPT OF THE INCOME FURNISHES ALONG WITH THE RETURN OF INCOME FOR THE RELEVANT ASSES SMENT YEAR THE REPORT OF SUCH AUDIT IN THE PRESCRIBED FORM DULY SIGNED AND VERIFIED BY SUCH ACCOUNTANT AND SETTING FORTH SUCH PARTICULARS AS MAY BE PRESCRIBED;] [( BA ) THE PERSON IN RECEIPT OF THE INCOME HAS FURNISHED THE RETURN OF INCOME FOR THE PREVIOU S YEAR IN ACCORDANCE WITH THE PROVISIONS OF SUB - SECTION (4A) OF SECTION 139 , WITHIN THE TIME ALLOWED UNDER THAT SECTION.] ITA NO. 337 /CTK/201 6 11 ( C ) [***] [(2) WHERE AN APPLICAT ION HAS BEEN MADE ON OR AFTER THE 1ST DAY OF JUNE, 2007, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RELATION TO THE INCOME OF SUCH TRUST OR INSTITUTION FROM THE ASSESSMENT YEAR IMMEDIATELY FOLLOWING THE FINANCIAL YEAR IN WHICH SUCH APPLICATION IS MADE:] [ PROVIDED THAT WHERE REGISTRATION HAS BEEN GRANTED TO THE TRUST OR INSTITUTION UNDER SECTION 12AA , THEN, THE PROVISIONS OF SECTIONS 11 AND 12 SHALL APPLY IN RESPECT OF ANY INCOME DERIVED FROM PROPERTY HELD UNDER TRUST OF ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR, FOR WHICH ASSESSMENT PROCEEDINGS ARE PENDING BEFORE THE ASSESSING OFFICER AS ON THE DATE OF SUCH REGISTRATION AND THE OBJECTS AND ACTIVITIES OF SUCH TRUST OR INSTITUTION REMAIN THE SAME FOR SUCH PRECEDING ASSESSMENT YEAR: PROVIDED FURTHER THAT NO AC TION UNDER SECTION 147 SHALL BE TAKEN BY THE ASSESSING OFFICER IN CASE OF SUCH TRUST OR INSTITUTION FOR ANY ASSESSMENT YEAR PRECEDING THE AFORESAID ASSESSMENT YEAR ONLY FOR NON - REGISTRATION OF SUCH TRUST OR INSTITUTION FOR THE SAID ASSESSMENT YEAR: PROVIDED ALSO THAT PROVISIONS CONTAINED IN THE FIRST AND SECOND PROVISO SHALL NOT APPLY IN CASE OF ANY TRUST OR INSTITUTION WHICH WAS REFUSED REGISTRATION OR THE REGI STRATION GRANTED TO IT WAS CANCELLED AT ANY TIME UNDER SECTION 12AA .] IT IS CLEAR FROM THE ABOVE SECTIONS AND PROVISO FOR GETTING BENEFIT OF THIS AMENDED PRO VISIONS, THE ASSESSMENT MUST BE PENDING LYING WITH THE A SSESSING OFFICER . IN THIS CASE, THE ASSESSMENT WAS NOT PENDING BEFORE THE ASSESSING OFFICER ON THE DATE OF SUCH REGISTRATION U/S.12AA OF THE INCOME TAX ACT, 1961. I N VIEW OF THIS, THE CONTENTION OF T HE LD. AR OF THE ASSESSEE THAT APPEAL WAS FILED BEFORE THE CIT(A) ON 24.03.2014, THEREFORE, THE SAME IS TO BE TREATED AS THE ASSESSMENT IS PENDING WITH THE CIT(A) , CANNOT BE ACCEPTED. IN THE ABOVE PROVISO TO SECTION 12A OF THE ACT, THERE IS SPECIFIC SENTEN CE HAS BEEN USED BY THE LEGISLATURE THAT ASSESSMENT ARE PENDING BEFORE THE INCOME TAX OFFICER, THEREFORE, WE SHOULD CONFINE AS PER THE ABOVE QUOTED PROVISO/SECTIONS. THEREFORE, AS PER OUR ABOVE FINDINGS RECORDED, WE DO NOT FIND ANY MUCH WEIGHTAGE ITA NO. 337 /CTK/201 6 12 ON THE AR GUMENT OF THE ASSESSEE THAT THE APPEAL PENDING BEFORE THE CIT(A) IS TO BE TREATED AS ASSESSMENT IS PENDING BEFORE THE A SSESSING OFFICER . IN THIS REGARD, FOR MORE CLARIFICATION, WE WOULD LIKE TO REPRODUCE THE SECTION 2(7A) OF THE ACT, WHEREIN THE ASSESSING OFFICER HAS BEEN DEFINED AS UNDER : - (7A) ' ASSESSING OFFICER' MEANS THE ASSISTANT COMMISSIONER [OR DEPUTY COMMISSIONER] [OR ASSISTANT DIRECTOR] [OR DEPUTY DIRECTOR] OR THE INCOME - TAX OFFICER WHO IS V ESTED WITH THE RELEVANT JURISDICTION BY VIRTUE OF DIRECTIONS OR ORDERS ISSUED UNDER SUB - SECTION (1) OR SUB - SECTION (2) OF SECTION 120 OR ANY OTHER PROVISION OF THIS ACT, AND THE [ADDITIONAL COMMISSIONER OR] [ADDITIONAL DIRECTOR OR] [JOINT COMMISSIONER OR JOINT DIRECTOR] WHO IS DIRECTED UNDER CLAUSE (B) OF SUB - SECTION (4) OF THAT SECTION TO EXERCISE OR PERFORM ALL OR ANY OF THE POWERS AND FUNCTIONS CONFERRED ON, OR ASSIGNED TO, AN ASSESSING OFFICER UNDER THIS ACT;] IT IS CLEAR FROM THE ABOVE SECTION TH AT APPELLATE AUTHORITY HAS NOT BEEN INCLUDED IN THE DEFINITION OF THE INCOME TAX OFFICER. 10. THE L D.AR HAS CITED A DECISION OF THE ITAT COCHIN BENCH OF THE TRIBUNAL IN THE CASE OF SNDP YOGAM VS. ADIT(EXEMPTION), (2016) 161 ITD 0001 (COCHIN) AND DREW OUR ATTENTION TO PARA 7.2, WHICH READ AS UNDER : - 7.2 WHEN SECTION 12A OF THE ACT WAS AMENDED BY INTRODUCING NEW PROVISOS TO SUB - SECTION (2) OF S. 12A BY FINANCE ACT, 2014 WITH EFFECT FROM 01.10.2014, THE ASSESSMENT ORDERS PASSED BY THE ASSESSING OFFICER IN R ESPECT OF THE PRESENT ASSESSEE WERE PENDING IN APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. DURING SUCH PENDENCY, THE ASSESSEE WAS GRANTED REGISTRATION U/S 12AA OF THE ACT ON 29.07.2013 W.E.F. THE ASSESSMENT YEAR 2013 - 14. THOSE APPEALS WERE THE CONTINUATIO N OF THE ORIGINAL PROCEEDINGS AND THAT THE POWER OF THE COMMISSIONER OF INCOME - TAX WAS CO - TERMINUS WITH THAT OF THE ASSESSING OFFICER [ADIT (EXEMPTION) IN THE PRESENT CASE] WERE TWO WELL ESTABLISHED PRINCIPLES OF LAW. IN VIEW OF THE ABOVE AND GOING BY THE PRINCIPLE OF PURPOSIVE INTERPRETATION OF STATUES, AN ASSESSMENT PROCEEDING WHICH IS PENDING IN APPEAL BEFORE THE APPELLATE AUTHORITY SHOULD BE DEEMED TO BE ASSESSMENT PROCEEDINGS PENDING BEFORE THE ASSESSING OFFICER WITHIN THE MEANING OF THAT TERM AS ENV ISAGED UNDER THE PROVISO. IT FOLLOWS THERE - FROM THAT THE ASSESSEE ITA NO. 337 /CTK/201 6 13 WHICH OBTAINED REGISTRATION U/S 12AA OF THE ACT DURING THE PENDENCY OF APPEAL WAS ENTITLED FOR EXEMPTION CLAIMED U/S 11 OF THE ACT. FROM THE ABOVE OBSERVATIONS OF THE TRIBUNAL, IT IS CLEAR THAT THE REGISTRATION IS TO BE GRANTED DURING THE PENDENCY OF THE APPEAL OR ASSESSMENT. IN THE ABOVE CASE, DURING THE PENDENCY OF APPEAL BEFORE THE FIRST APPELLATE AUTHORITY, THE REGISTRATION WAS GRANTED. BUT IN THE IMPUGNED CASE THERE WAS NO ANY APPEAL WA S LYING BEFORE THE LD. CIT(A) ON THE DATE OF REGISTRATION. THE REGISTRATION WAS GRANTED TO THE ASSESSEE ON 14.09.2011 W.E.F.01.04.2011. THE ASSESSEE HAS ALSO NOT FILED HIS RETURN OF INCOME WITH THE INCOME TAX DEPARTMENT BEFORE GRANTING ON THE DATE OF REGIS TRATION. THE ASSESSEE HAS FILED HIS RETURN OF INCOME ON 30.09.2011 WITH THE INCOME TAX DEPARTMENT. I N THE INSTANT CASE, THE REGISTRATION U/S.12A OF THE ACT HAS ALREADY BEEN GRANTED ON 14.09.2011 WHEN THERE WAS NEITHER ANY APPEAL NOR ANY ASSESSMENT WAS PEND ING EITHER BEFORE THE FIRST APPELLATE AUTHORITY OR BEFORE THE AO. THEREFORE, THERE WERE NO ANY ASSESSMENTS PENDING BEFORE THE REVENUE AUTHORITIES . IN VIEW OF THIS, CONSIDERING TO THE FACTS AND CIRCUMSTANCES OF THE CASE, WE ARE OF THE OPINION THAT THE CASE LAW RELIED ON BY THE LD. AR OF THE ASSESSEE IS NOT APPLICABLE IN THE PRESENT CASE IN HAND. AT THE TIME OF HEARING, A SPECIFIC QUERY WAS RAISED BY THE BENCH TO THE PARTIES AS TO WHETHER ANY ASSESSMENT OR ANY APPEAL WAS PENDING BEFORE GRANTING REGISTRATION FOR ANY ASSESSMENT YEAR . IN RESPONSE TO THE SAME, LD. DR ITA NO. 337 /CTK/201 6 14 STATED AT BAR THAT NO ASSESSMENT NOR ANY APPEAL WAS PENDING BEFORE THE AUTHORITIES BELOW, TO WHICH LD. AR COULD NOT CONTROVERT THE SAME. 11. IN THE IMPUGNED CASE, THE REGISTRATION WAS NOT GRANTED ON 14.09.2011 W.E.F.01.04.2011. THEREFORE, WITHOUT REGISTRATION U/S.12AA OF THE INCOME TAX ACT IN THE HANDS OF THE ASSESSEE THE BENEFIT OF SECTION 11 OF THE ACT CANNOT BE GIVEN. T HE CASE LAW RELIED ON BY THE LD.DR IN THE CASE OF U.P.FOREST CORPORATION [2017] 165 TAXMAN 533 (SC) SUPPORTS THE VIEW RENDERED BY US. THEREFORE, THE CIT(A) AS WELL AS THE AO HAS RIGHTLY DENIED GIVING EXEMPTION U/S.11 OF THE ACT INVESTED IN THE CAPITAL ASSETS OF RS.7,94,06,622/ - . ACCORDINGLY, GROUND NO.1 OF THE APPEAL OF THE ASSESSEE IS DISMISSED. 1 2 . FURTHER IN RESPECT OF GROUND NO.2, REGARDING ADDITION OF DEPRECIATION OF RS. 14,99,740/ - , WE DO NOT AGREE WITH THE SUBMISSIONS OF THE ASSESSEE THAT FOR THE PURPOSE OF INCOME TAX THE ASSESSEE MUST CALCULATE/FOLLOW THE INCOME TAX RULES AND R EGULATIONS. WE FIND FROM THE ORDER OF THE AUTHORITIES BELOW THAT THE ASSESSEE HAD CALCULATED DEPRECIATION ON THE NORMAL ACCOUNTING PRACTICE WHICH IS NOT SUSTAINABLE BECAUSE AS PER THE INCOME TAX ACT WHILE CALCULATING THE PROFIT FOR THE TAXATION PURPOSE, TH E ASSESSEE MUST FOLLOW THE INCOME TAX PROVISIONS AND THE DEPRECIATION HAS BEEN PROVIDED IN SECTION32 OF THE ACT. THEREFORE, THE ASSESSEE HIMSELF CALCULATED THE DEPRECIATION AS PER HIS PRECEDENCE . RES JUDICATA DOES NOT APPLY IN THE INCOME TAX ACT. ITA NO. 337 /CTK/201 6 15 THEREFORE , THE LOWER AUTHORITIES HAVE RIGHTLY DISMISSED THE EXCESS DEPRECIATION CLAIMED BY THE ASSESSEE. THIS GROUND NO.2 IS ALSO DISMISSED. 1 3 . IN GROUND NO.3, THE ASSESSEE SUBMITTED THAT THE CIT(A) IS NOT CORRECT IN CONFIRMING THE DISALLOWANCE MADE U/S.40A(3) OF THE ACT. LD. AR BEFORE US SUBMITTED THAT THE ASSESSEE HAS MADE ADVANCE CASH PAYMENTS TO ITS EMPLOYEES FOR THE PURCHASE OF VEGETABLES AND CHICKENS AND THE EMPLOYEES OF THE ASSESSEE USED TO PURCHASE THE VEGETABLES AND CHICKEN FROM THE MARKET FOR PROVIDING ME ALS TO THE STUDENTS OF THE SCHOO L AS THE ASSESSEE IS RUNNING A RESIDENTIAL SCHOOL. THEREFORE, THE ADVANCE CASH PAYMENT TO EMPLOYEES FOR PURCHASE IS NOT COMING UNDER THE PURVIEW OF PROVISIONS OF SECTION 40A(3) R.W.RULE 6DD OF THE I.T.RULES, 1962. WE AGREE W ITH THE ABOVE CONTENTIONS OF THE ASSESSEE CONSIDERING THE PRACTICALITY OF THE CIRCUMSTANCES AND THE FACT THAT THE ASSESSEE HAS MADE PAYMENT TO THE EMPLOYEES FOR PURCHASE OF VEGETABLES ETC. FROM THE MARKET. WE ALSO AGREE WITH THE CONTENTION OF THE LD. AR TH AT THE VEGETABLES, FRUITS ARE COMING UNDER THE AGRICULTURAL PRODUCTS WHICH ARE SUPPLIED BY THE GREEN GROCERS AND SMALL VENDORS OR VEGETABLE SELLERS. SIMILARLY, CHICKENS ARE COMING UNDER THE ANIMAL HUSBANDRY PRODUCTS, WHICH ARE SUPPLIED BY THE CHICKEN CENTR ES, THEREFORE, PAYMENTS MADE FOR PURCHASE OF AGRICULTURAL AND ANIMAL HUSBANDRY PRODUCTS FOR USE OF STUDENTS IN HOSTEL ARE NOT BE DISALLOWED ITA NO. 337 /CTK/201 6 16 U/S.40A(3) OF THE ACT. ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITION MADE U/S.40A(3) OF THE ACT. THUS, GROUN D NO.3 OF THE APPEAL OF THE ASSESSEE IS ALLOWED. 1 4 . IN RESPECT OF GROUND NO.4, THE AO HAS MADE ADHOC DISALLOWANCE OF RS.3,67,309/ - AT THE RATE OF 10% OF THE EXPENSES. THE ASSESSEE COULD NOT CONTROVERT THE FINDINGS RECORDED BY THE AUTHORITIES BELOW IN RESP ECT OF ADDITION MADE BY THE AO AND CONFIRMED BY THE CIT(A). THE ASSESSEE HAS SUBMITTED STATEMENT OF GARDENING & CULTURAL EXPENSES FOR THE FINANCIAL YEAR 2010 - 2011, COPIES OF WHICH ARE PLACED IN THE PAPER BOOK FROM PAGES 81 TO 84. HOWEVER, THE EXPENSES HAVE NOT BEEN CLARIFIED THAT ON WHAT BASIS/OBJECT THE EXPENDITURE HAVE BEEN INCURRED, NEITHER ANY NARRATION HAS BEEN QUOTED FOR THE SAID EXPENSES. IN VIEW OF THIS, WE ALSO UPHOLD THE ACTION OF LOWER AUTHORITIES ON THIS ISSUE. THUS, GROUND NO.4 IS DISMISSED. 1 5 . IN RESPECT OF GROUND NO.5, WITH REGARD TO LATE PAYMENT OF PROVIDENT FUND AMOUNTING TO RS.17,46,576/ - U/S.36(1)(VA) OF THE ACT, WE NOTICED THAT THE ASSESSEE HAS NOT DEPOSITED THE EMPLOYEES CONTRIBUTION WITHIN THE DUE DATE AS SPECIFIED IN THAT PARTICULAR ACT. WE FOUND SUBSTANCE IN THE SUBMISSIONS OF THE LD. DR THAT SECTION 36(1)(VA) OF THE ACT DEALS WITH THE DEDUCTION IN RESPECT OF THE SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB - SECTION 2(24)(X) OF THE ACT APPLIES, PROVIDED SUCH SUM IS CREDITED BY ITA NO. 337 /CTK/201 6 17 THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN RELEVANT FUND ON OR BEFORE THE DUE DATE. THE DUE DATE IS DEFINED UNDER THE EXPLANATION TO SECTION 36(1)(VA) OF THE ACT BY STATING THAT THE DUE DATE REFERRED UNDER THE RELEVANT AC T AND CERTAINLY NOT THE DUE DATE FOR FILING THE RETURN. WE ALSO FOUND THAT THIS VERY SIMILAR ISSUE HAS ALSO BEEN DECIDED BY THIS BENCH OF THE TRIBUNAL IN THE CASE OF MILIND GUPTA, ITA NOS.382&383/CTK/2017, ORDER DATED 27.09.2019, WHEREIN THE TRIBUNAL HAS O BSERVED AS UNDER : - 4. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIAL ON RECORD OF THE TRIBUNAL. WE FIND THAT THE ASSESSEE HAS DEPOSITED THE EPF AMOUNT OF RS.44,097/ - BEFORE DUE DATE OF FILING OF THE RETURN U/S.139(1) OF THE ACT. T HE ADDITION WAS MADE ON THE GROUND THAT THE EMPLOYEES CONTRIBUTION TO PF WAS NOT DEPOSITED WITHIN THE TIME PRESCRIBED UNDER THE P.F.ACT. LD D.R. RELIED ON THE CIRCULAR NO.22/2015 DATED 17.12.2015. 5. THE CBDT ISSUED CIRCULAR NO. 22/2015 DATED 17TH DECEM BER 2015 CLARIFYING THAT THE ISSUE IS WELL SETTLED IN SO FAR AS EMPLOYERS CONTRIBUTION IF DEPOSITED ON OR BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME, IS ALLOWABLE. HOWEVER, THE CBDT WAS CATEGORICAL IN STATING THAT THE SETTLED POSITION DOES NOT AP PLY TO DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION GOVERNED BY SECTION 36(1)(VA). WE FIND THAT THE FOLLOWING DECISIONS OF THE VARIOUS HIGH COURTS ARE IN FAVOUR OF THE ASSESSEE ALLOWING DEDUCTION OF EMPLOYEES CONTRIBUTION PAID BEYOND DUE DATE: (I) CI T VS. HINDUSTAN ORGANIC CHEMICALS LTD. (2014) 366 ITR 1 (BOM) (II) CIT VS. GHATGE PATIL TRANSPORT LIMITED 368 ITR 749 (BOM.) (III) CIT VS. AIMIL LTD. 321 ITR 508 (DEL.) (IV) SPECTRUM CONSULTANTS INDIA (P) LTD VS CIT 215 TAXMAN 597 (KAR.) (V) C IT VS. RAJ AGRO INDUSTRIES LTD. 334 ITR 122 (P&H) (VI) CIT VS. KICHHA SUGAR CO. LTD. 356 ITR 351 (UTTARAKHAND) (VII) CIT VS. UDAIPUR DUGDH UTPADAK SAHAKARI SANGH LTD. 366 ITR 163 (RAJ.) 6. IN FOLLOWING DECISIONS, THE HONBLE HIGH COURTS STRICTLY INTERPRETED SECTION 36(1) (VA) IN FAVOUR OF THE REVENUE AND DENIED DEDUCTION : ITA NO. 337 /CTK/201 6 18 (I) POPULAR VEHICLES & SERVICES PVT LTD VS. CIT [2018] 96 TAXMANN.COM 13 (KER.) (II) CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION - [2014] 41 TAXMANN.COM 100 (GUJ.) 7 . CONSIDERING THE MAJORITY VIEW RENDERED BY HONBLE HIGH COURTS ON THE ISSUE OF LATE DEPOSIT OF EMPLOYEES CONTRIBUTION, THE DECISION FAVOURABLE TO THE ASSESSEE SHOULD BE FOLLOWED AS PER THE RATIO LAID DOWN BY HONBLE SUPREME COURT IN THE CASE OF CIT VS. VEGETABLES PRODUCT LTD., 88 ITR 192 (SC). 8. IT MAY BE NOTED THAT IN THE CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. REPORTED IN 84 TAXMAN .COM. 185, THE SUPREME COURT HAS DISMISSED THE SLP FILED BY THE REVENUE AGAINST THE JUDGMENT OF TH E HON'BLE RAJASTHAN HIGH COURT IN PR. CIT VS RAJASTHAN STATE BEVERAGES CORPORATION LTD ., REPORTED IN [2017] 84 TAXMANN.COM 173(RAJ.), WHEREIN, WHERE IT WAS HELD AS UNDER : - SECTION 43B, READ WITH SECTI ON 36(1)(VA), OF THE INCOME - TAX ACT, 1961 BUSINESS DISALLOWANCE CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT (PF AND ESI CONTRIBUTION) HIGH COURT BY IMPUGNED ORDER HELD THAT AMOUNT CLAIMED ON PAYMENT OF PF AND ESI HAVING BEEN DEPOSITED ON OR BEFORE DUE DATE OF FILING OF RETURNS, SAME COULD NOT BE DISALLOWED UNDER SECTION 43B OR UNDER SECTION 36(1)(VA) WHETHER SLP AGAINST SAID IMPUGNED ORDER WAS TO BE DISMISSED HELD, YES [PARA 2] [IN FAVOUR OF ASSESSEE] 9. IN THE INSTANT CASE, IT IS NOT IN DISPUTE THAT THE CONTRIBUTION TO EPF WAS DEPOSITED BY THE ASSESSEE BEFORE DUE DATE OF FILING THE RETURN OF INCOME U/S.139(1) OF TH E ACT. ALTHOUGH THE CBDT CIRCULAR NO.22/2015 DATED 17.12.2015 PROVIDES THAT THE DEDUCTION RELATING TO EMPLOYEES CONTRIBUTION TO WELFARE FUND ARE GOVERNED BY SECTION 36(1)(VA) OF THE ACT AS RELIED BY THE LD D.R. IN THE CASE OF CIT VS. BHARAT HOTELS LTD., (2019) 103 TAXMANN.COM 295 (DEL), THE HONBLE DELHI HIGH COURT HELD THUS: 7. THE ISSUE HERE CONCERNS THE INTERPLAY OF SECTION 2(24)(X) OF THE ACT READ WITH SECTION 36(1)(VA) OF THE ACT ALONGSIDE PROVISIONS OF THE EMPLOYEES PROVIDENT FUNDS AND MISCELLANEOUS PROVISIONS ACT , 1952 (ESPECIALLY REGULATION 38 OF THE EMPLOYEES PROVIDENT FUNDS SCHEME, 1952) AN D THE PROVISIONS OF THE EMPLOYEES STATE INSURANCE ACT , 1948. THE AO HAD BROUGHT TO TAX AMOUNTS WHICH WERE DEDUCTED BY THE EMPLOYER/ASSESSEE FROM THE SALARIES AND WAGES PAYABLE TO ITS EMPLOYEES, AS PART OF THEIR CONTRIBUTIONS. IT IS NOT IN DISPUTE THAT THE EMPLOYERS RIGHT TO CLAIM DEDUCTIONS UNDER THE MAIN PART OF SECTION 43 - B OF THE ACT IS NOT AN ISSUE. THE QUESTION THE AO HAD TO THEN DECIDE WAS WHETHER TH E AMOUNTS DEDUCTED FROM THE SALARIES OF THE EMPLOYEES WHICH HAD TO BE DEPOSITED WITHIN THE STIPULATED TIME (IN TERMS OF NOTIFICATION/CIRCULAR DATED 19.03.1964 WHICH WAS MODIFIED ON 24.10.1973), AS FAR AS THE EPF CONTRIBUTION WENT AND THE PERIOD OF THREE WE EKS AS FAR AS THE ESI CONTRIBUTIONS WENT. ITA NO. 337 /CTK/201 6 19 THE AO MADE A TABULAR ANALYSIS WITH RESPECT TO THE CONTRIBUTIONS DEDUCTED AND ACTUALLY DEPOSITED. THE CUMULATIVE EFFECT OF NOTIFICATIONS UNDER THE EMPLOYEES PROVI DENT FUNDS ACT , 1952 AND THE EMPLOYEES STATE INSURANCE ACT , 1948 WAS THAT IN RESPECT OF THE EPF SCHEME CONTRIBUTIONS THE DEDUCTIONS WERE TO BE DEPOSITED WITHIN 15 DAYS OF THE SUCCEEDING WAGE PERIOD WITH A GRACE PERIOD OF 5 DAYS; FOR ESI CONTRIBUTIONS THE DEPOSIT WITH THE CONCERNED STATUTORY AUTHORITY HAD TO BE MADE WITHIN THREE WEEKS OF THE SUCCEEDING WAGE MONTH/PERIOD. THE CIT IN THIS CASE CONFIRMED THE ADDITIONS - MADE BY THE AO BASED ON THE ENTIRE AMOUNT S THAT WERE DISALLOWED. THE ITAT HOWEVER GRANTED COMPLETE RELIEF. 8. HAVING REGARD TO THE SPECIFIC PROVISIONS OF THE EMPLOYEES PROVIDENT FUNDS ACT AND ESI ACT AS WELL AS THE CONCERNED NOTIFICATIONS WHICH GRANTED A GRACE PERIOD OF 5 DAYS (WHICH APPEARS TO HAVE BEEN LATE WITHDRAWN RECENTLY ON 08.01.2016), WE ARE OF THE OPINION THAT THE ITATS DECISION IN THIS CASE WAS NOT CORRECT. THE ASSESSEE UNDOUBTEDLY WAS ENTITLED TO CLAIM THE BENEFIT AND PROPERLY TREAT SUCH AMOUNTS AS HAVING BEEN DULY DEPOSITED, WHICH WERE IN FACT DEPOSITED WITHIN THE PERIOD PRESCRIBED (I.E. 15 + 5 DAYS IN THE CASE OF EPF AND 21 DAYS + ANY OTHER GRACE PERIOD IN TERMS OF THE EXTENT NOTIFICATION). AS FAR AS THE AMOUNTS CONSTITUTING DEDUCTIONS FROM EMPLOYEES SA LARIES TOWARDS THEIR CONTRIBUTIONS, WHICH WERE MADE BEYOND SUCH STIPULATED PERIOD, OBVIOUSLY THE ASSESSEE WAS NOT ENTITLED TO CLAIM THE DEDUCTION FROM ITS RETURNS. 9. IN VIEW OF THIS DISCUSSION, THE REVENUES APPEAL IS PARTLY ALLOWED. THE AO IS DIRECTED TO EXAMINE THE CONTRIBUTIONS MADE WITH REFERENCE TO THE DATES WHEN THEY WERE ACTUALLY MADE AND GRANT RELIEF TO SUCH OF THEM WHICH QUALIFIED FOR SUCH RELIEF IN TERMS OF THE PREVAILING PROVISIONS AND NOTIFICATIONS. WE ALSO CLARIFY THAT THE ASSESSEE WOULD BE EN TITLED TO DEDUCTION IN TERMS OF SECTION 36(1)(VA) OF THE ACT. 10. IN VIEW OF ABOVE FINDINGS OF HONBLE DELHI HIGH COURT IN ITS RECENT JUDGMENT (SUPRA), THE ISSUE IS RESTORED TO THE F ILE OF THE ASSESSING OFFICER TO EXAMINE THE CONTRIBUTIONS MADE WITH REFERENCE TO THE DATES WHEN THEY WERE ACTUALLY MADE AND GRANT RELIEF TO SUCH OF CLAIM WHICH QUALIFIED FOR SUCH RELIEF IN TERMS OF PREVAILING PROVISIONS OF THE ACT. WE CLEARLY OBVERSE THAT THE ASSESSEE WOULD BE ENTITLED TO DEDUCTIONS IN TERMS OF SECTION 36(1)(VA) OF THE ACT. ACCORDINGLY, THIS GROUND IS ALLOWED FOR STATISTICAL PUR POSES. 1 6 . FROM THE ABOVE OBSERVATIONS OF THE TRIBUNAL, WE FOUND THAT THE TRIBUNAL HAS RESTORED THE ISSUE TO THE FILE OF AO TO EXAMINE THE CONTRIBUTIONS MADE WITH REFERENCE TO DATES WHEN THEY WERE ACTUALLY ITA NO. 337 /CTK/201 6 20 MADE AND GRANT RELIEF TO SUCH OF CLAIM WHICH QUALIFIED FOR SUCH RELIEF IN TERMS OF PREVAILING PROVISIONS OF THE ACT. ACCORDINGLY, THE ISSUE IN THE PRESENT APPEAL, BEING SIMILAR TO THE ISSUE DECIDED BY THE TRIBUNAL IN THE CASE CITED SUPRA, WE ALSO RESTORE THIS ISSUE TO THE FILE OF AO T O DECIDE THE SAME IN THE TERMS AS OBSERVED BY THE TRIBUNAL CITED ABOVE. THUS, THE GROUND OF APPEAL OF ASSESSEE IS ALLOWED FOR STATISTICAL PURPOSES. 1 7 . IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES . ORDER PRONOUNCED IN T HE OPEN COURT ON 25 / 0 9 / 20 20 . ( C.M.GARG ) (L.P.SAHU) / JUDICIAL MEMBER / ACCOUNTANT MEMBER CUTTACK ; DATED 25 / 0 9 /20 20 PRAKASH KUMAR MISHRA, SR.P.S. / COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( SENIOR PRIVATE SECRETARY ) , / ITAT, CUTTACK 1. / THE APPELLANT - KALINGA INSTITUTE OF SOCIAL SCIENCES (KISS), KIIT CAMPUS - 10, PLOT NO.582/1540, PATIA, BHUBANESWAR - 751007 2. / THE RESPONDENT - JCIT, RANGE - 2, BHUBANESWAR 3. ( ) / THE CIT(A), 4. / CIT 5. , , / DR, ITAT, CUTTACK 6. / GUARD FILE. //TRUE COPY//