Ghatge Patil Transports Ltd., Kolhapur V. ACIT, Cir.-2, Kolhapur

ITA 340/PUN/2010

• Counselvise Citation: 34024514 RSA 2010
• Duration Of Justice: 1 year(s) 4 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-07-2011
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: A
• Assessment Year: 2003-2004
• Appeal Filed On: 03-03-2010
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: HARESHWAR SHARMA; SANJAY SINGH
• Section: 43B; 143(3); 37(1); 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL PUNE BENCH A, PUNE BEFORE SHRI I C SUDHIR, JUD ICIAL MEMBER AND SHRI G S PANNU, ACCOUNTANT MEMBER S.NO. ITA NO A.Y APPELLANT RESPONDENT 1 340/PN/10 2003-04 GHATGE PATIL TRANSPORTERS LTD., 517-E, PUNE- BANGALORE ROAD, KOLHAPUR PAN AACFG4209R ASSTT.COMMISSIONER OF IT. CIR. 2, KOLHAPUR 2 341/PN/10 2004-05 -DO- -DO- APPELLANT BY :SHRI NIKHIL PATHAK RESPONDENT BY: S/SHRI HARESHWAR SHAR MA & SANJAY SINGH ORDER PER G.S. PANNU, AM BOTH THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST SE PARATE ORDERS OF THE COMMISSIONER OF INCOME-TAX (APPEALS), KOLHAPUR D ATED 10.11.2009, WHICH IN TURN HAVE ARISEN FROM THE ORDERS PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) OF THE INCOME-TAX ACT, 1961 (IN SHORT TH E ACT), PERTAINING TO THE ASSESSMENT YEARS 2003-04 AND 2004-05 RESPECTIVELY. 2. IN THE APPEAL FOR THE ASSESSMENT YEAR 2003-04, ALTHO UGH THE ASSESSEE HAS RAISED MULTIPLE GROUNDS, BUT ESSENTIALLY THE DISPUTE IS ON TWO ISSUES. THE FIRST ISSUE IN DISPUTE IS THE CLAIM OF DEDUCTION ON ACCOUNT OF EDUCATIONAL EXPENSES AMOUNTING TO RS 27,03,972/-. THE BRIEF FACTS AR E THAT THE ASSESSEE COMPANY CLAIMED EXPENDITURE ON ACCOUNT OF EDUCATION OF S/SHRI GAURAV M. GHATAGE, CHETAN M. GHATAGE AND TEJ SATISH GHATAGE, W HO WERE THE SONS OF THE DIRECTORS. THE ASSESSING OFFICER INVOKED PROVISIONS OF SECTIO N 37(1) AS WELL AS 2 40A(2)(B) OF THE ACT AND DISALLOWED THE EXPENDITURE. THE CLAIM OF THE ASSESSEE BEFORE THE COMMISSIONER OF INCOME-TAX (APPEALS) WAS THAT THE EXPENDITURE WAS INCURRED ON EDUCATION OF THE SONS OF THE DIRECTORS FOR STU DYING ABROAD; THAT THE EXPENDITURE WAS IN TERMS OF A BOARD RESOLUTION AUTHORI ZING THE COMPANY TO INCUR SUCH EXPENDITURE; AND, THAT IT WAS INTENDED TO BENEFIT THE ACTIVITIES OF THE ASSESSEE COMPANY, AS THE SONS WOULD HAVE ACQUIRED TECHNICAL SKILLS. THE COMMISSIONER OF INCOME-TAX (APPEALS), HOWEVER, DID NOT ALLOW THE EXPENDITURE BY RELYING ON THE FOLLOWING JUDGMENTS: (I) MUSTANG MOULDINGS P.LTD. V ITO 306 ITR 361 (AT)( BOM); (II) MAC EXPLOTEC P. LTD. V. CIT 286 ITR 378 (KAR); (III) K.B MEHTA V. DCIT 265 ITR 17 (AT)(PUNE); AND , (IV) INFOTECH ENTERPRISES LTD. V. JCIT 85 ITD 325 (HYD ) 3. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE HAS REI TERATED THE SUBMISSIONS AS MADE BEFORE THE LOWER AUTHORITIES AND SUBMI TTED THAT THE EXPENDITURE WAS ALLOWABLE. 4. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW IN SUPPORT OF THE CASE OF THE REVENUE. 5. HAVING CONSIDERED THE RIVAL STANDS, WE FIND THAT THE LOWER AUTHORITIES MADE NO MISTAKE IN DISALLOWING THE EXPENDITURE, SINCE THE SAM E DOES NOT QUALIFY THE TESTS LAID DOWN UNDER SECTION 37(1) OF THE ACT. THEREFOR E, THE DISALLOWANCE IS HEREBY SUSTAINED AND ACCORDINGLY, ASSESSEE FAILS ON THIS ASPE CT. 6. THE SECOND ISSUE RELATES TO THE DISALLOWANCE OF EMPLOYE ES AND EMPLOYERS CONTRIBUTIONS ON ACCOUNT OF PROVIDENT FUND, E SI AND PENSION FUND ON THE GROUND THAT THE PAYMENTS HAVE BEEN MADE BEYO ND THE DUE DATE. 7. THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT UNDISPUTABLY THE AMOUNTS HAD BEEN DEPOSITED BEFORE THE DUE DATE OF TH E FILING OF THE RETURN UNDER SECTION 139(1) OF THE ACT AND, THEREFORE, EMPLOYERS CON TRIBUTION TOWARDS ESI, PF 3 AND PENSION FUND IS AN ALLOWABLE DEDUCTION FOLLOWING THE RATIO OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC). IN SO FAR AS THE EMPLOYEES CONTRIBUTION IS CO NCERNED, THE LEARNED COUNSEL POINTED OUT THAT THE PUNE BENCH OF THE TRIBU NAL IN THE CASE OF JASRA GRAPHICS P. LTD. PUNE V DCIT IN ITA NO 374/PN/09 ORD ER DATED 8.10.2010 HAS ALLOWED THE CLAIM OF THE ASSESSEE FOLLOWING THE JUDGMEN T OF THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT V AIMIL LTD. 321 ITR 508 (DEL). APART THEREFROM, RELIANCE HAS ALSO BEEN PLACED ON THE JUDGMENT OF THE HO NBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT V. LAKHANI RUBBER WORKS 326 ITR 415 (P&H) IN THIS CONTEXT. 8. ON THE OTHER HAND, THE LEARNED DEPARTMENTAL REPR ESENTATIVE, POINTED OUT THAT THE RATIO OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD (SUPRA) IS BE APPLICABLE ONLY FOR EMPLOYERS CONTRIBUTIO N SINCE THE SAME IS COVERED BY THE PROVISIONS OF SECTION 43B OF THE ACT, WHI LE IN SO FAR AS THE EMPLOYEES CONTRIBUTION IS CONCERNED, ALLOWABILITY OF TH E SAME IS GOVERNED BY SECTION 2(24)(X) READ WITH SECTION 36(1)(VA) OF THE ACT AND, THEREFORE, THE SAME HAVING BEEN PAID BEYOND THE DUE DATE, IT IS LIABLE T O BE DISALLOWED. 9. HAVING CONSIDERED THE RIVAL SUBMISSIONS, THE AFORESAID GROUND IS DISPOSED OFF AS UNDER. IN SO FAR AS THE EMPLOYERS CONTRIB UTION TOWARDS ESI, PF AND PENSION FUND IS CONCERNED, THE SAME HAVING B EEN PAID BEFORE THE DUE DATE AFTER FILING OF THE RETURN UNDER SECTION 139 (1) OF THE ACT, IT IS ALLOWABLE IN VIEW OF THE JUDGMENT OF THE HONBLE SUPREME COURT I N THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). SO FAR AS EMPLOYEES CONTRIBUTIO N TOWARDS ESI, PF AND PENSION FUND IS CONCERNED, HERE ALSO, WE FIND THAT OUR CO-ORDINATE BENCH IN THE CASE OF JASRA GRAPHICS P LTD. (SUPRA), FOLLOWING THE RATI O OF THE HONBLE DELHI HIGH COURT IN THE CASE OF AIMIL LTD. (SUPRA) HAS UPHEL D THE PLEA OF THE ASSESSEE. SINCE THE FACTS AND CIRCUMSTANCES ARE IDENTICAL, FOLLOWING THE DECISION OF OUR CO- ORDINATE BENCH, THE ASSESSEE HAS TO SUCCEED ON THIS ASPECT A LSO. 4 10. BEFORE PARTING, WE MAY REFER TO A PLEA RAISED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE THAT THERE IS A DISTINCTION BETWEEN THE EMPLOYERS CONTRIBUTION TOWARDS PF, ESI AND PENSION FUND AND THAT OF THE EMPL OYEES CONTRIBUTION IN SO FAR AS ITS ALLOWABILITY IS CONCERNED. IT HAS BEEN POINTE D OUT THAT THE PROVISIONS OF SECTION 43B DO NOT APPLY WHILE EVALUATING THE ALLOWAB ILITY OF EMPLOYEES CONTRIBUTION AND THAT SUCH DISTINCTION HAS BEEN NOTED BY THE HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT V. GODAVARI (MANNAR) SA HAKARI SAKHAR KARKHANA LTD. 212 CTR 384 (BOM). THE AFORESAID PLEA OF THE LE ARNED DEPARTMENTAL REPRESENTATIVE WAS OPPOSED BY THE LEARNED COUNSEL FOR THE ASSESSEE BY POINTING OUT THAT THE JUDGMENTS OF THE HONBLE DELHI HIGH COURT IN THE CASE OF AIMIL LTD. (SUPRA) AND ALSO THAT OF THE HONBLE PUNJA B & HARYANA HIGH COURT IN THE CASE OF LAKHANI RUBBER WORKS (SUPRA) ARE DIRECTLY ON THE POINT OF DEDUCTIBILITY OF EMPLOYEES CONTRIBUTIONS TOWARDS PF/ESI AND THE SAME ARE BASED ON THE RATIO OF THE JUDGMENT RENDERED BY THE HONBL E SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA). THE PLEA SET-UP BY TH E LEARNED DEPARTMENTAL REPRESENTATIVE HAS BEEN CONSIDERED BY US AND THAT THE SAM E DOES NOT HELP THE CASE OF THE REVENUE IN THE PRESENT CASE. FIRSTLY, THE DIST INCTION SOUGHT TO BE MADE OUT ON THE BASIS OF THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF GODAVARI (MANNAR) SAHAKARI SAKHAR KARKHANA LTD. (SUPRA) IS MISPLACED. THE QUESTION BEFORE THE HONBLE HIGH COURT WAS AS TO W HETHER THE TRIBUNAL WAS RIGHT IN LAW IN DIRECTING TO ALLOW THE CLAIM IN RESPECT OF DELAYED PAYMENT OF PF, IF IT HAS BEEN PAID UPTO THE DATE OF FILING OF THE RETURN OF INCOME, IGNORING THE FACT THAT AMENDMENT TO THE PROVISIONS OF SECTION 43B WAS MADE WIT H EFFECT FROM THE ASSESSMENT YEAR 2004-05 AND PRIOR TO THAT PERIOD, SUCH CO NTRIBUTION WAS TO BE ALLOWED ONLY WHEN THE SAME IS PAID BEFORE THE DUE DAT E OF EFFECTIVE MONTH. THE HONBLE BOMBAY HIGH COURT HELD THAT THE OMISSION OF T HE SECOND PROVISO TO SECTION 43B OF THE ACT BY THE FINANCE ACT, 2003 DID NOT O PERATE RETROSPECTIVELY AND, THEREFORE, IT DID NOT COVER THE PERIODS PRIOR TO ASSESSMENT YEAR 2004-05. QUITE CLEARLY, THIS ASPECT HAS BEEN SUBSEQUENTLY REVERSED BY THE HONBLE 5 SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD.(SUPRA) . IN OUR VIEW, THE POINT SOUGHT TO BE MADE OUT BY THE LEARNED DEPARTMENTAL RE PRESENTATIVE BASED ON THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN THE CA SE OF GODAVARI (MANNAR) SAHAKARI SAKHAR KARKHANA LTD. IS MISPLACED AND SUCH A SIT UATION HAS NOT BEEN DEALT WITH BY THE HONBLE HIGH COURT. MOREOVER, OUR CO-ORDINATE BENCH IN THE CASE OF JASRA GRAPHICS P LTD (SUPRA) HAS ALREADY FOLLOWED THE JUDGMENT OF THE HONBLE DELHI HIGH COURT IN THE CASE OF AIMIL LTD. (SU PRA) WHICH HAD DEALT WITH THE ALLOWABILITY OF AMOUNTS RELATING TO EMPLOYEES CON TRIBUTION TOWARDS PF AND ESI. THE HONBLE DELHI HIGH COURT IN THE CASE OF AIMI L LTD. (SUPRA) SPECIFICALLY DEALT WITH SUCH AMOUNTS AND HELD THAT THE SAME WERE ALL OWABLE IF PAID BEFORE THE DUE DATE OF FILING OF THE RETURN, FOLLOWING THE RAT IO OF THE JUDGMENT OF THE HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA ). NOTABLY, SIMILAR ASPECT HAS BEEN CONSIDERED BY THE HONBLE PUNJAB & HAR YANA HIGH COURT IN THE CASE OF LAKHANI RUBBER WORKS (SUPRA). UNDER THESE CIRCUMSTA NCES, WHERE PRECEDENTS OF HIGHER COURT DIRECTLY ON THE POINT ARE A VAILABLE WITH NO CONTRARY DECISION THEREOF, WE THEREFORE FIND NO REASONS TO ACCEPT THE PLEA SET-UP BY THE LEARNED DEPARTMENTAL REPRESENTATIVE. IN THE RESULT, FOLLOWING THE JUDICIAL DISCIPLINE, WE CONCUR WITH THE DECISION OF OUR CO-ORDINATE BENCH IN THE CASE OF JASRA GRAPHICS P. LTD., (SUPRA) AND HOLD THAT EVEN EMPLO YEES CONTRIBUTION TOWARDS PF/ESI AND PENSION FUND WHICH ARE PAID BEFORE THE DUE DATE OF FILING OF THE RETURN ARE ALLOWABLE. 11. THUS, THE ORDER OF THE COMMISSIONER OF INCOME-TAX ( APPEALS) ON THIS ASPECT IS REVERSED AND THE GROUND OF APPEAL TAKEN BY THE ASSESSEE IS ALLOWED. 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE FOR THE ASS ESSMENT YEAR 2003-04 IS PARTLY ALLOWED. 13. IN ASSESSEES APPEAL IN ITA NO 341/PN/10 FOR THE A SSESSMENT YEAR 2004- 05, THE ONLY ISSUE RELATES TO THE DISALLOWANCE UNDER SECT ION 36(1)(VA) OF EMPLOYEES CONTRIBUTION TOWARDS PF AND ESI AMOUNTING T O RS 8,04,098/-. SIMILAR ISSUE HAS BEEN CONSIDERED BY US IN ASSESSEES APPEAL FOR THE A SSESSMENT YEAR 6 2003-04, WHEREIN WE HAVE DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. ON SIMILARLY PARITY OF REASONING, WE ALLOW THIS GROUND O F APPEAL. AS A RESULT, ASSESSEES APPEAL IS ALLOWED. DECISION WAS PRONOUNCED IN THE OPEN COURT ON 29TH DAY OF JULY, 2011. SD/- SD/- (I.C. SUDHIR) (G.S. PANNU) JUDICIAL MEMBER ACCOUNTANT MEMBER PUNE: DATED: 29 TH JULY, 2011 B COPY OF THE ORDER IS FORWARDED TO : 1. ASSESSEE 2. DEPARTMENT 3. THE CIT(A), KOLHAPUR 4. THE CIT, KOLHAPUR 5. THE D.R, A BENCH, PUNE 6. GUARD FILE TRUE COPY BY ORDER ASSTT. REGISTRAR, ITAT, PUNE