ITO, New Delhi V. M/s Metzeler Automotive Profiles India (P) Ltd., New Delhi

ITA 3509/DEL/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 52639 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: E
• Next Hearing Date: 12-09-2011
• Assessment Year: 2007-2008
• Appeal Filed On: 11-07-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Assessee Lawyers: P N MEHTAAR
• Keywords: Deemed to accrue or arise in india
• Section: 43B; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH BEFORE SHRI A.D.JAIN,, JM & SHRI A.N. PAHUJA, AM ITA NO.3509/DEL/2011 ASSESSMENT YEAR:2005-06 ITO WARD-6(4),ROOM NO.418,CR BUILDING, IP ESTATE,NEW DELHI [PAN:AAACW0019N] V/S . METZELER AUTOMOTIVE PROFILES INDIA (P) LTD.,301-302,TOLSTOY HOUSE,15,TOLSTOY MARG,NEW DELHI (APPELLANT) .. (RESPONDENT) ASSESSEE BY :- SHRI P.N.MEHTA,AR REVENUE BY:- SHRI R.S.NEGI, DR DATE OF HEARING:- 12-09-2011 DATE OF PRONOUNCEMENT:- 12-09-2011 O R D E R A.N.PAHUJA:- THIS APPEAL BY THE REVENUE FILED ON 13.7.2001 AGAI NST AN ORDER DATED 28.2.2011 OF THE LD. CIT (APPEALS)-IX, NEW DELHI, R AISES THE FOLLOWING GROUNDS:- 1. THE ORDER OF THE LD. CIT(A) IS ERRONEOUS AND CO NTRARY TO FACTS AND LAW. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW, THE LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.23,85,452/- MADE U/S 2(24)(X) OF THE ACT BEING THE LATE DEPOSIT OF EMPLOYEES CONTRIBUTION OF ESI & PF. 3. THE LEARNED CIT(A) IGNORED THE FINDING RECORDED BY THE ASSESSING OFFICER AND THE FACT THAT THE LATE DEPOSI T OF EMPLOYEES CONTRIBUTION TOWARDS ESI & EPF IS NOT COV ERED U/S 43B OF THE ACT AND IS DEEMED INCOME OF THE EMPLOYER AND IS COVERED U/S 2(24)(X) OF THE ACT. 4. THE APPELLANT CRAVES LEAVE TO ADD, TO ALTER, OR AMEND ANY GROUNDS OF THE APPEAL RAISED ABOVE AT THE TIME OF H EARING. 2 2. FACTS, IN BRIEF, AS RELEVANT ORDERS ARE THAT RET URN DECLARING NIL INCOME FILED ON 30 TH OCTOBER, 2007 BY THE ASSESSEE,MANUFACTURING AND TR ADING WEATHER STRIPS, WAS SELECTED FOR SCRUTINY WITH THE SERVICE OF A NOT ICE U/S 143(2) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER REFERRED TO AS THE ACT). DU RING THE COURSE OF ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER[AO IN SHORT] NOT ICED THAT THE ASSESSEE DEPOSITED FOLLOWING AMOUNT OF EMPLOYEES CONTRIBUTI ON TOWARDS PF BELATEDLY: CONTRIBUTION FOR THE MONTHS. DUE DATE OF DEPOSIT ACTUAL DATE OF DEPOSIT AMOUNT IN ` MARCH,2006 15.04.2006 06.05.2006 6,512/- MARCH, 006 15.04.2006 18.05.2006 40,329/- APRIL, 2006 15.05.2006 22.05.2006 5,03,064/- JUNE, 2006 15.07.2006 25.07.2006 22,948/- APR-MAY, 2006 15.06.2006 21.07.2006 30,313/- JULY, 2006 15.08.2006 19.08.2006 5,38,576/- JULY, 2006 15.08.2006 19.08.2007 29,128/- SEP, 2006 15.10.2006 16.10.2007 25,162/- FEB,2007 15.03.2007 16.03.2007 5,75,340/- FEB, 2007 15.03.2007 16.03.2007 34,467/- MARCH, 2007 15.04.2007 16.04.2007 5,79,613/- TOTAL 23,85,452/- 2.1 SINCE THE AFORESAID CONTRIBUTION WAS DEPOSITED BEYOND THE DUE DATE STIPULATED UNDER THE PF ACT, THE AO DISALLOWED THE AMOUNT OF RS.23,85,454/- IN TERMS OF PROVISIONS OF SECTION 2(24)(X) OF THE ACT. 3. ON APPEAL, THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE IN TERMS OF DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. ALMIL LTD., 321 ITR 508 (DELHI); CIT VS. DHARMENDRA SHARMA,297 ITR 320 (DELHI) AND CIT VS. P.M. ELECTRONICS LTD. , 313 ITR 161 (DELHI). 4. THE REVENUE IS NOW IN APPEAL BEFORE US AGAINST T HE AFORESAID FINDINGS OF THE LD. CIT(APPEALS). THE LD. DR SUPPORTED THE ORDE R OF THE AO WHILE THE LD. AR ON BEHALF OF ASSESSEE RELIED UPON THE DECISIONS OF HONBLE SUPREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD.(2009) 319 ITR 3 06 (SC) AND CIT VS. VINAY CEMENT LTD.,213CTR 268(SC) BESIDES DECISIONS IN CIT VS. DHARMENDRA 3 SHARMA,297 ITR 320(DEL),CIT VS. PM ELECTRONICS LTD. ,313 ITR 161(DEL.)AND ALMIL LTD.& OTHERS (SUPRA). 5. WE HAVE HEARD BOTH THE PARTIES AND GONE THROUGH THE FACTS OF THE CASE AS ALSO THE AFORESAID DECISIONS. AS REGARDS EM PLOYERS AND EMPLOYEES CONTRIBUTION TOWARDS PF , HONBLE DELHI HIGH COURT IN THE CASE OF CIT V. P.M.ELECTRONICS LTD., 220 CTR 635 (DELHI) WHILE RE LYING UPON THE DECISION OF HONBLE APEX COURT IN THE CASE OF CIT VS. VINAY C EMENT LTD.,213 CTR (SC) 268 , CONCURRED WITH THE VIEW TAKEN BY THE HONBLE MADRAS HIGH COURT IN NEXUS COMPUTER (P) LTD.,219 CTR(MAD) 54 THAT EMPLOYER/EM PLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND PAYMENTS MADE AFTER THE DUE DATE PRESCRIBED UNDER THE EMPLOYEES PROVIDENT FUND ACT AND RULES MADE THEREU NDER AND BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME UNDER SUB SEC. 1 OF SEC. 139 OF THE ACT, ARE ALLOWABLE UNDER S.36(1)(VA) READ WITH SEC. 2(24 (X) AND SEC. 43B OF THE ACT. 5.1 MOREOVER, RECENTLY HONBLE APEX COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD., 319 ITR 306 (SC) HELD THAT THE OMI SSION OF THE SECOND PROVISO TO SECTION 43B OF THE ACT BY THE FINANCE ACT, 2003, OP ERATED, RETROSPECTIVELY, WITH EFFECT FROM, APRIL 1, 1988 AND NOT PROSPECTIVELY FR OM APRIL 1, 2004. HONBLE COURT OBSERVED THAT EARLIER UNDER THE SECOND PROVISO TO S ECTION 43B AS AMENDED BY THE FINANCE ACT, 1989, THE ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOOD CREDITED ON OR BEFORE THE DUE DA TE GIVEN IN THE PROVIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICULTIES AND ON A REPRESENTATION MADE TO THE FINANCE MINISTRY, ONE MORE AMENDMENT WAS MADE BY TH E FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFE CT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPLIED RETROS PECTIVELY WITH EFFECT FROM APRIL 1, 1988.IT WAS CLARIFIED THAT WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECT ION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION THEREIN IS REQUI RED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SE CTION AS A WHOLE. 4 5.2 HONBLE KARNATAKA HIGH COURT IN THEIR DECIS ION IN ANZ INFORMATION TECHNOLOGY P LTD., 318 ITR 123 WHILE FOLLOWING THEI R EARLIER DECISION IN CIT VS. SABARI ENTERPRISES,298 ITR 141(KAR.) CONCLUDED THA T DEPOSITS MADE BY THE EMPLOYER OF THE EMPLOYEES CONTRIBUTION BELATEDLY A ND CONTRIBUTION TOWARDS ESI & PF UNDER THE RELEVANT ENACTMENTS CAN NOT BE TREATED AS INCOME OF THE ASSESSEE U/S 36(1)(VA) READ WITH SEC. 2(24)(X) IN VIEW OF P ROVISIONS OF SEC. 43B OF THE ACT. 5.3 HONBLE DELHI HIGH COURT IN ANOTHER DECISION DATED 23.12.2009 IN CIT VS. AIMIL LTD.(DELHI)IN ITA NO. 1063/2008, NOW REPORTED IN 321 ITR 508 OBSERVED THAT SEC. 2(24)(X) PROVIDES THAT AMOUNTS RECEIVED B Y AN ASSESSEE FROM EMPLOYEES TOWARDS PF CONTRIBUTIONS ETC. SHALL BE I NCOME. S. 36 (1) (VA) PROVIDES THAT IF SUCH SUMS ARE CONTRIBUTED TO THE E MPLOYEES ACCOUNT IN THE RELEVANT FUND ON OR BEFORE THE DUE DATE SPECIFIED I N THE PF LEGISLATION, THE ASSESSEE SHALL BE ENTITLED TO A DEDUCTION. THE SECO ND PROVISO TO S. 43B (B) PROVIDED THAT ANY SUM PAID BY THE ASSESSEE AS AN EM PLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND SHALL BE ALLOWED AS A DEDUCTION ONLY IF PAID ON OR BEFORE THE DUE DATE SPECIFIED IN 36(1)(VA) OF TH E ACT. AFTER THE OMISSION OF THE SECOND PROVISO W.E.F 1.4.2004, THE DEDUCTION IS ALL OWABLE UNDER THE FIRST PROVISO IF THE PAYMENT IS MADE ON OR BEFORE THE DUE DATE FO R FURNISHING THE RETURN OF INCOME. THE HONBLE HIGH COURT WHILE CONSIDERING W HETHER THE BENEFIT OF S. 43B CAN BE EXTENDED TO EMPLOYEES CONTRIBUTION AS WELL, WHICH ARE PAID AFTER THE DUE DATE UNDER THE PF LAW BUT BEFORE THE DUE DATE FOR F ILING THE RETURN, HELD THAT ( I) THOUGH THE REVENUE HAS ARGUED THAT A DISTINCTION IS TO BE MADE BETWEEN EMPLOYERS CONTRIBUTION AND EMPLOYEES CONTRIBUT ION AND THAT EMPLOYEES CONTRIBUTION BEING IN THE NATURE OF TRUST MONEY IN THE HANDS OF THE ASSESSEE CANNOT BE ALLOWED AS A DEDUCTION IF NOT PAID ON OR BEFORE THE DUE DATE SPECIFIED IN THE PF ETC LAW, THE SCHEME OF THE ACT IS THAT EM PLOYEES CONTRIBUTION IS TREATED AS INCOME U/S 2 (24) (X) ON RECEIPT BY THE ASSESSEE AND ALLOWED AS A DEDUCTION U/S 36 (1) (VA) ON MAKING DEPOSIT WITH THE CONCERNE D AUTHORITIES. S. 43B (B) STIPULATES THAT SUCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAYMENT; (II) THE QUESTION AS TO WHEN ACTUAL PAYMENT SHOULD BE MADE IS ANSWERED BY VINAY CEMENTS 213 CTR 268 WHERE THE DELETION OF THE SECOND PROVISO TO S. 43B W.E.F 1.4.2004 WAS HELD APPLICABLE TO EARLIER YEARS AS WELL. AS THE DELETION OF THE 2ND PROVISO IS RETROSPECTIVE, THE CASE HAS TO BE GO VERNED BY THE FIRST PROVISO. DHARMENDRA SHARMA 297 ITR 320 (DEL) & P.M. ELECTRON ICS 313 ITR 161 (DELHI) FOLLOWED; 5 (III) IF THE EMPLOYEES CONTRIBUTION IS NOT DEPOSIT ED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FO R WHICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE E SI ACT. THEREFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS THE INCOME-TAX A CT IS CONCERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN IN VINAY CEME NT. 5.4 IN VIEW OF THE FOREGOING AND IN THE LIGHT OF VIEW TAKEN IN THE AFORESAID DECISIONS , WE HAVE NO HESITATION IN HOLDING THAT T HE EMPLOYEES CONTRIBUTION TOWARDS PF PAID BY THE ASSESSEE BEFORE THE DUE D ATE OF FILING OF RETURN U/S 139(1) OF THE ACT FOR THE ASSESSMENT YEAR UNDER CON SIDERATION IS ADMISSIBLE. CONSEQUENTLY, FINDINGS OF THE LD. CIT(A) ARE UPHEL D . WITH THESE DIRECTIONS, GROUND NOS. 1 TO 3 IN THE APPEAL ARE DISMISSED. 6. NO ADDITIONAL GROUND HAVING BEEN RAISED BEFORE U S IN TERMS OF RESIDUARY GROUND NO.4 IN THE APPEAL, ACCORDINGLY, THIS GROUND IS DISMISSED. 7. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT SD/- SD/- (A.D.JAIN) (A.N. PAHUJA) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) DELHI (NS) DATED : 12/09/2011 COPY OF THE ORDER FORWARDED TO :- 1. METZELER AUTOMOTIVE PROFILES INDIA (P) LTD.,301 -302,TOLSTOY HOUSE,15,TOLSTOY MARG,NEW DELHI 2. ITO WARD-6(4),ROOM NO.418,CR BUILDING,IP ESTATE ,NEW DELHI 3. CIT (APPEALS)-IX, NEW DELHI 4. THE CIT CONCERNED. 5. THE DR, ITAT,E BENCH, NEW DELHI 6. GUARD FILE. BY ORDER, DEPUTY / ASSTT.REGISTRAR ITAT, DELHI