ACIT, Cochin V. SFO Technologies P. Ltd, Cochin

ITA 454/COCH/2014

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 86387 (ITAT-COCHIN)
• Duration Of Justice: 2 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-01-2015
• Appeal Filed By: Department
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 17-10-2014
• Court: TRIBUNAL
• Department Lawyers: LATHA V KUMAR
• Keywords: Business expenditure; Deemed dividend
• Section: 43B; 12; 28; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL COCHIN BENCH, COCHIN BEFORE S/SHRI N.R.S.GANESAN, JM AND CHANDRA POOJ ARI, AM I.T.A. NO.454/COCH/2014 ASSESSMENT YEAR : 2006-07 THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE-4(1), RANGE- 4, KOCHI. VS. SFO TECHNOLOGIES P. LTD. , PLOT NO. 37, CSEZ, KAKKANAD, KOCHI-682 037. (REVENUE-APPELLANT) (ASSESSEE-RESPONDENT) REVENUE BY SMT. LATHA V. KUMAR, JR. DR ASSESSEE BY NONE DATE OF HEARING 10/12/2014 DATE OF PRONOUNCEMENT 09/01/2015 O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST THE ORDER DATED 30-12-2014 PASSED BY THE CIT(A)-II, KOCHI FOR THE ASSESSMENT YEAR 2006-07. 2 AT THE TIME OF HEARING, NONE APPEARED ON BEHALF O F THE ASSESSEE NOR ANY ADJOURNMENT APPLICATION WAS FILED BEFORE TH E TRIBUNAL. HENCE, WE PROCEED TO ADJUDICATE THIS APPEAL EX PARTE. 3. THE FIRST ISSUE IS WITH REGARD TO DELETION OF DI SALLOWANCE OF RS.9,20,422/- MADE BY THE ASSESSING OFFICER. I.T.A. NO.454/COCH/2014 2 3. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSE SSING OFFICER HAS MADE THIS DISALLOWANCE MAINLY ON ACCOUNT OF OBSERVATION IN FORM NO.3CD WHEREIN IT WAS MENTIONED THAT THESE PAYMENTS HAVE B EEN MADE AFTER THE DUE DATE SPECIFIED BY THE RELEVANT ACT. THE AS SESSING OFFICER HAS MADE THIS DISALLOWANCE OBSERVING AS THE FOLLOWING: A PERUSAL OF FORM 3CD REVEALED THAT THE ASSESSEE H AS PAID EMPLOYEES CONTRIBUTION OF PF/SI AFTER THE DUE DATES. AS PER EXPLANATION TO SEC. 36(1)(VA) THE DUE DATE IS THE DATE SPECIFIED BY T HE RELEVANT ACT. THE PAYMENT OF EMPLOYEES CONTRIBUTION MADE AFTER THE DU E DATE IS NOT A ADMISSIBLE DEDUCTION. TOTAL AMOUNT PAID AFTER THE DUE DATE IS EPF OF RS.8,37,101/- AND ESI OF RS.83,321/-. THIS IS DISA LLOWED U/S. 36(1)(VA) R.W.S. 2(24)(X) AND EXPLANATION TO SEC. 36 (1)(VA). 4. ON APPEAL, THE CIT(A) RELIED ON THE JUDGMENTS O F SUPREME COURT IN THE CASE OF CIT VS. VINAY CEMENTS LTD. (213 CTR 268) AND IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (319 ITR 508) AND DE LHI HIGH COURT IN THE CASE OF CIT VS. AIMIL LTD. (321 ITR 508) WHEREI N IT WAS HELD THAT IF THE EMPLOYERS CONTRIBUTION AS WELL AS EMPLOYEES CO NTRIBUTION TOWARDS PF AND ESI IS DEPOSITED AFTER THE DUE DATE, AS PRESC RIBED UNDER THE RELEVANT RULES BUT BEFORE THE DUE DATE FOR FILING T HE RETURN UNDER THE INCOME TAX ACT, THEN NO DISALLOWANCE COULD BE MADE IN VIEW OF THE PROVISIONS OF SEC. 43B AS AMENDED BY THE FINANCE AC T, 2003. ACCORDING TO THE CIT(A), AS A MATTER OF FACT, THIS HAS LAID D OWN AS A PRINCIPLE I.T.A. NO.454/COCH/2014 3 WHERE EMPLOYEES CONTRIBUTION HAVE ALSO BEEN COVERED FOR THE DEPOSIT BY THE DUE DATE AS DEFINED IN SEC. 13(1) OF THE RELEVA NT ACT AND IN ANY CASE, IN VIEW OF THE DELETION OF SECOND PROVISO TO SEC. 43B, SUCH PAYMENTS IF MADE BEFORE THE DUE DATE OF FILING THE RETURN, THE SAME ARE ALLOWABLE. AGAINST THIS OBSERVATION, THE REVENUE I S IN APPEAL BEFORE US. 5. WE HAVE HEARD THE LD. DR. WE FIND THAT A SIMILA R ISSUE WAS CONSIDERED BY THE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (265 CTR 65) WHERE IN IT WAS HELD AS UNDER: 7.01. SHORT QUESTION WHICH IS POSED FOR CONSIDERAT ION OF THIS COURT IS WITH RESPECT TO THE DISALLOWANCE OF THE AMOUNT BEIN G EMPLOYEES CONTRIBUTION TO PF ACCOUNT / ESI CONTRIBUTION WHICH ADMITTEDLY WHICH THE CONCERNED ASSESSEE DID NOT DEPOSIT WITH THE PF DEPARTMENT / DSI DEPARTMENT WITHIN DUE DATE UNDER THE PF ACT AND /OR ESI ACT. 7.02. TO ANSWER THE ABOVE CONTROVERSY, THE RELEVANT PROVISIONS OF INCOME TAX ACT, 1961 ARE REQUIRED TO BE REFERRED TO . 7.03. INCOME HAS BEEN DEFINED UNDER SECTION 2(24) OF THE ACT. UNDER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASS ESSEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE EMPLOYEES STATE I NSURANCE ACT, 1948, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYE ES, CONSTITUTE INCOME. SECTION 2(24)(X) READS AS UNDER :- SECTION 2(24)(X) :- ANY SUM RECEIVED BY THE ASSES SEE FROM HIS EMPLOYEES AS CONTRIBUTIONS TO ANY PROVIDE NT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UND ER THE EMPLOYEES STATE INSURANCE ACT, 1948, OR ANY OTHER FUND FOR WELFARE OF SUCH EMPLOYEES. I.T.A. NO.454/COCH/2014 4 7.04. SECTION 36 OF THE ACT PROVIDES FOR DEDUCTION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28. THE RELEVANT PROV ISIONS APPLICABLE TO THE PRESENT CASES WOULD BE SECTION 36(1)(VA). AS PER SUB-SECTION 36(1)(VA), ASSESSEE SHALL BE ENTITLED TO THE DEDUCT ION IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 WITH RESPECT T O ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES TO WHIC H THE PROVISIONS OF SUBCLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. AS PER E XPLANATION TO SECTION 36(1)(VA) FOR THE PURPOSE OF THE SAID CLAUS E, DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER THE ACT, RULE, ORDER OR NOTIFIC ATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONT RACT OR SERVICE OR OTHERWISE. SECTION 36(1)(VA) READS AS UNDER : SECTION 36(1) : THE DEDUCTIONS PROVIDED FOR IN THE FOLLOWING CLAUSES SHALL BE ALLOWED IN RESPECT OF TH E MATTERS DEALT WITH THEREIN, IN COMPUTING THE INCOME REFERRE D TO IN SECTION 28-- SECTION 36(1) (VA) : ANY SUM RECEIVED BY THE ASSESS EE FROM ANY OF HIS EMPLOYEES TO WHICH THE PROVISIONS OF SUB -CLAUSE (X) OF CLAUSE (24) OF SECTION 2 APPLY, IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RE LEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE. EXPLANATION :- FOR THE PURPOSE OF THIS CLAUSE, DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEES CONTRIBUTION TO TH E EMPLOYEES ACCOUNT IN THE RELEVANT FUND UNDER ANY A CT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UN DER ANY STANDING ORDER, AWARD, CONTRACT OR SERVICE OR OTHER WISE. 7.05. ANOTHER PROVISION WHICH IS REQUIRED TO BE CON SIDERED WHILE CONSIDERING THE ABOVE CONTROVERSY WOULD BE SECTION 43B OF THE ACT, WHICH STOOD PRIOR TO THE AMENDMENT OF SECTION 43B O F THE ACT VIDE FINANCE ACT, 2003 AND AFTER THE AMENDMENT TO SECTIO N 43B OF THE ACT BY FINANCE ACT, 2003. SECTION 43B OF THE ACT PR IOR TO THE AMENDMENT OF SECTION 43B OF THE ACT VIDE FINANCE AC T, 2003 READS AS UNDER : I.T.A. NO.454/COCH/2014 5 PROVIDED THAT NOTHING CONTAINED IN THIS SECTION SH ALL APPLY IN RELATION TO ANY SUM REFERRED TO IN CLAUSE (A) OR CLAUSE (C) OR CLAUSE (D) OR CLAUSE (E) OR CLAUSE (F), WHICH IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPL ICABLE IN T HIS CASE FOR FURNISHING THE RETURN OF INCOME UNDER SUB- SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIO US YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY TH E ASSESSEE ALONG WITH SUCH RETURN: PROVIDED FURTHER THAT NO DEDUCTION SHALL, IN RESPEC T OF ANY SUM REFERRED TO IN CLAUSE (B), BE ALLOWED UNLESS SU CH SUM HAS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF A CHE QUE OR DRAFT OR BY ANY OTHER MODE ON OR BEFORE THE DUE DAT E AS DEFINED IN THE EXPLANATION BELOW CLAUSE (VA) OF SUB SECTION (1) OF SECTION 36, AND WHERE SUCH PAYMENT HAS BEEN MADE OTHERWISE THAN IN CASH, THE SUM HAS BEEN REALISED W ITHIN FIFTEEN DAYS FROM THE DUE DATE. BY THE FINANCE ACT, 2003, SECOND PROVISO TO SECTION 43B OF THE ACT CAME TO BE DELETED AND EVEN THE FIRST PROVISO TO SE CTION 43B OF THE ACT CAME TO BE AMENDED. THE FIRST PROVISO TO SECTIO N 43B OF THE ACT, AFTER ITS AMENDMENT BY THE FINANCE ACT, 2003 READS AS UNDER :- PROVIDED THAT NOTHING CONTAINED IN THIS SECTION AP PLY IN RELATION TO ANY SUM WHICH IS ACTUALLY PAID BY THE A SSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR F URNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTI ON 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SUM WAS INCURRED AS AFORESAID AND THE EVIDENCE OF S UCH PAYMENT IS FURNISHED BY THE ASSESSEE ALONG WITH SUC H RETURN. 7.06. CONSIDERING THE AFORESAID PROVISIONS OF THE A CT, AS PER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF ESI ACT OR ANY O THER FUND FOR THE WELFARE OF SUCH EMPLOYEES SHALL BE TREATED AS AN I NCOME. SECTION 36 OF THE ACT DEALS WITH THE DEDUCTIONS IN COMPUTIN G THE INCOME REFERRED TO IN SECTION 28 AND AS PER SECTION 36(1)( VA) SUCH SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) OF SECT ION 2 APPLY, THE ASSESSEE SHALL BE ENTITLED TO DEDUCTION OF SUCH AMO UNT IN COMPUTING I.T.A. NO.454/COCH/2014 6 THE INCOME REFERRED TO IN SECTION 28 IF SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE I.E. DATE BY WHICH THE ASS ESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT THE EMPLOYEES CONTRIBUTIO N TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND, IN THE PRE SENT CASE, THE PROVIDENT FUND AND ESI FUND UNDER THE PROVIDENT FUND ACT AND ESI ACT. SECTION 43B IS WITH RESPECT TO CERTAIN DEDUCTI ONS ONLY ON ACTUAL PAYMENT. IT PROVIDES THAT NOTWITHSTANDING ANYTHING CONTAINED IN ANY OTHER PROVISIONS OF THE ACT, A DEDUCTION OTHERWISE LIABLE UNDER THE ACT IN RESPECT OF ...... (B) ANY SUM PAYABLE BY THE ASSESSEE AS AN EM PLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLO YEES IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF T HAT PREVIOUS YEAR IN WHICH SUCH SUM IS ACTUALLY PAID BY HIM. IT APPEA RS THAT PRIOR TO THE AMENDMENT OF SECTION 43B OF THE ACT VIDE FINANCE AC T, 2003, AN ASSESSEE WAS ENTITLED TO DEDUCTIONS WITH RESPECT TO THE SUM PAID BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES (EMPLOYERS CONTRIBUTI ON) PROVIDED SUCH SUM EMPLOYERS CONTRIBUTION IS ACTUALLY PAID BY T HE ASSESSEE ON OR BEFORE THE DUE DATE APPLICABLE IN HIS CASE FOR FURN ISHING RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139 IN RESPECT OF THE PREVIOUS YEAR IN WHICH THE LIABILITY TO PAY SUCH SU M WAS INCURRED AND THE EVIDENCE OF SUCH PAYMENT IS FURNISHED BY THE AS SESSEE ALONG WITH SUCH RETURN. IT ALSO FURTHER PROVIDED THAT NO DEDUCTION SHALL, IN RESPECT OF ANY SUM REFERRED TO IN CLAUSE (B) I.E. W ITH RESPECT TO THE EMPLOYERS CONTRIBUTION, BE ALLOWED UNLESS SUCH SUM IS ACTUALLY BEEN PAID IN CASH OR BY ISSUE OF CHEQUE OR DRAFT OR BY A NY OTHER MODE ON OR BEFORE THE DUE DATE AS DEFINED IN EXPLANATION BE LOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 AND WHERE SUCH SUM HA S BEEN MADE OTHERWISE THAT IN CASH, THE SUM HAS BEEN REALIZED W ITHIN 15 DAYS FROM THE DUE DATE. BY THE FINANCE ACT 2003, SECOND PROVISO OF SECTION 43B OF THE ACT HAS BEEN DELETED AND FIRST P ROVISO TO SECTION 43B HAS ALSO BEEN AMENDED WHICH IS REPRODUCED HEREI NABOVE. THEREFORE, WITH RESPECT TO EMPLOYERS CONTRIBUTION AS MENTIONED IN CLAUSE (B) OF SECTION 43(B), IF ANY SUM TOWARDS EMP LOYERS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATIO N FUND OR GRATUITY FUND OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLO YEES IS ACTUALLY PAID BY THE ASSESSEE ON OR BEFORE THE DUE DATE APPL ICABLE IN HIS CASE FOR FURNISHING THE RETURN OF THE INCOME UNDER SUB-S ECTION (1) OF SECTION 139, ASSESSEE WOULD BE ENTITLED TO DEDUCTIO N UNDER SECTION 43B ON ACTUAL PAYMENT AND SUCH DEDUCTION WOULD BE A DMISSIBLE FOR I.T.A. NO.454/COCH/2014 7 THE ACCOUNTING YEAR. HOWEVER, IT IS REQUIRED TO BE NOTED THAT AS SUCH THERE IS NO CORRESPONDING AMENDMENT IN SECTION 36(1 ) (VA). DELETION OF SECOND PROVISO TO SECTION 43B VIDE FINANCE ACT 2 003 WOULD BE WITH RESPECT TO SECTION 43B AND WITH RESPECT TO ANY SUM MENTIONED IN SECTION 43(B) (A TO F) AND IN THE PRESENT CASE, EMPLOYERS CONTRIBUTION AS MENTIONED IN SECTION 43B(B). THEREF ORE, DELETION OF SECOND PROVISO TO SECTION 43B AND AMENDMENT IN FIRS T PROVISO TO SECTION 43B BY FINANCE ACT, 2003 IS REQUIRED TO BE CONFINED TO SECTION 43B ONE AND DELETION OF SECOND PROVISO TO S ECTION 43B VIDE AMENDMENT PURSUANT TO THE FINANCE ACT, 2003 CANNOT BE MADE APPLICABLE WITH RESPECT TO SECTION 36(1)(VA) OF THE ACT. THEREFORE, ANY SUM WITH RESPECT TO THE EMPLOYEES CONTRIBUTION AS MENTIONED IN SECTION 36(1)(VA), ASSESSEE SHALL BE ENTITLED TO TH E DEDUCTION OF SUCH SUM TOWARDS THE EMPLOYEES CONTRIBUTION IF THE SAME IS DEPOSITED IN THE ACCOUNTS OF THE CONCERNED EMPLOYEES AND IN THE CONCERNED FUND SUCH AS PROVIDENT FUND, ESI CONTRIBUTION FUND, ETC. PROVIDED THE SAID SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYE ES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DA TE UNDER THE PROVIDENT FUND ACT, ESI ACT, RULE, ORDER OR NOTIFICA TION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONT RACT OR SERVICE OR OTHERWISE. IT IS REQUIRED TO BE NOTED THAT AS SU CH THERE IS NO AMENDMENT IN SECTION 36(1) (VA) AND EVEN EXPLANATIO N TO SECTION 36(1)(VA) IS NOT DELETED AND IS STILL ON THE STATUT E AND IS REQUIRED TO BE COMPLIED WITH. MERELY BECAUSE WITH RESPECT TO EM PLOYERS CONTRIBUTION SECOND PROVISO TO SECTION 43B WHICH PR OVIDED THAT EVEN WITH RESPECT TO EMPLOYERS CONTRIBUTION [(SECTION 4 3(B)B], ASSESSEE WAS REQUIRED TO CREDIT AMOUNT IN THE RELEVANT FUND UNDER THE PF ACT OR ANY OTHER FUND FOR THE WELFARE OF THE EMPLOYEES ON OR BEFORE THE DUE DATE UNDER THE RELEVANT ACT, IS DELETED, IT CAN NOT BE SAID THAT SECTION 36(1)(VA) IS ALSO AMENDED AND/OR EXPLANATIO N TO SECTION 36(1)(VA) HAS BEEN DELETED AND/OR AMENDED. IT IS AL SO REQUIRED TO BE NOTED AT THIS STAGE THAT AS PER THE DEFINITION OF INCOME AS PER SECTION 2(24)(X), ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONTRIBUTION TO ANY PROVIDENT FUND OR SUPERANNUATION FUND OR ANY FUND SET UP UNDER THE PROVISIONS OF ESI ACT OR ANY OTHER FUND FOR THE WELFARE OF THE SUCH EMPLOYEES IS TO BE TREATED AS INCOME AND ON FULFILLING THE CONDITION AS MENTIONED UNDER SECTION 36(1) (VA), THE ASSESSEE SHALL BE ENTITLED TO DEDUC TION WITH RESPECT TO SUCH EMPLOYEES CONTRIBUTION. SECTION 2(24)(X) REFE RS TO ANY SUM RECEIVED BY THE ASSESSEE FROM HIS EMPLOYEES AS CONT RIBUTION AND DOES NOT REFER TO EMPLOYERS CONTRIBUTION. UNDER TH E CIRCUMSTANCES AND SO LONG AS AND WITH RESPECT TO ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH PROVISIONS OF SU B-CLAUSE (X) OF SUB-SECTION 24 OF SECTION 2 APPLIES, ASSESSEE SHALL NOT BE ENTITLED TO I.T.A. NO.454/COCH/2014 8 DEDUCTION OF SUCH SUM IN COMPUTING THE INCOME REFER RED TO IN SECTION 28 UNLESS AND UNTIL SUCH SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUND S ON OR BEFORE THE DUE DATE AS MENTIONED IN EXPLANATION TO SECTION 36(1)(VA). THEREFORE, WITH RESPECT TO THE EMPLOYEES CONTRIBUTI ON RECEIVED BY THE ASSESSEE IF THE ASSESSEE HAS NOT CREDITED THE S AID SUM TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE MENTIONED IN EXPLANATION TO SECTION 36(1) (VA), THE ASSESSEE SHALL NOT BE ENTITLED TO DEDUCTIONS OF SUC H AMOUNT IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 OF T HE ACT. 7.07. NOW SO FAR AS THE RELIANCE PLACED UPON THE DE CISION OF THE HONBLEE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA), BY THE LEARNED ITAT AS WELL AS LEARNED ADV OCATES APPEARING ON BEHALF OF THE ASSESSEE IN SUPPORT OF THEIR SUBMI SSION THAT IN VIEW OF AMENDMENT IN SECTION 43B PURSUANT TO FINANCE ACT , 2003, BY WHICH THE SECOND PROVISO TO SECTION 43B HAS BEEN DE LETED AND THEREFORE EVEN WITH RESPECT TO EMPLOYEES CONTRIBUTI ON DESPITE SECTION 36(1)(VA), AND EXPLANATION TO SECTION 36(1) (VA), IF THE EMPLOYEES CONTRIBUTION IS CREDITED AFTER THE DUE D ATE MENTIONED IN THE PARTICULAR ACT BUT CREDITED ON OR BEFORE THE DU E DATE BY FILING RETURN UNDER SECTION 139 OF THE ACT, ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH AMOUNT, IS CONCERNED, ON CONSIDER ING THE CONTROVERSY BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA), THE SAID DECISION WOULD NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE. IN THE SAID CASE BEFORE ALOM EXTRUSIONS LTD. , THE CONTROVERSY WAS WHETHER THE AMENDMENT IN SECTION 43B OF THE ACT, VIDE FINANCE ACT, 2003 WOUL D OPERATE RETROSPECTIVELY W.E.F. 1/4/1988 OR NOT. IT IS ALSO REQUIRED TO BE NOTED THAT IN THE CASE BEFORE THE HON'BLE SUPREME COURT, THE CONTROVERSY WAS WITH RESPECT TO EMPLOYERS CONTRIBUTION AS PER SECTION 43(B)(B) OF THE ACT AND NOT WITH RESPECT TO EMPLOYEES CONTR IBUTION UNDER SECTION 36(1)(VA). BEFORE THE HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA) THE HON'BLE SUPREME COURT HAD NO OCCASION TO CONSIDER DEDUCTION UNDER SECTION 36(1)( VA) OF THE ACT AND WITH RESPECT TO EMPLOYEES CONTRIBUTION. AS STA TED ABOVE, THE ONLY CONTROVERSY BEFORE THE HON'BLE SUPREME COURT W AS WITH RESPECT TO AMENDMENT (DELETION) OF THE SECOND PROVISO TO SE CTION 43(B) OF THE INCOME TAX ACT, 1961 BY THE FINANCE ACT, 1963 O PERATES W.E.F. 1/4/2004 OR WHETHER IT OPERATES RETROSPECTIVELY W.E .F. 1/4/1988. UNDER THE CIRCUMSTANCES, THE LEARNED TRIBUNAL HAS C OMMITTED AN ERROR IN RELYING UPON THE DECISION OF THE HON'BLE S UPREME COURT IN THE CASE OF ALOM EXTRUSIONS LTD. (SUPRA) WHILE PASSING THE IMPUGNED JUDGEMENT AND ORDER AND DELETING DISALLOWA NCE OF THE I.T.A. NO.454/COCH/2014 9 RESPECTIVE SUMS BEING EMPLOYEES CONTRIBUTION TO PF ACCOUNT / ESI ACCOUNT, WHICH WERE MADE BY THE AO WHILE CONSIDERIN G THE PROVISO TO SECTION SECTION 36(1) (VA) OF THE INCOME TAX AC T. 7.08. NOW, SO FAR AS THE RELIANCE PLACED UPON THE D ECISION OF THE DIVISION BENCH OF THIS COURT IN THE CASE OF ALEMBIC GLASS INDUSTRIES LTD. (SUPRA) IS CONCERNED, ON FACTS AND CONSIDERING THE PROVISIONS OF SECTION SECTION 36(1)(VA) OF THE ACT AS IS STANDS, THE SAID DECISION WOULD NOT BE APPLICABLE TO THE FACTS OF THE CASE ON HAND AND THE CONTROVERSY IN QUESTION. 7.09. NOW, SO FAR AS THE RELIANCE PLACED UPON THE D ECISION OF THE KARNATAKA HIGH COURT IN THE CASE OF SABARI ENTERPRISES (SUPRA) IS CONCERNED, ON FACTS AND CONTROVERSY RAISED IN THE P RESENT APPEALS, THE SAID DECISION WOULD NOT BE ANY ASSISTANCE TO TH E ASSESSEE. IN THE CASE BEFORE THE KARNATAKA HIGH COURT, THE DISPUTE W AS WITH RESPECT TO THE EMPLOYERS CONTRIBUTION AND THE CONTROVERSY WAS WHETHER THE AMENDMENT TO SECTION 43B OF THE ACT WOULD BE RETROS PECTIVE IN NATURE OR NOT. IN THE AFORESAID CASE BEFORE THE KAR NATAKA HIGH COURT, THERE WAS NO DISPUTE WITH RESPECT TO EMPLOYEES CON TRIBUTION AS IS THERE IN THE PRESENT CASE. 7.10. SIMILARLY, THE DECISION OF THE BOMBAY HIGH CO URT IN THE CASE OF PAMWI TISSUES LTD. (SUPRA) ALSO WOULD NOT BE APPLICABLE TO THE FACTS OF THE CASE ON HAND. IN THE CASE BEFORE THE H ONBLE BOMBAY HIGH COURT, THE DISPUTE WAS WHETHER DELETION OF SEC OND PROVISO TO SECTION 43B WOULD BE APPLICABLE RETROSPECTIVELY OR NOT AND IN THAT CASE THE DISPUTE WAS ALSO WITH RESPECT TO EMPLOYER S CONTRIBUTION. 7.11. NOW, SO FAR AS THE RELIANCE PLACED UPON THE D ECISION OF THE HIMACHAL PRADESH HIGH COURT IN THE CASE OF NIPSO POLYFABRIKS LTD . (SUPRA); DECISION OF THE KARNATAKA HIGH COURT IN TH E CASE OF SPECTRUM CONSULTANTS INDIA (P) LTD. (SUPRA); DECISION OF THE RAJASTHAN HIGH COURT IN THE CASE OF UDAIPUR DUGDH UTPADAK SAHAKARI SANDH LTD. (SUPRA) AND DECISION OF THE PUNJAB AND HARYANA HIGH COURT IN THE CASE OF HEMLA EMBROIDERY MILLS (P) LTD. (SUPRA) TAKING VIEW THAT WHERE THE ASSESSEE DEPOSIT ED EMPLOYEES CONTRIBUTION TO ESI AND PROVIDENT FUND BE FORE THE DUE DATE OF FILING THE RETURN UNDER SECTION 139(1) OF T HE ACT, THE SAME WOULD BE ALLOWABLE AS DEDUCTION, ARE CONCERNED, WIT H RESPECT AND FOR THE REASONS STATED HEREINABOVE, WE ARE NOT IN A GREEMENT WITH THE VIEW TAKEN BY THE AFOREMENTIONED HIGH COURTS. A S DISCUSSED HEREINABOVE, AS THERE IS NO AMENDMENT IN SECTION 36 (1)(VA) OF THE INCOME TAX ACT AND CONSIDERING SECTION 36(1) (VA) O F THE INCOME TAX ACT AS IT STANDS, WITH RESPECT TO ANY SUM RECEI VED BY THE I.T.A. NO.454/COCH/2014 10 ASSESSEE FROM ANY OF HIS EMPLOYEES TO WHICH THE PRO VISIONS OF CLAUSE (X) OF SUB-SECTION (24) OF SECTION 2 APPLIES, ASSES SEE SHALL NOT BE ENTITLED TO DEDUCTION OF SUCH AMOUNT IN COMPUTING T HE INCOME REFERRED TO IN SECTION 28 IF SUCH SUM IS NOT CREDIT ED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND OR F UNDS ON OR BEFORE THE DUE DATE AS PER EXPLANATION TO SECTION 36(1)(VA ) OF THE ACT. MERELY BECAUSE SECOND PROVISO TO SECTION 43B OF THE ACT IN WHICH THERE WAS A REFERENCE TO DUE DATE AS DEFINED IN EXP LANATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36, IT CA NNOT BE HELD THAT EVEN SECTION 36(1)(VA) IS AMENDED AND/OR EVEN EXPLA NATION BELOW CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 IS ALS O DELETED. IT CAN BE SAID THAT THERE WAS A REFERENCE TO EXPLANATION BELO W CLAUSE (VA) OF SUB-SECTION (1) OF SECTION 36 IN SECOND PROVISO OF SECTION 43B (WHICH HAS BEEN DELETED BY FINANCE ACT, 2003), ONLY FOR TH E PURPOSE OF DEFINING DUE DATE AS PER EXPLANATION BELOW CLAUSE ( VA) OF SUB-SECTION (1) OF SECTION 36. THEREFORE, BY DELETING SECOND PR OVISO TO SECTION 43B BY FINANCE ACT, 2003, IT CANNOT BE SAID THAT SE CTION 36(1) (VA) IS AMENDED AND/OR EXPLANATION BELOW CLAUSE (VA) OF SUB SECTION (1) OF SECTION 36 IS DELETED, WHICH IS WITH RESPECT TO EMP LOYEES CONTRIBUTION. UNDER THE CIRCUMSTANCES, WE ARE NOT I N AGREEMENT WITH THE VIEW EXPRESSED BY THE HIMACHAL PRADESH HIGH COU RT; KARNATAKA HIGH COURT; RAJASTHAN HIGH COURT AND PUNJAB AND HAR YANA HIGH COURT IN THE CASES REFEREED TO HEREINABOVE. 7.12. NOW, SO FAR AS THE RELIANCE PLACED UPON THE D ECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF SARABHAI SONS LTD . (SUPRA), BY TH E LEARNED COUNSEL APPEARING ON BEHALF OF THE ASSESSEE AND HIS SUBMISSION THAT IF TWO VIEWS ARE POSSIBLE AND DIFFE RENT HIGH COURTS HAVE TAKEN A PARTICULAR VIEW, THIS COURT MAY NOT TA KE A DIFFERENT VIEW, IS CONCERNED, WE ARE OF THE OPINION THAT IN T HE PRESENT CASE, AND AS DISCUSSED HEREINABOVE, ONLY ONE VIEW IS POSS IBLE AS CANVASSED ON BEHALF OF THE REVENUE AND AS OBSERVED BY UNDER SECTION HEREINABOVE AND WE ARE NOT IN AGREEMENT WIT H THE VIEW TAKEN BY THE HIMACHAL PRADESH HIGH COURT; KARNATAKA HIGH COURT; RAJASTHAN HIGH COURT AND PUNJAB AND HARYANA HIGH CO URT IN THE CASES REFERRED TO HEREINABOVE, AND THEREFORE, THE S UBMISSION MADE ON BEHALF OF THE ASSESSEE TO FOLLOW THE DECISIONS O F THE DIFFERENT HIGH COURTS REFEREED TO HEREINABOVE AND/OR NOT TO TAKE A CONTRARY VIEW CANNOT BE ACCEPTED. 8.00. IN VIEW OF THE ABOVE AND FOR THE REASONS STAT ED ABOVE, AND CONSIDERING SECTION 36(1)(VA) OF THE INCOME TAX ACT , 1961 READ WITH SUB-CLAUSE (X) OF CLAUSE 24 OF SECTION 2, IT IS HEL D THAT WITH RESPECT TO THE SUM RECEIVED BY THE ASSESSEE FROM ANY OF HIS EM PLOYEES TO I.T.A. NO.454/COCH/2014 11 WHICH PROVISIONS OF SUB-CLAUSE (X) OF CLAUSE (24) O F SECTION (2) APPLIES, THE ASSESSEE SHALL BE ENTITLED TO DEDUCTIO N IN COMPUTING THE INCOME REFERRED TO IN SECTION 28 WITH RESPECT TO SU CH SUM CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNT IN THE RELEV ANT FUND OR FUNDS ON OR BEFORE THE DUE DATE MENTIONED IN EXPLANATIO N TO SECTION 36(1)(VA). CONSEQUENTLY, IT IS HELD THAT THE LEARNE D TRIBUNAL HAS ERRED IN DELETING RESPECTIVE DISALLOWANCES BEING EMPLOYEE S CONTRIBUTION TO PF ACCOUNT / ESI ACCOUNT MADE BY THE AO AS, AS SUCH, SUCH SUMS WERE NOT CREDITED BY THE RESPECTIVE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS (IN THE PRES ENT CASE PROVIDENT FUND AND/OR ESI FUND ON OR BEFORE THE DUE DATE AS PE R THE EXPLANATION TO SECTION 36(1)(VA) OF THE ACT I.E. DA TE BY WHICH THE CONCERNED ASSESSEE WAS REQUIRED AS AN EMPLOYER TO C REDIT EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT I N THE PROVIDENT FUND UNDER THE PROVIDENT FUND ACT AND/OR IN THE ESI FUND UNDER THE ESI ACT. CONSEQUENTLY, ALL THESE APPEALS ARE ALLOWED AND THE IMPUGNED JUDGEMENT AND ORDERS PASSED BY THE TRIBUNAL IN DELE TING THE DISALLOWANCES MADE BY THE AO ARE HEREBY QUASHED AND SET ASIDE AND THE DISALLOWANCES OF THE RESPECTIVE SUMS WITH RESPE CT TO THE PROVIDENT FUND / ESI FUND MADE BY THE AO IS HEREBY R ESTORED. THE QUESTIONS RAISED IN PRESENT APPEAL ARE ANSWERED IN FAVOUR OF THE REVENUE. WITH THIS, ALL THESE APPEALS ARE ALLOWED. 6. IN VIEW OF THE ABOVE ORDER, WE ARE INCLINED HOLD THAT WHERE ANY SUM RECEIVED BY THE ASSESSEE FROM ANY OF ITS EMPLOY EES AS CONTRIBUTION TO PF AND/OR ESI WAS NOT CREDITED BY THE ASSESSEE T O EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE DUE DATE AS PER EXPLANATION TO SEC. 36(1)(VA) OF THE I.T. ACT, THE A SSESSEE SHALL NOT BE ENTITLED TO DEDUCTION THEREOF. ACCORDINGLY, THE OR DER OF THE CIT(A) IS REVERSED ON THIS ISSUE AND THAT OF THE ASSESSING OF FICER IS RESTORED. ACCORDINGLY, THIS GROUND OF THE REVENUE IS ALLOWED. I.T.A. NO.454/COCH/2014 12 7. THE SECOND GROUND OF THE REVENUE IS WITH REGARD TO THE DELETION OF ADDITION OF RS. 24,18,295/- MADE U/S. 2(22)(E) O F THE I.T. ACT. 8. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSI NG OFFICER HAS MADE THIS DISALLOWANCE BY OBSERVING AS FOLLOWS: THE ASSESSEE HAS PURCHASED MAJORITY SHARES IN SOME GROUP COMPANIES AS ON 27/03/2006. THE ASSESSEE COMPANY I S NOT A COMPANY IN WHICH THE PUBLIC IS SUBSTANTIALLY INTERE STED. AFTER ACQUISITION OF THE MAJORITY SHARES THE ASSESSEE HAS RECEIVED CERTAIN PAYMENTS FROM THESE COMPANIES BY WAY OF LOAN. THE RECEIPTS ARE DEEMED DIVIDEND WITHIN THE MEANING OF SECTION 2(22) () OF THE I.T. ACT. THE DETAILS OF SUCH RECEIPTS ARE AS UNDER: CRYSIND ELECTRONICS PVT. LTD. RS.7,73, 295/- SUN GENERIC CABLE PVT. LTD. RS.4,91, 907/- SWIFT LIANK PVT. LTD. RS. 11,53,093/- SINCE THESE AMOUNTS ARE RECEIVED BY THE ASSESSEE AN D IT HOLDS MORE THAN 10% OF THE BENEFICIAL SHARES THE AMOUNT IS TAX ABLE IN THE HANDS OF THE ASSESSEE U/S. 2(22)(E) OF THE I.T. ACT. 9. ON APPEAL, THE CIT(A) OBSERVED THAT THESE AMO UNTS WERE CREDITED AND REPRESENTED SALARY PAYMENTS ON BEHALF OF THE COMPAN Y AND THUS THESE PAYMENTS ARE IN THE NATURE OF NORMAL BUSINESS EXPENSES AND C ANNOT BE TREATED AS DEEMED DIVIDEND IN THE HANDS OF THE COMPANY. THEREFORE, T HE CIT(A) HELD THAT THESE PAYMENTS CANNOT BE TREATED AS DEEMED DIVIDEND AND D ELETED THE ADDITION OF RS.24,18,295/-. I.T.A. NO.454/COCH/2014 13 10. WE HAVE HEARD THE LD. DR. WE FIND THAT DURING T HE FIRST APPELLATE PROCEEDINGS, THE CIT(A) GOT ADMITTED THE LEDGER ACC OUNT STATEMENTS AND THEREAFTER, HE CAME TO THE CONCLUSION THAT THE SAID AMOUNT RECEIVED WERE CREDITED ON THE LAST DATE OF THE FINANCIAL YEAR AND REPRESENTED SALARY PAYMENTS MADE ON BEHALF OF THE COMPANY ON ACCOUNT OF COMMERC IAL EXPEDIENCY. THESE LEDGER STATEMENTS WERE NOT FILED BEFORE THE ASSESSI NG OFFICER AND THE CIT(A) HAS ALSO NOT CALLED FOR REMAND REPORT FROM THE ASSESSIN G OFFICER. IN OUR OPINION, IT IS PROPER TO REMIT THE ISSUE TO THE FILE OF THE ASS ESSING OFFICER FOR FRESH CONSIDERATION IN THE LIGHT OF THE MATERIAL PRODUCED BEFORE THE CIT(A) ON THIS ISSUE AS THIS WAS NOT PLACED BEFORE THE ASSESSING O FFICER FOR HIS COMMENTS. ACCORDINGLY, THIS ISSUE IS REMITTED BACK TO THE FIL E OF THE ASSESSING OFFICER FOR FRESH CONSIDERATION. THIS GROUND OF THE REVENUE IS ALLOWED OR STATISTICAL PURPOSES. 11. IN THE RESULT, THE APPEAL FILED BY THE REVENUE IS PARTLY ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN THE OPEN COURT ON 09-01-2015 (N.R.S.GANESAN) (CHANDRA POOJARI) JUDICIAL MEMBER ACC OUNTANT MEMBER PLACE: KOCHI DATED: 9 TH JAN 2015 GJ COPY TO: 1. SFO TECHNOLOGIES P. LTD., PLOT NO. 37, CSEZ, KAK KANAD, KOCHI-682 037. I.T.A. NO.454/COCH/2014 14 2. THE ASSISTANT COMMISSIONER OF INCOME-TAX, CIRCLE -4(1), RANGE-4, KOCHI. 3. THE COMMISSIONER OF INCOME-TAX(APPEALS)-II, KOCH I. 4. THE COMMISSIONER OF INCOME-TAX, 5. D.R., I.T.A.T., COCHIN BENCH, COCHIN. 6. GUARD FILE. BY ORDER (ASSISTANT REGISTRAR) I.T.A.T., COC HIN