ACIT, Bangalore V. M/s. Elsamax-TWS-SNC Joint Venture, Bangalore

ITA 47/BANG/2011

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 51417 (ITAT-BANGALORE)
• Duration Of Justice: 11 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-12-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 18-01-2011
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SUSAN THOMAS JOSE
• Assessee Lawyers: A SHANKAR
• Section: 43B; 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE SHRI BARATHVAJA SANKAR, VICE-PRESIDENT AND SMT. P. MADHAVI DEVI, JUDICIAL MEMBER ITA NO.47(BANG)/2011 (ASSESSMENT YEAR: 2006-07) ASST. COMMISSIONER OF INCOME-TAX, CIRCLE 1(1), BANGALORE. VS. APPELLANT M/S.ELSAMEX-TWS-SNC JOINT VENTURE, 12 TH FLOOR, S.N.TOWERS, 25/2, MG ROAD, BANGALORE. RESPONDENT PAN: AAAAE 0553B APPELLANT BY: SMT.SUSAN THOMAS JOSE. RESPONDENT BY: SHRI A.SHANKAR. DATE OF HEARING: 29-12-2011 DATE OF PRONOUNCEMENT: 29-12-2011 O R D E R PER N . BARATHVAJA SANKAR, VP : THIS IS AN APPEAL PREFERRED BY THE REVENUE FOR THE ASSESSMENT YEAR 2006-07 IN THE CASE OF M/S.ELSAMEX- TWS-SNC JOINT VENTURE, BANGALORE, AGAINST THE APPELLATE ORD ER DATED 8-11-2010 OF THE CIT(A)-I, BANGALORE. THE REVENUE HAS BROUGHT BEFORE US TWO ISSUES FOR ADJUDICATION VIZ., (I) WHETHER THE CIT(A) HAS ERRED IN DIRECTING THE ASSESSING OFF ICER (AO) TO ITA NO.47(BANG)/2011 PAGE 2 OF 5 GIVE CREDIT FOR THE CLAIM OF TDS AMOUNTING TO ` .20,91,000/- WITHOUT APPRECIATING THE FACTS AND CIRCUMSTANCES UN DER WHICH CREDIT WAS NOT ALLOWED FOR SUCH CLAIM, AND (II) WHE THER THE CIT(A) HAS ERRED IN HOLDING THAT THE ASSESSEE WAS E NTITLED TO THE CLAIM OF DEDUCTION IN RESPECT OF DELAYED PAYMEN TS OF EMPLOYEES MONTHLY CONTRIBUTION TO PF AMOUNTING TO ` .1,66,022/-. 2. LET US FIRST TAKE UP THE ISSUE RELATING TO TDS CREDIT. WHILE FRAMING THE ASSESSMENT U/S 143(3) OF THE INCO ME-TAX ACT, 1961 [HEREINAFTER REFERRED TO AS 'THE ACT'] FO R THE RELEVANT ASSESSMENT YEAR, THE AO DID NOT GIVE CREDIT TO THE TDS ON ADVANCE AMOUNT RECEIVED FROM THE NATIONAL HIGHWAY O F INDIA TO THE EXTENT OF ` .20,91,000/- SINCE THE ASSESSEE HAD NOT ACCOUNTED FOR THE CORRESPONDING RECEIPTS AS INCOME DURING THE YEAR RELEVANT TO THE ASSESSMENT YEAR 2006-07. AGGR IEVED, THE ASSESSEE MOVED THE MATTER IN APPEAL BEFORE THE FIRS T APPELLATE AUTHORITY. THE FIRST APPELLATE AUTHORITY, FOLLOWIN G THE DECISION OF THE ITAT IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 2002- 03 IN ITA NO.1420(BANG)/2005 DATED 26-6-2007 ALLOWE D THE CLAIM OF THE ASSESSEE. NOW THE REVENUE IS AGGRIEVE D AND IS ON SECOND APPEAL BEFORE US WITH THIS ISSUE. LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THE CONTENTS OF THE ASSESSMENT ORDER AS HER SUBMISSIONS . PER CONTRA, LEARNED COUNSEL FOR THE ASSESSEE PLACED ON RECORD COPY OF THE ORDER OF THE TRIBUNAL CITED SUPRA AND CLAIME D THAT THE ITA NO.47(BANG)/2011 PAGE 3 OF 5 POINT AT ISSUE IS SQUARELY COVERED BY THE ABOVE DEC ISION IN ASSESSEES OWN CASE. WE FIND THAT THE LEARNED COUN SEL FOR THE ASSESSEE IS RIGHT IN SUBMITTING THAT THE POINT AT I SSUE IS SQUARELY COVERED BY THE EARLIER DECISION OF THE TRIBUNAL. H ENCE, FOLLOWING THE SAID DECISION, WE ARE DISMISSING THIS GROUND OF APPEAL OF THE REVENUE. 3. NOW, LET US TURN TO THE NEXT ISSUE RELATING TO THE CLAIM OF DEDUCTION IN RESPECT OF DELAYED PAYMENTS OF EMPL OYEES MONTHLY CONTRIBUTIONS TO THE PF U/S 43B OF THE ACT. BRIEF FACTS, AS CULLED OUT FROM THE ASSESSMENT ORDER, ARE THAT W HILE FRAMING THE ASSESSMENT U/S 143(3) OF THE ACT, THE AO NOTED THAT THE EMPLOYEES PROVIDENT FUND COLLECTED FROM THE EMPLOY EES, TO THE EXTENT OF ` .1,66,021/- WAS NOT DEPOSITED WITHIN TIME STIPULATE D. THEREFORE, HE DISALLOWED THE SAME AS EXPENDITURE U/ S 36(1)(VA) OF THE ACT AND ADDED TO THE RETURNED INCOME BY THE ASSESSEE. AGGRIEVED, ASSESSEE MOVED THE MATTER IN APPEAL BEFO RE THE FIRST APPELLATE AUTHORITY AND THE FIRST APPELLATE AUTHORI TY, AFTER FOLLOWING THE DECISION IN CIT VS. M/S.SABRI ENTERPRISES (2008) 298 ITR 141(KAR) ALLOWED THE CLAIM OF THE ASSESSEE. THE REVENUE IS AGGRIEVED AND IS ON SECOND APPEAL BEFORE US WITH THIS ISSUE. AT THE TIME OF HEARING, LEARNED COUNSEL FOR THE ASS ESSEE SUBMITTED THAT THE DECISION IN THE CASE OF SABRI ENTERPRISES (SUPRA) HAS BEEN AFFIRMED BY THE APEX COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (2009) 319 ITR 306 (SC). WE HAVE ITA NO.47(BANG)/2011 PAGE 4 OF 5 ALSO HEARD THE LEARNED DEPARTMENTAL REPRESENTATIVE AND GONE THROUGH THE ORDER OF THE APEX COURT. THE APEX COUR T, IN THAT DECISION, HAS AFFIRMED THE DECISION OF THE KARNATAK A HIGH COURT AND DECIDED THE ISSUE IN FAVOUR OF THE ASSESSEE. T HE APEX COURT, IN THAT CASE, OBSERVED AS UNDER: THE OMISSION OF THE SECOND PROVISO TO SECTI ON 43B OF THE INCOME-TAX ACT, 1961, BY THE FINANCE ACT , 2003, OPERATED, RETROSPECTIVELY WITH EFFECTIVE FROM APRIL 1, 1998 AND NOT PROSPECTIVELY FROM APRIL 1, 2004. EARLIER UNDER THE SECOND PROVISO TO SECTION 43B AS AMENDED BY THE FINANCE ACT,1989, ASSESSEES WERE ENTITLED TO DEDUCTION ONLY IF THE CONTRIBUTION STOO D CREDITED ON OR BEFORE THE DUE DATE GIVEN IN THE PROVIDENT FUNDS ACT. THIS CREATED FURTHER DIFFICULT IES AND ON A REPRESENTATION MADE TO THE FINANCE MINISTR Y ONE MORE AMENDMENT WAS MADE BY THE FINANCE ACT, 2003. THOUGH THIS AMENDMENT WAS MADE APPLICABLE WITH EFFECT FROM APRIL 1, 2004, THE AMENDMENT WAS CURATIVE IN NATURE AND APPLIED RETROSPECTIVELY WITH EFFECT FROM APRIL 1, 1988. WHEN A PROVISO IN A SECTION IS INSERTED TO REMEDY UNINTENDED CONSEQUENCES AND TO MAKE THE SECTION WORKABLE, THE PROVISO WHICH SUPPLIES AN OBVIOUS OMISSION THEREIN IS REQUIRED TO BE READ RETROSPECTIVELY IN OPERATION, PARTICULARLY TO GIVE EFFECT TO THE SECTION AS A WHOLE. ALLIED MOTORS P.LTD. VS. CIT (1997) 224 ITR 677 (SC ) RELIED ON. IF STRICT CONSTRUCTION LEADS TO A RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION, AND IF ANOTHER CONSTRUCTION IS POSSIBL E APART FROM THE LITERAL CONSTRUCTION, THEN THAT CONSTRUCTION SHOULD BE PREFERRED. ITA NO.47(BANG)/2011 PAGE 5 OF 5 RESPECTFULLY FOLLOWING THE DECISION OF THE APEX COU RT AND THAT OF THE KARNATAKA HIGH COURT, WE ARE INCLINED TO DISMIS S THE GROUND OF APPEAL OF THE REVENUE. 4. IN THE RESULT, THE REVENUES APPEAL IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT AT THE END OF TH E HEARING ON 29 TH DECEMBER, 2011 SD/- SD/- (SMT. P.MADHAVI DEVI) JUDICIAL MEMBER (N.BHARATHVAJA SANKAR) VICE-PRESIDENT PLACE : BANGALORE EKS COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) CONCERNED 4. CIT 5. DR, ITAT, BANGALORE 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, ITAT, BANGALORE