Assistant Commissioner of Income Tax, Circle-1(1), Visakhapatnam V. Bharat Heavy Plates & Vessels Limited , Visakhapatnam

ITA 477/VIZ/2018

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 7901 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-02-2022
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 24-09-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(1); 139(1); 43

Judgement Text

आयकरअपीलीयअधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (through web-based video conferencing platform) श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No.477/Viz/2018 (ननधधारण वर्ा / Assessment Year : 2006-07) Asst.Commissioner of Income Tax Circle-1(1) Visakhapatnam Vs. Bharat Heavy Plates & Vessels Limited 10-3, Administrative Building BHPV Post, Nathayyapalem Visakhapatnam [PAN : AAACB7076N] (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri I.Kama Sastry, AR प्रत्यधथी की ओर से / Respondent by : Shri Sankar Pandi, DR सुनवधई की तधरीख / Date of Hearing : 16.02.2022 घोर्णध की तधरीख/Date of Pronouncement : 25.02.2022 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the revenue against the order of Commissioner of Income Tax (Appeals) [CIT(A)]-1, Visakhapatnam dated 20.06.2018 for the Assessment Year (A.Y.)2006-07. 2 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam 2. The only grievance of the revenue is deletion of addition made by the AO on account of belated remittance of employees contribution to PF amounting to Rs.2,07,51,824/-.. 3. Brief facts of the case are that the assessee company is a public sector undertaking and it had filed its return of income declaring a loss of Rs.51,25,82,098/- . The return was processed u/s 143(1) of the Income Tax Act, 1961 (in short ‘Act’). The case was taken up for scrutiny and the scrutiny assessment was completed on 15.09.2008 determining total loss at Rs.36,66,53,460/-. The case was reopened by issuing notice u/s 148. The Assessing Officer (AO) observed that the assessee company had received a sum of Rs.2,26,00,124/- from employees towards contribution to provident fund, but paid into their respective government accounts after due date except an amount of Rs.18,48,300/- paid within the due date. As per the provisions of section 36(1)(va) of the Act, deduction in respect of any sum received by the tax payer as contribution from his employees towards any welfare fund of such employees was allowed only if such sum was credited by the tax payer to the employee’s account in the relevant fund on or before the due date. Accordingly, an amount of Rs.2,07,51,824/- is disallowed and added to the total income of the assessee as per provisions of section 43B of the Act. 3 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam 4. On being aggrieved, the assessee preferred an appeal before the CIT(A) and submitted that section 43B provides that a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution of any fund such as provident fund shall be allowed if it is paid on or before the due date as contemplated u/s 139(1) of the Act. The Ld.AR relied on the following case laws : (i) M/s Fluid Air India Pvt. Ltd. Vs.DCIT (63 ITD 182) (ii) Madras Radiator & Pressing Ltd. Vs. CIT (56 TTJ 662) (iii) CIT Vs. Kichha Sugar Co. Ltd. (356 ITR 351) (iv) CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (366 ITR 163) (v) CIT Vs. Hemla Embroidery Mills Pvt. Ltd. (98 ITR 107) (vi) CIT Vs. Nipso Polyfabriks Ltd. (350 ITR 327) (vii) CIT Vs. AIMIL Ltd. (321 ITR 508) (viii) ANZ Information Technology Pvt. Ltd. (318 ITR 123) The Ld.AR further submitted that the impugned payments have been made before the due date of filing return of income and requested to delete the addition. The Ld.CIT(A) has considered the submissions made by the Ld.AR. He relied on the decision of Hon’ble High Court of Karnataka in the case of Essae Teraoka (P) Ltd. Vs. DCIT 43 Taxmann 33 4 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam in which the Hon’ble High Court took the view that the word contribution occurring in section 43B of the Act would include employees contribution to PF, in the light of the definition of the word ‘contribution’ by sec.2(c) of P.F.Act, as per which contribution would mean both the employers contribution and employees contribution. The Ld.CIT(A) also relied on the following decisions and held that PF contribution paid after the due date under the respective Act but before filing of the return of income u/s 139(1) cannot be disallowed u/s 43B or u/s 36(1)(v)(A) of the Act. (i) Hon’ble High Court of Uttarakhand in the case of CIT Vs. Kichha Sugar Co. Ltd.. 35 Taxmann (ii) Hon’ble High Court of Rajasthan in the case of CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. (relied on Apex Court decision in the case of CIT Vs. Alom Extrusions Ltd. (319 ITR 306) & CIT Vs. Vinay Cement Ltd. (213 CTR 268 SC) (iii) Hon’ble High Court of Calcutta in the case of CIT Vs. Vijay Shree Ltd. 43 Taxmann 396 (iv) Hon’ble High Court of Delhi in the case of CIT Vs. Dharmendra Sharma, 297 ITR 328 and CIT Vs.AIMIL Ltd. & Others (321 ITR 508) (v) Hon’ble High Court of Madras in the case of CIT Vs. Nexus Computer Pvt. Ltd. (vi) Hon’ble Himachal Pradesh High Court in the case of CIT Vs. Nipso Poly Fabric Pvt. Ltd. (350 ITR 327 HP) Relying on the above decisions of Hon’ble High Courts and also on the similar views taken by ITAT Mumbai, Pune & Chennai, the Ld.CIT(A) directed the AO to delete the impugned addition and held that the 5 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam assessee would be entitled for deduction of the employees contribution of PF & ESI made before the due date of filing of the return of income u/s 139(1) of the Act and allowed the appeal of the assessee. 5. On being aggrieved, the revenue preferred an appeal before the ITA, raising the following ground of appeal : 1. The Order of the Ld.CIT(A)-1 Visakhapatnam is erroneous in law. 2. The Ld.CIT(A)-1. Visakhapatnam erred in deleting the addition of Rs.2,07,51,824/- made by the A.O towards belated remittance of employees' contribution to PF u/s.36(1)(va) rw.s. 2(24)(x) of the Income-tax Act, 1961. 3. The Ld.CIT(A) ought to have confirmed the addition made by AO, on account of belated remittance of employee's contribution to PF amounting to Rs.2,07,51,824. 4. The Ld.CIT(A) ought to have considered that the provisions of Sec43B and decision of Apex Court in the case of Alom Extrusion Ltd., (319 ITR306) are attracted only in case of employer's contribution to PF and not to employees contribution to PF as clarified by CBDT vide Circular No.22/2015 dated 17 th December 20 15. 5. The Ld.CIT(A) ought to have appreciated that the provision of section 36(l)(va) is applicable in respect of employee's contribution to PF received by the employer and such contributions received is income in the hands of employer as per see.2(24)(x) and deductible only if the payment is made before the date as prescribed under the P.F Act / Rules or notification governing such funds. 6. The appellant craves leave to add or amend or alter or substitute any ground at the time of hearing of the appeal. 6 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam 6. Ground No.1 and 6 are general in nature which does not require specific adjudication. 7. Ground No. 2 to 5 are related to belated remittance of employee’s contribution to PF amounting to Rs.2,07,51,824/-. The Ld..DR submitted that the lower authorities have rightly disallowed the payments made belatedly as per the respective Acts. He further submitted that the Employees Contribution to PF and ESI is allowed as deduction, if the same is deposited on or before the due date specified under the provisions of Employees Provident Fund Act and ESI Act. He further submitted that since the assessee has not deposited the contribution to respective fund account on the date as prescribed in Explanation to section 36(1)(va) of the Act, the disallowance made by the AO was just, proper and reasonable, therefore, submitted that the Ld.CIT(A) rightly confirmed the disallowance made by the AO, hence the addition is to be sustained. The Ld.DR relied on the decision of Hon’ble Kerala High Court in the case of CIT Vs. Merchem Ltd. reported in (2015) 378 ITR 443 and Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation (366 ITR 170) [2014] (Gujarat) reported in (2014) 366 ITR 170, 41 taxmann.com 100. 7 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam 8. On the other hand, Ld.Counsel for the assessee has submitted that the assessee made the payment before filing of the due date of filing of return of income u/s 139(1) of the Income Tax Act, 1961 (in short ‘Act’) and also relied on the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P) Ltd. Vs. DCIT, reported in 366 ITR 408, wherein, it was held that if the payments were made before filing of the due date of filing of return of income u/s 139(1), the assessee is entitled to claim the deduction. 9. We have heard both the parties and perused the records and after considering the facts and circumstance of the case, it is undisputed fact that the payments were made beyond due date of specified time mentioned in the Employees Provident Fund Act. It is also admitted fact that the payments were made by the assessee before filing of the due date of filing the return of income. On this aspect, the coordinate Bench of ITAT, Visakhapatnam on similar set of facts decided the issue in favour of the assessee, relying on the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P) Ltd. Vs. DCIT (supra), wherein, the Hon’ble Karnataka High Court viewed as follows : “8. The Hon’ble Karnataka High Court, in the case of Essae Teraoka (P) Ltd. Vs. DCIT 366 ITR 408 took the view that the word contribution occurring in 8 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam section 43B of the Act would include employees’ contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer’s contribution and employees’ contribution. Accordingly, it was held that the provisions of section 43B of the Act allowing deduction for payment made before the due date of filing of Income Tax return cannot be ignored. Similarly, the ITAT, Hyderabad Tribunal in the case of Tetra Soft (India) Pvt. Ltd. Vs. ACIT (2015) 40 ITR (Trib) 470 held that when assessee remitted employees’ contribution to PF within due date of filing return of income u/s 139(1) of the Act, amount of employees’ contribution to PF cannot be disallowed. Similar view was upheld by the Chennai bench of the ITAT, in the case of ACIT Vs. Farida Shoes Pvt. Ltd. (2016) 46 CCH 29. The coordinate bench held that if assessee had not deposited employees’ contribution towards provident fund up to the due date as prescribed under relevant statute, but before due date of filing of return no disallowance could be made in view of the provisions of section 43B of the Act. In the case of CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 35 Taxman 616, the Hon’ble High Court of Rajasthan, after referring to the apex court decision in the case of CIT Vs. Alom Extrusions Ltd. 319 ITR 306 & CIT Vs. Vinay Cement Ltd. held that the deductions should be allowed for the payment of employees’ contribution made before the due date of filing of return. Similarly, in the case of CIT Vs. State Bank of Bikaner, the Hon’ble Rajasthan High Court held that contribution paid after the due date under the respective Act, but before filing the return of income u/s 139(1) of the Act cannot be disallowed u/s 43B of the Act and or u/s 36(1)(va) of the Act. “ Coordinate Bench of ITAT, Visakhapatnam considered the decision of Hon’ble Kerala High Court, Hon’ble High Court of Gujarat (supra) and also considered the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s Vegetables Products Ltd. reported in 88 ITR 192, wherein it was held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. After considering all these decisions, the coordinate Bench of this 9 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam Tribunal has allowed the appeal of the assessee in the case of Focus Trans Tech Shipping Private Ltd., Vs DCIT, Visakhapatnam in I.T.A. No.132/Viz/2021 dated 23.09.2021. Therefore, respectfully following the view taken by the Tribunal on similar set of facts, we hold that the orders passed by the Ld.CIT(A) needs no interference. Hence, the grounds raised by the revenue are dismissed. 10. In the result, the appeal of the revenue is dismissed. Order pronounced in the open court on 25 th February, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/JUDICIAL MEMBER Dated : 25 .02.2022 L.Rama, SPS 10 I.T.A. No.477/Viz/2018, A.Y.2006-07 M/s Bharat Heavy Plates & Vessels Ltd., Visakhapatnam आदेश की प्रतितिति अग्रेतिि/Copy of the order forwarded to:- 1. रधजस्व/The Revenue – Asst.Commissioner of Income Tax, Circle-1(1), Visakhapatnam 2. ननधधाऩरती/ The Assessee– Bharat Heavy Plates & Vessels Limited, 10-3, Administrative Building, BHPV Post, Nathayyapalem, Visakhapatnam 3. आयकर आयुक्त (अपील)/ The Commissioner of Income Tax (Appeals)-1, Visakhapatnam 4. The Pr.Commissioner of Income-tax-1, Visakhapatnam 5. नवभधगीय प्रनतनननध, आयकर अपीलीय अनधकरण, नवशधखधपटणम/ DR,ITAT, Visakhapatnam 6.गधर्ा फ़धईल / Guard file आदेशधनुसधर / BY ORDER Sr. Private Secretary ITAT, Visakhapatnam