Deputy Commissioner of Income tax, Jammu V. TRG Industries P.Ltd, Jammu

ITA 484/ASR/2009

• Counselvise Citation: [2011] 134 COUNSELVISE.COM (IT) 5800 (ITAT-AMRITSAR)
• Duration Of Justice: 1 year(s) 6 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-06-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Next Hearing Date: 14-12-2010
• Assessment Year: 2004-2005
• Appeal Filed On: 13-11-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P N ARORA
• Keywords: Question of law
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH: AMRITSAR. BEFORE SHRI H.L. KARWA, VICE PRESIDENT AND SHRI MEHAR SINGH, ACCOUNTANT MEMBER. I.T.A. NOS.483 & 484(ASR)/2009. (ASSESSMENT YEARS: 2003-04 & 2004-05) THE DEPUTY COMMISSIONER OF M/S.TRG INDUSTRIES PVT . LTD., INCOME TAX, CIR.I, JAMMU. 29, GMC, RAIL HEAD COMPLE X, JAMMU. (APPELLANT) VS. (RESPONDENT) APPELLANT BY: SHRI TARSEM LAL, D.R. RESPONDENT BY: SHRI P.N. ARORA, ADV. ORDER PER H.L. KARWA, VICE PRESIDENT. THESE TWO APPEALS FILED BY THE REVENUE ARE DIRECTE D AGAINST THE CONSOLIDATED ORDER OF THE CIT(A), BHATINDA DATED 19 -8-2009, RELATING TO THE ASSESSMENT YEARS 2003-04 AND 2004-05 WERE HEARD TOG ETHER AND ARE BEING DISPOSED OF BY A COMMON ORDER FOR THE SAKE OF CONVE NIENCE. 2. THE COMMON GROUNDS OF APPEALS ARE AS UNDER:- 1. THAT THE LEARNED CIT(A) WAS NOT JUSTIFIED IN DE LETING THE ADDITION MADE ON ACCOUNT OF EMPLOYEES SHARE OF PROV IDENT FUND AS THE SAID PAYMENT HAS NOT BEEN MADE BEFORE THE DU E DATE AS PROVIDED IN EXPLANATION BLOW THE PROVISION OF CLAUS E (VA) OF SUB-SECTION (1) OF SECTION 36 OF THE INCOME TAX ACT , 1961. 2. THE LEARNED CIT(A) HAS ERRED HIMSELF TO HOLD THA T THE EMPLOYEES SHARE OF PROVIDENT FUND IS ALLOWABLE WITH IN THE PROVISION OF SECTION 43B OF THE INCOME TAX ACT, 196 1 WHICH IS 2 IN CONTRAVENTION OF THE PROVISION OF SECTION 36(1)( VA) OF THE INCOME TAX ACT. 3. THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT DUE DATE AS MENTIONED IN SECTION 36(1)(VA) IS THE DATE AS DEFINED/MENTIONED U/S.139(1) OF INCOME TAX ACT, 196 1 WHEN THE SAME HAS BEEN DEFINED IN EXPLANATION BELOW SUB- SECTION (VA) OF THE SUB-SECTION (1) OF SECTION 36. 4. IN THE WAKE OF THE MADRAS HIGH COURT DECISION IN THE CASE OF CIT VS. SYNERGY FINANCIAL EXCHANGE LTD. 288 ITR (MA D) 336. SUCH VIEWS IS ALSO SUPPORTED BY FOLLOWING DECISIONS OF OTHER HIGH COURTS. A) HITECH (I) PVT. LTD. VS. UOI 227 ITR (AP) 44 6. B) THE KERALA STATE FINANCE LTD. 225 ITR (KER) 99 9. C) CIT VS. SOUTH INDIA CO-OPERATIVE LTD. 242 ITR (K ER) 114. D) CIT VS. MADRAS RADIATORS 264 ITR (MAD) 620. 5. THE APPELLANT CRAVES TO ADD, AMEND OR ALTER ANY GROUND OF APPEAL. 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE-COMPANY IS ENGAGED IN THE EXECUTION OF VARIOUS CONTRACTS. THE A.O. OBSERVED THAT THE ASSESSEE-COMPANY AS AN EMPLOYER WAS REQUIRED UNDER SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961 (IN SHORT, THE ACT) TO DEDUCT THE EMPLOYEES CONTRIBUTION AND DEPOSIT THE SAME WITH OWN CONTRIBU TIONS TO THE EMPLOYEES PROVIDENT FUND WITHIN THE PRESCRIBED PERIOD. HE FUR THER OBSERVED THAT FOR THE ASSESSMENT YEAR 2003-04, THE EMPLOYEES CONTRIBUTION /EMPLOYER CONTRIBUTIONS TO THE PROVIDENT FUND TO THE TUNE OF RS.15,03,364/- HAS BEEN DEPOSITED LATE. THE A.O., THEREFORE, DISALLOWED RS .15,03,364/- UNDER SECTION 2(24)(X) OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. SIMILARLY, THE A.O. DISALLOWED RS.16,14,512/- UNDER SECTION 2(24)( X) OF THE ACT FOR THE ASSESSMENT YEAR 2004-05. 3 4. ON APPEAL, THE CIT(A) PASSED THE CONSOLIDATED OR DER FOR BOTH THE ASSESSMENT YEARS UNDER CONSIDERATION AND ALLOWED TH E CLAIM OF THE ASSESSEE AND HENCE THE REVENUE HAS FILED THESE APPEALS BEFOR E THE TRIBUNAL. AGAINST THE CONSOLIDATED ORDER OF THE CIT(A), BHATINDA DATE D 19-8-2009. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS. WE FIND TH AT BOTH THE ISSUES RAISED IN THIS APPEAL ARE SQUARELY COVERED IN FAVOU R OF THE ASSESSEE AND AGAINST THE REVENUE BY THE DECISION OF HONBLE HIGH COURT OF DELHI IN THE CASE OF CIT VS. P.M. ELECTRONIC LTD. (2009) 177 TAX MAN 1 (DELHI). IN THE SAID CASE, ON EXAMINATION OF THE DETAILS SUBMITTED BY THE ASSESSEE WITH RESPECT TO PROVIDENT FUND PAYMENT MADE BOTH ON ACCO UNT OF EMPLOYER AND EMPLOYEES SHARE REVEALED THAT PAYMENTS IN A SUM OF RS.17,94,042/- WERE MADE AS PER THE PROVISIONS OF SECTION 36(1)(VA) REA D WITH SECTION 2(24)(X) AND SECTION 43B OF THE INCOME TAX ACT, 1961. CONSEQ UENTLY, THE A.O. DISALLOWED THE DEDUCTION AND ADDED THE SUM OF RS.1 7,94,042/- TOWARDS EPF CONTRIBUTION. ON APPEAL, THE CIT(A) ALLOWED PARTIA L RELIEF TO THE ASSESSEE. IN SECOND APPEAL, THE TRIBUNAL ALLOWED THE APPEAL O F THE ASSESSEE. THE REVENUE PREFERRED AN APPEAL U/S.260A OF THE ACT BEF ORE THE HONOURABLE DELHI HIGH COURT AND THE HONBLE HIGH COURT CONFIRM ED THE ORDER OF THE TRIBUNAL OBSERVING AS UNDER:- 7. HAVING HEARD THE LEARNED COUNSEL FOE THE REVEN UE, AS WELL AS THE ASSESSEE, WE ARE OF THE VIEW THAT THE VIEW TAKEN BY THE TRIBUNAL DESERVES TO BE SUSTAINED AS IT IS NO LONGER RES INT EGRA IN VIEW OF THE DECISION OF THE SUPREME COURT IN THE CASE OF CIT VS . VINAY CEMENT LTD. (S.L.A. NO.1934 OF 2007, DATED 7-3-2007) WHICH HAS BEEN FOLLOWED BY A DIVISION BENCH OF THIS COURT IN THE C ASE OF CIT VS. DHARMENDRA SHARMA (2008) 297 ITR 320. 8. DESPITE THE AFORESAID JUDGMENTS, THE LEARNED COU NSEL FOR THE TRIBUNAL HAS CONTENDED THAT IN VIEW OF THE JUDGMENT OF THE DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT V S. SYNERGY 4 FINANCIAL EXCHANGE LTD. 92007) 288 ITR 366 AND THAT OF THE DIVISION BENCH OF THE BOMBAY HIGH COURT IN THE CASE OF CIT V S. PAMWI TISSUES LTD. (IT APPEAL NO.1034 OF 2004, DATED 4-2- 2008) THE ISSUE REQUIRES CONSIDERATION. ACCORDING TO US, IN VIEW OF THE DISMISSAL OF THE SPECIAL LEAVE PETITION IN THE CASE OF VINAY CEM ENT LTD. (SUPRA) BY THE SUPREME COURT BY A SPEAKING ORDER, THE SUBMISSI ON OF THE LEARNED COUNSEL FOR THE REVENUE HAS TO BE REJECTED AT THE V ERY THRESHOLD. THE REASON FOR THE SAME IS AS FOLLOWS:- 9. THE GAUHATI HIGH COURT IN THE CASE OF CIT V. GE ORGE WILLIAMSON (ASSAM) LTD. (2006) 284 ITR 619 DEALT W ITH THE VERY SAME ISSUE. IN THE SAID JUDGMENT THE DIVISION BENCH OF THE GAUHATI HIGH COURT NOTED A CONTRARY VIEW TAKEN BY THE KERALA HIGH COURT IN THE CASE OF CIT VS. SOUTH INDI A CORPN. LTD. (2000) 242 ITR 114. AFTER NOTING THE SAID JUD GMENT THE FACT THAT THE AMENDMENTS HAD BEEN MADE TO THE PROVI SIONS OF SECTION 43B OF THE ACT BY VIRTUE OF FINANCE ACT, 20 03 WITH EFFECT FROM 1-4-2004 IT AGREED WITH THE SUBMISSION OF THE LEARNED COUNSEL OF THE ASSESSEE THAT BY VIRTUE OF T HE OMISSION OF THE SECOND PROVISO AND THE OMISSION OF CLAUSES (A), (C), (D), (E) AND (F) WITHOUT ANY SAYING CLAUSE WOULD MEAN THAT T HE PROVISIONS WERE NEVER IN EXISTENCE. FOR THIS PURPO SE, IN THE SAID CASE THE ASSESSEE HAD PLACED RELIANCE ON THE JUDGME NT OF A CONSTITUTION BENCH OF THE SUPREME COURT IN THE CASE OF KOLHAPUR CANESUGAR WORKS LTD. VS. UNION OF INDIA ( 2000) 2 SCC 536 AND RAYALA CORPN. (P) LTD. V. DIRECTOR OF ENFORCEMENT (1969) 2 SCC 412 AND GENERAL FINANCE CO . VS. ASSN. CIT (2002) 257 ITR 338 (SC). THE SAID SUBMIS SIONS FOUND FAVOUR WITH THE DIVISION BENCH OF THE GAUHATI HIGH COURT AND RELYING ON EARLIER DECISIONS OF ITS OWN C OURT IN CIT VS. ASSAM TRIBUNE (2002) 253 ITR 932 AND CIT VS. BH ARAT BAMBOO & TIMBER SUPPLIERS (1996) 219 ITR 212 (GAU.) THE DIVISION BENCH DISMISSED THE APPEAL OF THE REVENUE. IT TRANSPIRES THAT THE AFORESAID MATTER WAS TAKEN UP I N APPEAL ALONG WITH OTHER MATTERS INCLUDING VINAY CEMENT LTD.S CA SE (SUPRA). THE ORDER IN VINAY CEMENT LTD.S CASE (SUPRA) WAS P ASSED BY THE SUPREME COURT ON 7-3-2007 WHEREIN IT OBSERVED A S FOLLOWS:- DELAY CONDONED. 5 IN THE PRESENT CASE WE ARE CONCERNED WITH THE LAW A S IT STOOD PRIOR TO THE AMENDMENT OF SECTION 43B. IN TH E CIRCUMSTANCES, THE ASSESSEE WAS ENTITLED TO CLAIM T HE BENEFIT IN SECTION 43B FOR THAT PERIOD PARTICULARLY IN VIEW OF THE FACT THAT HE HAS CONTRIBUTED TO PROVIDENT FU ND BEFORE FILING OF THE RETURN. SPECIAL LEAVE PETITION IS DISMISSED. 10. IN VIEW OF THE ABOVE, IT I QUITE EVIDENT THAT THE S PECIAL LEAVE PETITION WAS DISMISSED BY A SPEAKING ORDER A ND WHILE DOING SO THE SUPREME COURT HAD NOTICED THE FACT THA T THE MATTER IN APPEAL BEFORE IT PERTAIN TO A PERIOD PRIOR TO TH E AMENDMENT BROUGHT ABOUT IN SECTION 43B OF THE ACT. THE AFORE SAID POSITION AS REGARDS THE STATE OF THE LAW FOR A PERIOD PRIOR TO THE AMENDMENT TO SECTION 43B HAS BEEN NOTICED BY A DIVI SION BENCH OF THIS COURT IN DHARMENDRA SHARMAS CASE (SUPRA).APPLYING THE RATIO OF THE DECISION OF THE S UPREME COURT IN VINAY CEMENT LTD.S (SUPRA) A DIVISION BENCH OF THIS COURT DISMISSED THE APPEALS OF THE REVENUE. IN THE PASSI NG WE MAY ALSO NOTE THAT A DIVISION BENCH OF THE MADRAS HIGH COURT IN THE CASE OF CIT VS. NEXUS COMPUTER (P.) LTD. BY A JUDG MENT DATED 18-8-2008 PASSED IN TAX-CASE (A) NO.1192 OF 2008 DI SCUSSED THE IMPACT OF BOTH THE DISMISSAL OF THE SPECIAL LEA VE PETITION IN THE CASE OF GEORGE WILLIAMSON (ASSAM) LTD.S CASE ( SUPRA) AND VINAY CEMENT LTD.S CASE (SUPRA) AND VINAY CEMENT L TD.S (SUPRA) AS WELL AS A CONTRARY VIEW OF THE DIVISION BENCH OF ITS OWN COURT IN SYNERGY FINANCIAL EXCHANGES CASE (SUPR A). THE DIVISION BENCH OF THE MADRAS HIGH COURT HAS EXPLAIN ED THE EFFECT OF THE DISMISSAL OF A SPECIAL LEAVE PETITION BY A SPEAKING ORDER BY RELYING UPON THE JUDGMENT OF THE SUPREME C OURT IN THE CASE OF KUNHAYAMMED VS. STATE OF KERALA (2000) 119 STC 505 AT PAGE 526 IN PARAGRAPH 40 AND NOTED THE FOLLOWIN G OBSERVATIONS:- IF THE ORDER REFUSING LEAVE TO APPEAL IS A SPEA KING ORDER, I.E., GIVES REASONS FOR REFUSING THE GRANT OF LEAVE , THEN THE ORDER HAS TWO IMPLICATIONS. FIRSTLY, THE STATEMENT OF LAW CONTAINED IN THE ORDER IS A DECLARATION OF LAW BY T HE SUPREME COURT WITHIN THE MEANING OF ARTICLE 141 OF THE CONSTITUTION. SECONDLY, OTHER THAN THE DECLARATION OF LAW, 6 WHATEVER IS STATED IN THE ORDER ARE THE FINDINGS RE CORDED BY THE SUPREME COURT WHICH WOULD BIND THE PARTIES THERETO AND ALSO THE COURT, TRIBUNAL OR AUTHORITY I N ANY PROCEEDINGS SUBSEQUENT THERETO BY WAY OF JUDICIAL DISCIPLINE, THE SUPREME COURT BEING THE APEX COURT OF THE COUNTRY. BUT, THIS DOES NOT AMOUNT TO SAYING T HAT THE ORDER OF THE COURT, TRIBUNAL OR AUTHORITY BELOW HAS STOOD MERGED IN THE ORDER OF THE SUPREME COURT REJECTING SPECIAL LEAVE PETITION OR THAT THE ORDER OF THE SUP REME COURT IS THE ONLY ORDER BINDING AS RES JUDICATA IN SUBSEQUENT PROCEEDINGS BETWEEN THE PARTIES. 11. UPON NOTING THE OBSERVATIONS OF THE SUPREME COURT I N KUNHAYANMMEDS CASE (SUPRA) THE DIVISION BENCH OF T HE MADRAS HIGH COURT IN THE CASE OF NEXUS COMPUTER (P. ) LTD. (SUPRA) CAME TO THE CONCLUSION THAT THE VIEW TAKEN BY THE SUPREME COURT IN VINAY CEMENT LTD.S CASE (SUPRA) W OULD BIND THE HIGH COURT AS IT WAS NON-DECLARED BY THE SUPREM E COURT UNDER ARTICLE 141 OF THE CONSTITUTION. 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASONI NG OF THE MADRAS HIGH COURT IN NEXUS COMPUTER (P.) LTD.S CAS E (SUPRA). JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE VIEW OF THE SUPREME COURT IN VINAY CEMENT LTD.S CASE (SUPRA) A S ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHARMEN DRA SHARMAS CASE (SUPRA). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY AGREE W ITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOMBAY HIGH COURT IN PAMWI TISSUES LTD.S CASE (SUPRA). 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARISES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS , THUS, DISMISSED. 6. IN OUR OPINION, THE RATIO LAID DOWN BY THE HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. P.M. ELECTRONICS LTD. (2009) 177 TAXMAN 1 (DELHI) IS SQUARELY APPLICABLE TO THE FACTS OF THE PRESENT CASE AND 7 RESPECTFULLY FOLLOWING THE JUDGMENT OF THE HONBLE DELHI HIGH COURT (SUPRA), WE DO NOT FIND ANY MERIT IN THE APPEALS FI LED BY THE REVENUE AND ACCORDINGLY, WE DISMISS THE SAME. 7. IN THE RESULT, BOTH THE APPEALS ARE DISMISSED. THE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 TH JUNE, 2011. SD/- SD/- (MEHAR SINGH) (H.L. KARWA) ACCOUNTANT MEMBER. VICE PRESIDENT. DATED: 8 TH JUNE, 2011. KC/- COPY OF THE ORDER FORWARDED TO: (1) THE RESPONDENT: M/S.TRG INDS. PVT. LTD.,29, GMC, RA IL HEAD COMPLEX, JAMMU (2) THE DCIT, CIR. I, JAMMU. (3) THE CIT, JAMMU. (4) THE CIT(A), BTD. (5) THE SR.D.R., ITAT, ASR. TRUE COPY BY ORDER ASSTT. REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, AMRITSAR.