GROUP M MEDIA (INDIA) PRIVATE LIMITED, MUMBAI V. DEPUTY COMMISSIONER OF INCOME TAX (OSD) 7, MUMBAI

ITA 501/MUM/2018

• Counselvise Citation: [2019] 118 COUNSELVISE.COM (IT) 0217 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2010-2011
• Appeal Filed On: 23-01-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K MISHRA
• Assessee Lawyers: AJIT SHAHAR
• Keywords: TDS; Set aside
• Section: 43B; 143(3)

Judgement Text

1 IN THE INCOME-TAX APPELLATE TRIBUNAL G BENCH MUMB AI BEFORE SHRI PAWAN SINGH, JUDICIAL MEMBER AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER ITA NO. 501/MUM/2018 (ASSESSMENT YEAR 2010-11 ) M/S GROUP M MEDIA (INDIA) PVT. LTD., 8 TH FLOOR, COMMERZ INTERNATIONAL BUSINESS PARK, OBEROI GARDEN CITY, OFF WESTERN EXPRESS HIGHWAY, GOREGAON (EAST), MUMBAI-400063 . PAN: AADCM1073B VS. THE DCIT (OSD)- 7, 455, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDE NT APPELLANT BY : SHRI AJIT SHAH(AR) RESPONDENT BY : SHRI S.K. MISHRA (SR. DR) DATE OF HEARING : 20.03.2019 DATE OF PRONOUNCEMEN T : 27.03.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-40, (HEREINAFTER REFERRED A S LD. CIT (A), MUMBAI DATED 27.10.2017 FOR ASSESSMENT YEAR 2010-11 . THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: 1. THE LEARNED COMMISSIONER OF INCOME TAX, IN THE F ACTS IN CIRCUMSTANCES OF THE CASE AND IN LAW ERRED .IN HOLD ING THAT THE AMOUNT OF RS. 49,81,018/- BEING THE PROVISION MADE FOR LEAVE SALARY MADE BY THE APPELLANT BASED ON ACTUARIAL VALUATION WAS NOT ALLO WABLE AS DEDUCTION U/S. 43B(F) OF THE ACT AND ALSO FURTHER ERRED IN HOLDING THAT THE CLAIM IN RESPECT OF THE SAME WAS NOT MADE IN THE RETURN OF INCOME AN D HENCE, NOT ALLOWABLE 2. THE ABOVE GROUNDS OF APPEAL ARE DISTINCT AND SEP ARATE AND WITHOUT PREJUDICE TO EACH OTHER. ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 2 3. IT IS HUMBLY PRAYED THAT THE RELIEFS AS PRAYED F OR HEREINABOVE AND/OR SUCH OTHER RELIEFS AS MAY BE JUSTIFIED BY THE FACTS AND CIRCUMSTANCES OF THE CASE AND AS MAY MEET THE ENDS OF JUSTICE SHOULD BE GRANTED. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN MEDIA PLANNING, BUYING, SELLING AND CONSULTANCY SERVICES, FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2010-11 ON 13.10.2010 DE CLARING TOTAL INCOME OF RS. 64,49,47,710/-. SUBSEQUENTLY, THE REV ISED RETURN WAS FILED BY ASSESSEE ON 27.12.2010 DECLARING THE SAME INCOME RELATING CREDIT OF TAX DEDUCTED AT SOURCE (TDS) OF RS. 41,09,442/-. TH E RETURN WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED UNDER SECTION 143(3) ON 12.03.2013. DURING THE ASSESSMENT, THE ASSESSEE CLAIMED THAT THEY HAVE OFFERED TO TAX OF RS. 49,81,018/- IN RESPECT O F LEAVE ENCASHMENT PROVISION AS DISALLOWABLE U/S. 43B(F) OF THE ACT, T HE SAME SHOULD NOT BE DISALLOWED IN COMPUTING THE INCOME FOR THE YEAR. TH E ASSESSEE RELIED UPON THE DECISION OF HONBLE KOLKATA HIGH COURT IN EXIDE INDUSTRIES LTD. VS. UNION OF INDIA, WHEREIN THE SAID PROVISION IS DECLARED AS INVALID. THE CLAIM OF ASSESSEE WAS NOT ACCEPTED BY ASSESSING OFFICER HOLDING THAT THE ASSESSEE HAS ITSELF OFFERED THE SAME IN CO MPUTATION OF INCOME ALONG WITH THE RETURN OF INCOME AS DISALLOWABLE. ON APPEAL BEFORE THE LD. CIT(A), THE ACTION OF ASSESSING OFFICER WAS UPHELD. THE LD. CIT(A) CONCLUDED THAT IN VIEW OF THE DECISION OF HONBLE S UPREME COURT IN GOETZ (INDIA) LTD. VS. CIT [284 ITR 323], NO FRESH CLAIM CAN BE ENTERTAINED BY THE ASSESSING OFFICER. THIS RESTRICT ION IS ALSO APPLICABLE TO ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 3 LD. CIT(A), THEREFORE, THE CLAIM OF ASSESSEE CANNOT BE ENTERTAINED IN THE APPEAL AS WELL. AGGRIEVED BY THE ORDER OF LD. CIT(A ), THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 3. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE L D. AR OF THE ASSESSEE SUBMITS THAT IN VIEW OF THE DECISION OF HONBLE JUR ISDICTIONAL HIGH COURT IN CIT VS. PRUTHVI BROKERS & SHAREHOLDERS [349 ITR 336 (BOM), THE ASSESSEE IS ENTITLED TO RAISE ADDITIONAL GROUNDS OF APPEAL BEFORE THE APPELLATE AUTHORITY. THE LD. AR OF THE ASSESSEE FU RTHER SUBMITS THAT ON MERIT, THE SOLE GROUNDS OF APPEAL, THE ASSESSEE IS COVERED IN FAVOUR OF ASSESSEE BY THE DECISION OF CO-ORDINATE BENCH IN EV EREST INDUSTRIES LTD. VS. JCIT [2018] 90 TAXMANN.COM 330 (MUM. TRIB.), WH EREIN IT WAS HELD THAT IF THE DECISION OF HONBLE SUPREME COURT COMES IN FAVOUR OF ASSESSEE, THE ASSESSEE IS FREE TO SEEK THE AMENDMEN T OF ASSESSMENT ORDER. 4. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUBMITS THAT IN VIEW OF THE DECISION OF CIT VS. PRUTHVI BROKERS & SHAREHOLDERS (SUPRA), THE GROUNDS OF APPEAL MAY BE RESTORED TO THE FILE OF ASSESSING OFF ICER TO DECIDE THE ISSUE AFRESH. 5. WE HAVE CONSIDERED THE SUBMISSION OF PARTIES AND HA VE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NOTED THAT THE ASSESSING OFFICER NOT ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 4 ACCEPTED THE REVISED CLAIM OF THE ASSESSEE. THE LD. CIT(A) ALSO CONCURRED WITH THE DECISION OF ASSESSING OFFICER. H OWEVER, KEEPING IN VIEW THE RATIO OF LAW LAID DOWN BY HONBLE JURISDI CTIONAL HIGH COURT IN CIT VS. CIT VS. PRUTHVI BROKERS AND SHAREHOLDERS (S UPRA), WE ADMIT THE ADDITIONAL GROUND OF CLAIM RAISED BY ASSESSEE AND R ESTORE THE ISSUE TO THE FILE OF ASSESSING OFFICER TO DECIDE THE ISSUE AS PE R THE DECISION OF CO- ORDINATE BENCH IN EVEREST INDUSTRIES LTD. VS. JCIT (SUPRA). FOR APPRECIATION OF FACT THE RELEVANT PART OF DECISION OF EVEREST INDUSTRIES LTD. (SUPRA) IS EXTRACTED BELOW: 13. THE SECOND ISSUE CONTESTED BY THE ASSESSEE RELATES TO DEDUCTION RESPECT OF 'PROVISION OF LEAVE ENCASHMENT'. THE ASSESSEE CR EATED A PROVISION OF RS. 120.60 LAKHS TOWARDS LEAVE ENCASHMENT AND CLAIMED T HE SAME AS DEDUCTION. WHEN THE AO SOUGHT TO DISALLOW THE SAME U/S. 43B OF THE ACT, THE ASSESSEE CONTENDED THAT THE PROVISION FOR LEAVE ENCASHMENT I S NOT A STATUTORY LIABILITY AND HENCE IT IS NOT LIABLE TO BE DISALLOWED U/S. 43 B OF THE ACT. IN THIS REGARD, THE ASSESSEE PLACED ITS RELIANCE ON THE DECISION RE NDERED BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. V. UNION OF INDIA [2007] 292 ITR 470/164 TAXMAN 9 . THE ASSESSING OFFICER, HOWEVER, DISALLOWED THE CLAIM OF THE ASSESSEE ON THE REASONING THAT THE DEC ISION RENDERED BY HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD. ( SUPRA ) HOLDING THAT THE PROVISIONS OF SECTION 43B(F) IS UNCONSTITUTIONA L, HAS SINCE BEEN STAYED BY HON'BLE SUPREME COURT. THE LEARNED CIT(A) ALSO CONF IRMED THE SAME. 14. THE LEARNED AR SUBMITTED THAT HON'BLE COCHIN BENCH OF THE ITAT HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF MUTHOOT VEHICLES & ASSET FINANCE LTD. [IT APPEAL NO. 623 (COCH) OF 2013, DATED 6-12-2013 ], AND THE TRIBUNAL HAS RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH THE DIRECTION TO CONSIDER THE ISSUE AFRESH AS PER THE D ECISION THAT MAY BE RENDERED BY HON'BLE APEX COURT IN THE CASE OF EXIDE INDUSTRIES LTD. ( SUPRA ). 15. WE HAVE HEARD LEARNED DEPARTMENTAL REPRESENTATIVE AND PERUSED THE RECORD. WE NOTICED THAT THE COCHIN BENCH OF THE TRI BUNAL HAS CONSIDERED AN IDENTICAL ISSUE AND RESTORED THE MATTER TO THE FILE OF THE ASSESSING OFFICER WITH FOLLOWING OBSERVATIONS : ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 5 '3. WE HAVE HEARD THE RIVAL CONTENTIONS ON THIS ISSUE. WE NOTICE THAT THIS BENCH OF TRIBUNAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF M/S. KERALA FEEDS LTD. (ITA NO.179 & 180/COCH/2013) AND THE TRIBUNAL, VIDE ITS ORDER DATED 27-09-2013, HAS SET ASIDE THIS ISSUE TO THE FILE OF THE AO WITH THE FOLLOWING OBSERVATIONS: 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE RECORD. WITH REGARD TO THE CLAIM OF PROVISION FOR LEAVE ENC ASHMENT, THE LD COUNSEL PLACED RELIANCE ON THE DECISION OF HON'BLE KERALA HIGH COURT IN THE CASE OF HINDUSTAN LATEX LTD. ( SUPRA ) AND ALSO ON THE DECISION RENDERED BY HON'BLE RAJASTHAN HIGH COURT I N THE CASE OF CIT V. RAJ. STATE BRIDE AND CONSTRUCTION CORPORATION LTD. (2012) (346 ITR 53) . WE NOTICE THAT THE RAJASTHAN HIGH COURT, IN THE ABOVE CITED CASE, HAS CONSIDERED THE CLAIM OF DEDUC TION OF PROVISION FOR LEAVE ENCASHMENT FOR ASSESSMENT YEAR 2000-01. HOWEVER, THE PROVISIONS OF SEC. 43B(F) WAS INSERTED INTO THE ACT BY FINANCE ACT,2001 W.E.F. 1.4.2002, WHICH COULD NOT H AVE BEEN CONSIDERED BY HON'BLE RAJASTHAN HIGH COURT. HENCE, RELIANCE PLACED BY THE ASSESSEE ON THE SAID DECISION MAY NOT BE USEFUL FOR THE YEAR UNDER CONSIDERATION. 8. WE HAVE ALSO CAREFULLY GONE THROUGH THE DECISION RENDERED BY THE JURISDICTIONAL KERALA HIGH COURT IN THE CASE OF HINDUSTAN LATEX LTD. ( SUPRA ) AND NOTICE THAT THE HIGH COURT HAS ALLOWED THE CL AIM OF THE ASSESSEE ON TWO GROUNDS VIZ., ( A ) THE HON'BLE KERALA HIGH COURT, IN PARA 5 OF ITS ORD ER, HAS CONCURRED WITH THE VIEW EXPRESSED BY THE HON'BLE CA LCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA) T HAT CLAUSE (F) OF SECTION 43B IS UNCONSTITUTIONAL. ( B ) THE DECISION RENDERED BY THE HON'BLE CALCUTTA HIGH COURT HAS NOT BEEN CHALLENGED BEFORE THE SUPREME COURT. (PARA 5 A ND 8). ACCORDINGLY, THE HON'BLE KERALA HIGH COURT, BY FOLL OWING THE DECISION RENDERED BY THE HON'BLE SUPREME COURT IN T HE CASE OF BERGER PAINTS LTD. V. CIT ( 266 ITR 99 ), HAS FURTHER HELD THAT THE REVENUE HAVING NOT CHALLENGED THE CORRECTNESS OF TH E LAW LAID DOWN BY THE CALCUTTA HIGH COURT, IT IS NOT OPEN TO THE REVENUE TO CHALLENGE ITS CORRECTNESS IN THE CASE OF ANOTHER AS SESSEE. 9. HOWEVER, WE NOTICE THAT THE DEPARTMENT HAS CHALL ENGED THE DECISION RENDERED BY THE HON'BLE CALCUTTA HIGH COUR T IN THE CASE OF EXIDE INDUSTRIES LTD, BY FILING APPEAL BEFORE HON'B LE SUPREME COURT AND THE HON'BLE APEX COURT HAS STAYED THE JUD GMENT OF THE HON'BLE CALCUTTA HIGH COURT. IN FACT, THE HON'BLE A PEX COURT HAS ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 6 PASSED TWO INTERIM ORDERS IN THIS REGARD, WHICH ARE DETAILED BELOW: ( A ) THE FIRST ORDER WAS PASSED ON 08-09-2008 IN THE PET ITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) CC 12060/2008 IN THE CASE O F CIT V. EXIDE INDUSTRIES LTD. (FROM THE JUDGMENT AND ORDER DATED 27-6-2007 IN APO NO.301/2005 OF THE HIGH COURT OF CALCUTTA). THE ORDER READS AS UNDER:- 'UPON HEARING COUNSEL THE COURT MADE THE FOLLOWING ORDER ISSUE NOTICE. IN THE MEANTIME, THERE SHALL BE STAY OF THE IMPUGNE D JUDGMENT, UNTIL FURTHER ORDERS.' ( B ) THE SECOND ORDER WAS PASSED ON 08-05-2009 IN THE PE TITION FOR SPECIAL LEAVE TO APPEAL (CIVIL) NO(S) 22889/2008 (F ROM THE VERY SAME JUDGMENT OF THE HIGH COURT OF CALCUTTA). THE O RDER READS AS UNDER: PENDING HEARING AND FINAL DISPOSAL OF THE CIVIL APP EAL, DEPARTMENT IS RESTRAINED FROM RECOVERING PENALTY AND INTEREST WHICH HAS ACCRUED TILL DATE. IT IS MADE CLEAR THAT AS FAR AS THE OUTSTANDING INTEREST DEMAND AS OF DATE IS CONCERNED, IT WOULD B E OPEN TO THE DEPARTMENT TO RECOVER THAT AMOUNT IN CASE CIVIL APP EAL OF THE DEPARTMENT IS ALLOWED. WE FURTHER MAKE IT CLEAR THAT THE ASSESSEE WOULD, D URING THE PENDENCY OF THIS CIVIL APPEAL, PAY TAX AS IF SECTIO N 43B(F) IS ON THE STATUTE BOOK BUT AT THE SAME TIME IT WOULD BE ENTIT LED TO MAKE A CLAIM IN ITS RETURNS. THUS, IT IS NOTICED THAT THE HON'BLE APEX COURT HAS NOT ONLY STAYED THE OPERATION OF THE HON'BLE CALCUTTA HIGH COURT IN THE CASE OF EXIDE INDUSTRIES LTD (SUPRA), BUT ALSO OBSERVED THA T THE ASSESSEE WOULD, DURING THE PENDENCY OF THIS CIVIL APPEAL, PA Y TAX AS IF SECTION 43B(F) IS ON THE STATUTE BOOK. THOUGH THE I NTERIM ORDERS WERE PASSED BY THE HON'BLE APEX COURT IN THE YEARS 2008/2009, IT WAS NOT BROUGHT TO THE NOTICE OF HON'BLE JURISDICTI ONAL HIGH COURT. WE FURTHER NOTICE THAT THE HON'BLE SUPREME COURT HA S MODIFIED THE DECISION RENDERED IN THE CASE OF BERGER PAINTS ( SUPRA ) IN ITS SUBSEQUENT DECISION IN THE CASE OF GANGADHARAN (304 ITR 61). THE OPERATIVE PART OF THE SAID DECISION READS AS UNDER: - 'IN ANSWERING THE REFERENCE, WE HOLD THAT MERELY BE CAUSE IN SOME CASES THE REVENUE HAS NOT PREFERRED APPEAL THAT DOE S NOT OPERATE AS ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 7 A BAR FOR THE REVENUE TO PREFER AN APPEAL IN ANOTHE R CASE WHERE THERE IS JUST CAUSE FOR DOING SO OR IT IS IN PUBLIC INTEREST TO DO SO OR FOR A PRONOUNCEMENT BY THE HIGHER COURT WHEN DIVERG ENT VIEWS ARE EXPRESSED BY THE TRIBUNALS OR THE HIGH COURTS. 10. WE ALSO NOTICE THAT THE CALCUTTA BENCH OF TRIBU NAL HAS CONSIDERED AN IDENTICAL ISSUE IN THE CASE OF S.R BATLIBOY & CO. IN ITA NO.1598/KOL/2011 AND THE TRIBUNAL, VIDE ITS DEC ISION DATED 13-03-2012, HAS SET ASIDE THE MATTER TO THE FILE OF THE AO WITH THE DIRECTION TO CONSIDER THE ISSUE AFRESH AS PER THE D ECISION OF HON'BLE APEX COURT IN THE CASE OF EXIDE INDUSTRIES LTD. ( SUPRA ). ACCORDINGLY, WE SET ASIDE THE ORDERS OF LD CIT(A) O N THIS ISSUE IN BOTH THE YEARS UNDER CONSIDERATION AND RESTORE THEM TO THE FILE OF THE AO WITH THE DIRECTION TO EXAMINE THE ISSUE AFRE SH IN THE LIGHT OF DISCUSSIONS MADE SUPRA.' 4. CONSISTENT WITH THE VIEW TAKEN IN THE CASE OF KERALA FEEDS LTD. ( SUPRA ), WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSU E AND RESTORE THE SAME TO THE FILE OF THE ASSESSING OFFIC ER WITH THE DIRECTION TO EXAMINE THIS ISSUE AFRESH IN ACCORDANC E WITH THE DECISION RENDERED BY HON'BLE SUPREME COURT IN THE C ASE OF M/S. EXIDE INDUSTRIES LTD. ( SUPRA ).' 16. IT CAN BE NOTICED THAT THE HON'BLE SUPREME COURT H AS HELD THAT THE ASSESSEE SHALL PAY TAX ON THE DISALLOWANCE OF 'PROVISION FOR LEAVE ENCASHMENT' AS IF SEC. 43B(F) IS ON STATUTE BOOK. HENCE THE ADDITION MADE BY THE AO IS REQUIRED TO BE SUSTAINED. IF THE DECISION OF HON'BLE SUPREME COURT COMES IN FAVOUR OF THE ASSESSEE IN FUTURE, THEN THE ASSESSEE IS FREE TO SE EK AMENDMENT OF ASSESSMENT ORDER. 6. CONSIDERING THE DECISION OF CO-ORDINATE BENCH ON ME RIT OF THE CASE, THE GROUNDS OF APPEAL IS RESTORED TO THE FILE OF ASSESS ING OFFICER IN CASE THE DECISION OF HON'BLE SUPREME COURT COMES IN FAVOUR O F THE ASSESSEE IN FUTURE, THEN THE ASSESSEE IS FREE TO SEEK AMENDMENT OF ASSESSMENT ORDER. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED FO R STATISTICAL PURPOSE. ORDER PRONOUNCED IN THE OPEN COURT ON 27/03/2019. SD/- SD /- N.K. PRADHAN, PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER ITA NO. 501 MUM 2018-M/S GRO UP M MEDIA (INDIA) PVT. LTD. 8 MUMBAI, DATE: 27.03.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR G BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI