ITO 3(2)(1), MUMBAI V. INDORE STEEL AND IRON MILLS LTD, MUMBAI

ITA 5487/MUM/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 84492 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 3 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: I
• Next Hearing Date: 03-12-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 30-08-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SACCHIDANAND DUBEY
• Keywords: Business income; Question of law
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH, MUM BAI , , BEFORE SHRI SANJAY ARORA, AM AND SHRI VIVEK VARMA, JM ./ I.T.A. NO. 5487/MUM/2012 ( / ASSESSMENT YEAR: 2008-09) ITO-3(2)(1) ROOM NO. 673, 6 TH FLOOR, AAYAKAR BHAVAN, M. K. ROAD, MUMBAI -400 020 / VS. INDORE STEEL AND IRON MILLS LTD., 71, EMPIRE BUILDING, 34, D.N. ROAD, MUMBAI -400 001 ' ./# ./PAN/GIR NO. AAACI 6050 K ( $'% /APPELLANT ) : ( &''% / RESPONDENT ) $'% ( / APPELLANT BY : SHRI SACCHIDANAND DUBEY &''% ) ( / RESPONDENT BY : SHRI SHIV PRAKASH * ) + , / DATE OF HEARING : 03.12.2014 DATE OF ORDER : 08.12.2014 - / O R D E R PER SANJAY ARORA, A. M.: THIS IS AN APPEAL BY THE REVENUE ARISING OUT OF TH E ORDER BY THE COMMISSIONER OF INCOME TAX (APPEALS)-4, MUMBAI (CIT(A) FOR SHO RT) DATED 06.06.2012, ALLOWING THE ASSESSEES APPEAL CONTESTING ITS ASSESSMENT U/S.143 (3) OF THE INCOME TAX ACT, 1961 (THE ACT HEREINAFTER) FOR THE ASSESSMENT YEAR (A.Y.) 20 08-09 VIDE ORDER DATED 24.12.2010. 2. THE ONLY ISSUE ARISING IN THIS APPEAL IS WHETHER THE DEPOSIT BY THE ASSESSEE- COMPANY OF THE EMPLOYEES CONTRIBUTION TO THE EMPLO YEES PROVIDENT FUND (EPF) OR TO THE EMPLOYEES STATE INSURANCE CORPORATION (ESIC), I .E., AS AN EMPLOYER, AFTER THE RESPECTIVE DUE DATES, I.E., UNDER THE RESPECTIVE AC TS, WHERE-UNDER BOTH THE EMPLOYEE AND THE EMPLOYER ARE OBLIGED TO CONTRIBUTE A SUM, RECKO NED AS A PERCENTAGE OF AN EMPLOYEES 2 ITA NO.5487/MUM/2012 (A.Y. 2008-09) ITO VS. INDORE STEEL & IRON MILLS LTD. SALARY, TO A FUND MAINTAINED FOR THE WELFARE OF THE EMPLOYEES, THOUGH BEFORE THE DUE DATE OF FILING RETURN OF INCOME FOR THE RELEVANT YEAR, C OULD BE ALLOWED AS A DEDUCTION IN COMPUTING ITS BUSINESS INCOME FOR THE SAID YEAR. TH E FIRST APPELLANT AUTHORITY HAVING ALLOWED THE ASSESSEES APPEAL ON THE SHORT GROUND O F THE SAID DEDUCTION BEING COVERED BY THE AMENDED U/S.43B, WHICH HAS RATHER BEEN EXPLAINE D BY THE APEX COURT IN CIT V . ALOM EXTRUSIONS LTD . [2009] 319 ITR 306 (SC) TO BE RETROSPECTIVE, THE REVENUE IS IN APPEAL. 3. WE HAVE HEARD BOTH THE PARTIES AND RELEVANT MATE RIAL ON RECORD. THE PRIMARY ISSUE ARISING IN THE INSTANT CASE, AS D ISCERNED FROM THE ORDERS OF THE AUTHORITIES BELOW; THE GROUND/S OF APPEAL ASSUMED B Y THE ASSESSEE (BEFORE THE LD. CIT(A)) AND THE REVENUE (BEFORE US), AND THE ARGUMENTS BEFO RE US, IS THE PROVISION/S UNDER WHICH THE RELEVANT PAYMENT STANDS TO BE GOVERNED. THE REV ENUE RELIES ON THE DECISION IN THE CASE OF BENGAL CHEMICAL AND PHARMACEUTICALS LTD . [2011]11 TAXMANN.COM 328/10 TAXMANN.COM 26) (KOL), HOLDING THAT THE EMPLOYEES CONTRIBUTION TO THE SAID EMPLOYEE WELFARE FUNDS IS COVERED BY SECTION 36(1)(VA) READ WITH SECTION 2(24)(X) OF THE ACT. AS SUCH, THE PROVISION OF S. 36(1)(VA), WHICH PROVIDES FOR THE DEDUCTION OF THE SAID SUM/S TO BE SUBJECT TO PAYMENT BY THE DUE DATE OF DEPOSIT UN DER THE RELEVANT STATUTE, SHALL PREVAIL. THE SAID ISSUE HAS IN FACT BEEN THE SUBJECT MATTER OF CONSIDERATION BY THE SPECIAL BENCH OF THE TRIBUNAL IN CIT V. ITC LTD . [2008] 112 ITD 57 (KOL)(SB), HOLDING LIKEWISE (PA RAS 55- 56/PGS.102-104). THERE WAS, THEREFORE, IT STANDS EX PLAINED, NO QUESTION OF APPLICABILITY OF SECTION 43B TO SUCH SUMS. THE MATTER STANDS DISCUSS ED AGAIN IN EXTENSO BY THE TRIBUNAL PER ITS DECISION IN THE CASE OF ITO V. LKP SECURITIES LTD . [2013] 36 CCH 093 (MUM)[IN ITA NOS. 638 & 1093/MUM/2012 DATED 17.05.2013]. EVE N IF, IT STANDS EXPLAINED THEREIN, S. 43B IS CONSIDERED AS APPLICABLE, BEING A NON OBSTANTE CLAUSE, IT WOULD COME INTO PLAY ONLY WHERE THE RELEVANT PAYMENT/S IS OTHERWISE ALLO WABLE, I.E., UNDER ANY OTHER PROVISION OF THE ACT, BEING A CONDITION PRECEDENT FOR THE APP LICABILITY OF SECTION 43B. THE SAME BEING NOT DEDUCTIBLE UNDER THE RELEVANT PROVISION, I.E., SECTION 36(1)(VA) R/W S. 2(24)(X), NO OCCASION FOR INVOCATION OF SECTION 43B ARISES. I N OTHER WORDS, EVEN ASSUMING SECTION 43B TO BE APPLICABLE TO THE EMPLOYEES CONTRIBUTION TO THE SAID FUNDS WOULD BE OF LITTLE 3 ITA NO.5487/MUM/2012 (A.Y. 2008-09) ITO VS. INDORE STEEL & IRON MILLS LTD. MOMENT. THIS IS AS SECTION 43B STIPULATES A PAYMENT CRITERIA, IRRESPECTIVE OF THE METHOD OF ACCOUNTING FOLLOWED BY THE ASSESSEE, FOR DEDUCTI ON QUA THE SUMS SPECIFIED THEREUNDER, WHICH STANDS RENDERED SUPERFLUOUS, WITH SECTION 36( 1)(VA) ALSO PROVIDING THE SAME, I.E., THE CONDITION OF PAYMENT, FOR THE ALLOWABILITY OF D EDUCTION THERE-UNDER, AND WHICH IS RATHER MORE STRINGENT THAN THAT PROVIDED BY SECTION 43B. FURTHER ON, HONBLE GUJARAT HIGH COURT HAS ALSO RECENTLY, I.E., VIDE ITS DECISION IN CIT V. GUJARAT STATE ROAD TRANSPORT CORPORATION [2014] 41 TAXMANN.COM 100 (GUJ) (COPY ON RECORD), RELIED UPON BY THE REVENUE BEFORE US, DEALT WITH THE MATTER IN CONSIDE RABLE DETAIL, STATING THAT THE ISSUE STANDS SQUARELY COVERED BY THE RELEVANT PROVISIONS, SO THAT THE DEDUCTION OF THE EMPLOYEES CONTRIBUTION TO THE RELEVANT FUNDS WOULD STAND TO BE GOVERNED BY THE PROVISIONS OF SECTION 36(1)(VA) R/W S. 2(24)(X), D ISTINGUISHING AND DISAPPROVING THE SEVERAL DECISIONS BY OTHER HIGH COURTS ADVANCED BEF ORE IT. BE THAT AS IT MAY, THE LD. AUTHORIZED REPRESENTATI VE (AR), CITED BEFORE US THE DECISION BY THE HONBLE JURISDICTIONAL HIGH COURT I N CIT V. HINDUSTAN ORGANICS CHEMICALS LTD . (2014) 270 CTR 478 (BOM), PLACING A COPY OF THE S AME ON RECORD, WHEREIN THE HONBLE COURT HAS HELD THE DEDUCTION IN RESPECT OF EMPLOYEES CONTRIBUTION AS VALID WHERE DEPOSITED BY THE ASSESSEE-EMPLOYER BEFO RE THE DUE DATE OF FILING OF ITS RETURN OF INCOME FOR THE RELEVANT YEAR. TRUE, THE ISSUE BE FORE THE HONBLE COURT, AS RAISED BY THE REVENUE, WAS NOT THE APPLICABILITY OR OTHERWISE OF THE PROVISIONS OF S. 36(1)(VA) R/W S. 2(24)(X) TO THE IMPUGNED SUM/S - WHICH IS THE ISSUE UNDER REFERENCE AND, FURTHER, AS DISCERNED BY US. THE HONBLE COURT WAS THUS NOT CAL LED UPON TO ANSWER THE SAME; RATHER, PROCEEDED ON THE BASIS OF THE DEDUCTION QUA THE RELEVANT SUM/S AS BEING COVERED U/S. 43B, SO THAT THE ISSUE WAS OF THE RETROSPECTIVITY OF THE AMENDMENT TO S. 43B BY WAY OF OMISSION OF THE FIRST PROVISO THERETO, BRINGING THE DEDUCTIBILITY OF THE SAID SU MS AT PAR WITH OTHERS COVERED BY THE SAID PROVISION. HOWEVER, AGAIN, IT CANNOT BE DENIED THAT PER THE SAID DECISION, WHICH IS JUDICIALLY BINDING ON U S, THE HONBLE COURT HAS ABUNDANTLY CLARIFIED THAT THE DEDUCTION IN RESPECT OF THE EMPL OYEES CONTRIBUTION (TO THE EMPLOYEE WELFARE FUNDS) IN THE HANDS OF THE ASSESSEE-EMPLOYE R IS GOVERNED BY THE PROVISION OF SECTION 43B, SO THAT WHERE DEPOSITED BY THE DUE DAT E OF THE FILING OF THE RETURN FOR THE 4 ITA NO.5487/MUM/2012 (A.Y. 2008-09) ITO VS. INDORE STEEL & IRON MILLS LTD. RELEVANT YEAR, SHALL BE VALID IN TERMS OF THE AMEND ED S.43B, I.E., BY FINANCE ACT 2003, WITH EFFECT FROM 01.04.2004, WHICH AMENDMENT STANDS HELD BY THE APEX COURT IN ALOM EXTRUSIONS LTD . (SUPRA) TO THE RETROSPECTIVE, SO THAT IT SHALL AP PLY EVEN TO YEARS PRIOR TO A.Y.2004-05. THE HONBLE COURT, WE NOTE, DOES NOT D ISCUSS NOR REFER TO ANY JUDICIAL PRECEDENTS. THE QUESTION OF LAW FRAMED BY THE DEPAR TMENT, AS WELL AS ITS REPRESENTATION BEFORE THE HONBLE COURT, LEAVES MUCH TO BE DESIRED . THAT, HOWEVER, WOULD NOT IN ANY MANNER DETRACT FROM OR DILUTE ITS BINDING NATURE ON US AS A SUBORDINATE FORUM. WE ARE NOT MENTIONING ANY OF THE DECISIONS BY THE OTHER HIGH C OURTS, ALSO RELIED UPON BEFORE US BY THE LD. AR. THE REASON IS SIMPLE. NONE OF THEM, WHI CH ARE NOT BINDING ON US, AS EXPLAINED BY THE HONBLE GUJARAT HIGH COURT, BEFORE WHICH, LI KEWISE, SEVERAL DECISIONS BY OTHER HIGH COURTS WERE CITED IN GUJARAT STATE ROAD TRANSPORT CORPORATION (SUPRA), ADDRESS THE PERTINENT ISSUE, I.E., WHETHER THE IMPUGNED SUMS AR E AT ALL GOVERNED BY S. 43B, BUT PROCEED ON THE BASIS THAT IT DOES, SO THAT THE ISSU E IS REDUCED TO THE YEAR SINCE WHICH THE AMENDED S. 43B IS APPLICABLE, WHICH IS IN ANY CASE APPLICABLE FOR THE CURRENT YEAR. AND, ACCORDINGLY, CONSTITUTES THE PRINCIPAL REASON FOR T HE SAID COURT BEING NOT MOVED BY THE SAID DECISIONS. IN FACT, AS EXPLAINED HEREINBEFORE, EVEN ASSUMING SO WOULD ALSO NOT ASSIST THE ASSESSEES CASE INASMUCH AS S. 43B PROVIDES AN ADDITIONAL CONDITION QUA SUMS OTHERWISE ALLOWABLE, SO THAT THE PROVISION OF S. 36 (1)(VA) R/W S. 2(24)(X) WOULD IN ANY CASE HAVE TO BE COMPLIED WITH OR SATISFIED. UNDER THE CIRCUMSTANCES, NOTWITHSTANDING THE DECISI ONS HOLDING OTHERWISE CITED IN THIS ORDER; THE RATIONALE OF WHICH STANDS ALSO EXPL AINED BY US, OR AT BAR, WE, RESPECTFULLY FOLLOWING THE DECISION BY THE JURISDICTIONAL HIGH C OURT IN HINDUSTAN ORGANICS CHEMICALS (SUPRA), ALLOW THE ASSESEES CLAIM; IT BEING ADMITT ED THAT THE IMPUGNED PAYMENTS WERE MADE WELL BEFORE THE DUE DATE OF THE FILING THE RET URN OF INCOME FOR THE RELEVANT YEAR. FURTHER, THE FACT THAT SOME OF THE IMPUGNED PAYMENT S, ADMITTEDLY MADE AFTER THE DUE DATES UNDER THE RELEVANT STATUTES, ARE OUTSIDE THE GRACE PERIOD ALLOWED BY THE ADMINISTRATIVE OR LEGAL INJUNCTION (FOR THE PURPOSE OF LEVY OF INTEREST, PENALTY, ETC.), EVEN AS STATED BY THE AO IN HIS ORDER, WOULD BE IN THIS VIEW OF THE MATTER OF NO CONSEQUENCE. WE DECIDE ACCORDINGLY. 5 ITA NO.5487/MUM/2012 (A.Y. 2008-09) ITO VS. INDORE STEEL & IRON MILLS LTD. 4. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. $. /+0 ) $ . ) + 12 ORDER PRONOUNCED IN THE OPEN COURT ON DECEMBER 03, 2014 AT THE CONCLUSION OF THE HEARING ITSELF. SD/- SD/- (VIVEK VARMA) (SANJAY ARORA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER * 3 MUMBAI; 4 DATED : 08.12.2014 ../ A.K.PATEL , PS ! ' #$%& ' &$ / COPY OF THE ORDER FORWARDED TO : 1. $'% / THE APPELLANT 2. &''% / THE RESPONDENT 3. * 5+ ( $ ) / THE CIT(A) 4. * 5+ / CIT CONCERNED 5. 89 &+: , $, : / , * 3 / DR, ITAT, MUMBAI 6. 9; < / GUARD FILE ! ( / BY ORDER, )/(* + (DY./ASSTT. REGISTRAR) , * 3 / ITAT, MUMBAI