TRENDS PHARMA P. LTD, MUMBAI V. DCIT 8(3), MUMBAI

ITA 5627/MUM/2009

• Counselvise Citation: [2010] 135 COUNSELVISE.COM (IT) 4701 (ITAT-MUMBAI)
• Duration Of Justice: 11 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2010
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: I
• Next Hearing Date: 28-09-2010
• Assessment Year: 2006-2007
• Appeal Filed On: 16-10-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAGDISH
• Assessee Lawyers: B V JHAVERI
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH: MUMBAI BEFORE SHRI A.L. GEHLOT, ACCOUNTANT MEMBER AND SHRI R. S. PADVEKAR, JUDICIAL MEMBER ITA NO.5627/MUM/2009 (ASSESSMENT YEAR: 2006-07) M/S. TRENDS PHARMA PVT. LTD., 6TH FLOOR, MATHARU ARCADE, SUBHAS ROAD, VILE PARLE (E), MUMBAI -400 057 . ASSESSEE VS DCIT 8(3), AYAKAR BHAVAN, NEW MARINE LINES, MUMBAI 400 020 REVENUE PAN: AABCT 1861 A ASSESSEE BY: SHRI B.V. JHAVERI REVENUE BY: SHRI JAGDISH O R D E R PER R. S. PADVEKAR, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENG ING THE IMPUGNED ORDER OF THE LD. CIT (A)-XXIX MUMBAI DATED 04.8.2009 FOR THE A.Y. 2006-07. THE ASSESSEE HAS TAKEN THE FOLLOWING EFFECTIVE GROUNDS:- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW, THE LEARNED CIT (APPEALS) ERRED IN TREATING A SUM O F ` .10,09,779 AS INCOME U/S.2(24)(X) R/W SECTION 36(1) (VA) OF THE I.T. ACT BEING PROVIDENT FUND CONTRIBUTION RECEIVED FROM THE EMPLOYEES. ITA 5627/M/2009 M/S. TRENDS PHARMA PVT. LTD. 2 2. THE LEARNED CIT (APPEALS) FAILED TO APPRECIATE T HAT EMPLOYEES CONTRIBUTION OF ` 10,09,779/- RECEIVED DURING THE YEAR COULD NOT BE DEPOSITED WITH THE P.F. AUTHORITIES AS P.F. CODE NUMBER WAS NOT ALLOTTED AND FURTHER THE SAME WAS DEPOSITED WITH THE P.F. AUTHORITIES IMMEDIATELY AFTER ALLOTMENT FOR P. F. CODE NUMBER. 2. THE FACTS WHICH REVEAL FROM THE RECORD ARE AS UN DER. THE ASSESSEE IS ENGAGED IN THE MANUFACTURING OF PHARMACEUTICALS, BULK DRUGS & VENETARY PRODUCTS. THE RETURN FILED BY THE ASSESSE E WAS SELECTED FOR SCRUTINY AND ASSESSMENT WAS COMPLETED U/S.143(3) OF THE ACT. IT WAS NOTICED BY THE A.O. THAT THE EMPLOYEES CONTRIBUTION TO THE P.F. TO THE EXTENT OF ` 11,34,939/- WAS NOT PAID AS PER THE PROVISIONS OF EMPLOYEES P.F. ACT. I) PAID BEYOND THE DUE DATE - ` 1,16,722/- II) PAID BEYOND THE FINANCIAL YEAR - ` 10,09,779/- III) NOT PAID - ` 8,04,038/- SO FAR AS THE CONTROVERSY BEFORE US IS IN RESPECT O F PAID BEYOND THE FINANCIAL YEAR AMOUNTING TO ` 10,09,779/-. 3. WE HAVE HEARD THE PARTIES. THE LD. COUNSEL ARGU ED THAT THE ASSESSEE HAS APPLIED FOR GETTING A SEPARATE CODE NU MBER FOR ITS UNIT IN MUMBAI TO THE PROVIDENT FUND COMMISSIONER. THE APP LICATION WAS MADE ON 3RD MAY 2005, BUT THE SEPARATE CODE WAS ALL OTTED BY THE REGIONAL PROVIDENT FUND COMMISSIONER VIDE LETTER NO.MH/48104/PF/ENF.IVM/688 DATED 31.3.2006. ACTUAL LY, THE ASSESSEE RECEIVED THE SAID LETTER IN THE MONTH OF A PRIL, 2006. IT IS PLEADED THAT, AFTER RECEIVING THE SEPARATE CODE NUM BER, THE ASSESSEE IMMEDIATELY DEPOSITED THE SAID AMOUNT ON 2.5.2006. THE LD. COUNSEL RELIED ON THE FOLLOWING DECISIONS: I. CIT VS AIMIL LTD (DELHI) 188 TAXMAN 265 (DEL. H. C.) ITA 5627/M/2009 M/S. TRENDS PHARMA PVT. LTD. 3 II. M/S. PIK PEN PVT LTD VS. ITO IN ITA NO.6847/MUM /2008 DATED 28.1.2010. HE, THEREFORE, PLEADED THAT THE AMOUNT OTHERWISE WA S ALSO PAID BY THE ASSESSEE BEFORE THE DUE DATE OF FILING OF THE RETUR N AND HENCE THE SAME IS ALLOWABLE. WE HAVE ALSO HEARD THE LD. D.R. 4. IN THE CASE OF AIMIL LTD (SUPRA) THE HONBLE H IGH COURT HAS HELD AS UNDER:- 17. WE MAY ONLY ADD THAT IF THE EMPLOYEES CON TRIBUTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELE VANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR WHICH SPE CIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE E SI ACT. THEREFORE, THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS THE INCOME-TAX ACT IS CONCERNED, THE ASSESSEE CAN GET T HE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED, AS PER THE PRINCIPLE LAID DOWN BY THE SUPREME COURT IN VINAY C EMENT LTD.S CASE (SUPRA). 5. IN THE CASE OF M/S. PIK PEN PRIVATE LIMITED (SUP RA) THE TRIBUNAL HAS HELD AS UNDER:- 10. THE NEXT ISSUE IS DISALLOWANCE OF EMPLOYEES CON TRIBUTION TO PF AND ESIC OF ` 43,721/-. THE SHORT CONTROVERSY BEFORE US IS IN RESPECT OF THE PAYMENT OF THE EMPLOYEES CONTRIBUTIO N TO P.F./E.S.I.C BEYOND THE GRACE PERIOD WHICH WAS RELATING TO THE M ONTH OF FEBRUARY. THE LD. COUNSEL RELIED ON THE DECISION O F THE HONBLE SUPREME COURT IN THE CASE OF CIT V/S. ALOM EXTRUSI ON LTD., 319 ITR 306. THE A.O. MADE THE DISALLOWANCE U/S. 36(1)(VA ) AS HE WAS OF THE OPINION THAT THE EMPLOYEES CONTRIBUTION TO PF/E SIC EVEN IF MADE BEFORE FILING OF THE RETURN OF INCOME IS NOT COVERED U/S. 43B OF ITA 5627/M/2009 M/S. TRENDS PHARMA PVT. LTD. 4 THE I.T. ACT. IN THE CASE OF ALOM EXTRUSION LTD.(S UPRA), THE ISSUE BEFORE THEIR LORDSHIP WAS WHETHER THE OMISSION OF SECOND PROVISO TO SECTION 43B OF THE I.T. ACT 1961 BY THE FINANCE ACT 2003 OPERATED W.E.F. 1.2.2004 OR WHETHER IT OPERATED RETROSPECTIV ELY W.E.F. 1.4.1988. IN THE SAID CASE ALSO, THE ISSUE WAS CON CERNING THE CONTRIBUTION PAYABLE BY THE EMPLOYER TO THE P.F/SUP ERANNUATION FUND OR ANY OTHER FUND OF WELFARE OF THE EMPLOYEES. IN OUR OPINION, NOW THE ISSUE STANDS COVERED IN FAVOUR OF THE ASSES SEE BY THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF AL OM EXTRUSION LTD. (SUPRA). WE, THEREFORE, ALLOW THE GROUND TAKEN BY THE ASSESSEE AND DELETE THE ADDITION. 6. IN THE PRESENT CASE, THE ASSESSEE HAS DEPOSITED THE AMOUNT BEFORE THE DUE DATE OF FILING OF THE RETURN, WE, THEREFORE , HOLD THAT THE AMOUNT DEPOSITED BEFORE DUE DATE OF FILING OF THE RETURN C ANNOT BE DISALLOWED U/S.43B NOR IT CAN BE ADDED AS INCOME. WE, THEREFO RE, REMAND THIS ISSUE TO THE FILE OF THE A.O. FOR THE LIMITED PURPO SE OF VERIFYING WHETHER THE PAYMENT IS DEPOSITED BY THE ASSESSEE BEFORE DUE DATE OF FILING OF THE RETURN. 7. IN THE RESULT, THE APPEAL IS ALLOWED IN THE ABOV E TERMS. ORDER PRONOUNCED IN THE OPEN COURT ON 28TH DAY OF S EPTEMBER, 2010. SD/- SD/- (A.L. GEHLOT) ACCOUNTANT MEMBER (R. S. PADVEKAR) JUDICIAL MEMBER MUMBAI, DATE: 28TH SEPTEMBER 2010 ITA 5627/M/2009 M/S. TRENDS PHARMA PVT. LTD. 5 COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) XXIX, MUMBAI. 4) THE CIT -8, MUMBAI. 5) THE D.R. I BENCH, ITAT, MUMBAI. BY ORDER / / TRUE COPY / / ASSTT. REGISTRAR *CHAVAN I.T.A.T., MUMBAI ITA 5627/M/2009 M/S. TRENDS PHARMA PVT. LTD. 6 SR.N. EPISODE OF AN ORDER DATE INITIALS CONCERNED 1 DRAFT DICTATED ON 28.09.2010 SR.PS 2 DRAFT PLACED BEFORE AUTHOR 28.09.2010 SR.PS 3 DRAFT PROPOSED & PLACED BEFORE THE SECOND MEMBER JM/AM 4 DRAFT DISCUSSED/APPROVED BY SECOND MEMBER JM/AM 5 APPROVED DRAFT COMES TO THE SR.PS SR.PS 6 KEPT FOR PRONOUNCEMENT ON SR.PS 7 FILE SENT TO THE BENCH CLERK SR.PS 8 DATE ON WHICH FILE GOES TO THE HEAD CLERK 9 DATE OF DISPATCH OF ORDER