M/S CENTRAL COALFIELDS LTD.., RANCHI V. PRINCIPLE COMMISSIONER OF INCOME TAX, , RANCHI

ITA 57/RAN/2021

• Counselvise Citation: [2022] 104 COUNSELVISE.COM (IT) 1316 (ITAT-RANCHI)
• Duration Of Justice: 11 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-10-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 22-09-2022
• Assessment Year: 2015-2016
• Appeal Filed On: 28-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment; Set aside
• Section: 147; 263; 43B; 143(3); 139(1)

Judgement Text

ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 1 IN THE INCOME TAX APPELLATE TRIBUNAL, ‘RANCHI’ BENCH, KOLKATA [VIRTUAL COURT HEARING AT KOLKATA] Before Shri Rajpal Yadav, Vice-President (KZ) & Dr. Manish Borad, Accountant Member I.T.A. No. 57/RAN/2021 Assessment Year: 2015-2016 M/s. Central Coalfields Limited,.................................................Appellant Darbhanga House, Office of GM Finance, Opp. Governor House, Ranchi-834001, Jharkhand [PAN;AAACC7476R] -Vs.- Principal Commissioner of Income Tax,...................................Respondent Office of the Pr. Commissioner of Income Tax, Central Revenue Building, Main Road, Ranchi-834001, Jharkhand Appearances by: Shri M.K. Choudhury, Advocate, appeared on behalf of the assessee Shri Sanjay Mukherjee, CIT, D.R.,, appeared on behalf of the Revenue Date of concluding the hearing : September 23, 2022 Date of pronouncing the order: October 10 th , 2022 O R D E R Per Dr. Manish Borad, Accountant Member- The assessee is in appeal before the Tribunal against the order of ld. Principal Commissioner of Income Tax, Ranchi dated 24.03.2020 passed under section 263 of the Income Tax Act in assessment year 2015- 16. 2. The assessee has raised six grounds of appeal. However, the solitary grievance of the assessee is that the ld. Pr. CIT has erred in taking cognizance under section 263 of the Income Tax Act and setting ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 2 aside the assessment order passed under section 147 read with section 143(3) of the Income Tax Act. 3. The ld. Counsel for the assessee, at the very outset, submitted that basic grievance of the ld. Commissioner in taking cognizance under section 263 is that the ld. Assessing Officer failed to disallow an amount of Rs.8.51 crore, which represents employees contribution towards ESI and PF. According to the ld. Commissioner, this amount was to be added back with the aid of section 36(1)(va) read with section 43B of the Income Tax Act because it was not paid before the due date provided under PF & ESI Acts. He further contended that the issue in dispute is squarely covered in favour of the assessee by a large number of decisions including the decision of Hon’ble Jurisdictional High Court in the case of Southern Construction Company –vs.- ITO (Tax Appeal No. 56 of 2010) decided on 10 th August, 2016. The Hon’ble Jurisdictional High Court has propounded that if payments of these contributions are being made before the due date of filing of the return, then no disallowance is to be made. He drew our attention to page no. 5 of the impugned order, where details of payments are available. 4. On the other hand, ld. Departmental Representative relied upon the order of ld. Commissioner. 5. The assessee has filed an application for out of turn hearing. Since it is an appeal against the order of ld. CIT passed under section 263, therefore, it is to be heard out of turn as directed by the Hon’ble President, ITAT on administrative side vide his order dated 14 th June, 2016. Hon’ble President, ITAT has laid down that such appeals be heard out of turn. Considering the smallness of the issue that being covered in favour of the assessee, we deem it appropriate to hear it today itself on merit. ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 3 6. Before adverting to the issue on merit, we find that Registry has raised an objection that appeal is time barred. However, it is to be noted that the impugned order was passed on 24.03.2020. The appeal presented before the Tribunal on 29.10.2021, but both the periods are COVID period. Hence provisions of delay are not applicable in view of the judgment of the Hon’ble Supreme Court dated 23 rd September, 2021 in Miscellaneous Application No. 665 of 2021 in SMW(C) No. 3 of 2020. Therefore, practically there is no delay in filing the appeal. 7. As far as merits of the issues are concerned, we find that assessee has made the following payments out of Employee’s Contribution towards ESI and PF:- Sl. No. Amount Remarks A 5,78,42,493/- The amount deposited either on 29.04.2015 or 30.04.2015 B 2,72,85,303/- The amount claimed as deposited out date of deposit is not mentioned Total 8,51,27,796/- Refer Annexure-1 for detail (as enclosed) 8. These payments were made after the limitation provided in ESI and PF but before the due date of filing of the return. We take note of the finding of ITAT, Kolkata dated 2 nd August, 2022 in ITA Nos. 67 & 68/RAN/2021 in the case of Pankaj Agarwal, which reads as under:- “Per Rajpal Yadav, Vice-President (KZ):- CA Akshay Ringasia, ld. Authorised Representative of the assessee has filed an application dated 16 th June, 2022 for grant of out of turn hearing. The ld. A.R. for the assessee submitted that the only issue involved in the appeals relates to confirmation of additions of Rs.8,23,764/- (for Assessment Year 2018-19) and Rs.3,87,239/- (for Assessment Year 2019-20), which were added by the ld. Assessing Officer with the aid of section 36(1)(va) read with section 2(24)(x) on the ground that employees’ contributions towards PF & ESI were not deposited by the assessee within the due date provided under these two Acts. Ld. A.R. for the assessee submitted that these payments have ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 4 been made before the due date of filing of the return and, therefore, the issue is covered by the decision of the Hon’ble Jurisdictional High Court in the case of (i) CIT –vs.- Vijayshree Ltd. in ITAT No. 243 of 2011 & GA No. 26607 of 2011;(ii) CIT – vs.- Philips Carbon Black Ltd. in GA No. 1382 of 2014 & ITAT 31 of 2014; (iii) CIT –vs.- M/s. Coal India Ltd. in ITA 12 of 2015 and (iv) M/s. Akzo Nobel India Ltd. –vs.- CIT in ITA No. 110 of 2011. This aspect has been considered by the Coordinate Bench in the case of Lumino Industries Ltd. –vs.- ACIT (ITA No. 231 & 365/KOL/2021). 2. On the other hand, ld. Sr. D.R. contended that since it is only an early hearing application, he is not possessing the files. But after considering the smallness of the issue involved in the appeals, more so, being covered by the Hon’ble Jurisdictional High Court, we allow this prayer of the assessee for grant of out of turn hearing and take up the appeals for hearing today itself i.e. 2 nd August, 2022. 3. We proceed to decide the appeals on merit also. We have recently decided a large number of appeals on this issue. Recently we have considered this aspect in ITA Nos. 531 & 532/KOL/2021, wherein we took note of the earlier order of ITAT, Kolkata dated 09.03.2022 whereby the Tribunal considered the impact of amendment brought into section 36(1) as well as 43B by Finance Act, 2021. The discussion made in that order read as under: “3. On due consideration of the above facts and circumstances, we find that ITAT, Kolkata has duly examined the amendment brought in by virtue of Finance Act, 2021. On the proposition and the discussion made by the ITAT in the case of Lumino Industries Limited & Others read as under:- “17. Have heard both the parties. We note that the Finance Bill, 2021 has brought in an amendment which disallows the employees’ contribution made in PF and ESI if not made within the due date as prescribed by the respective statutes (PF and ESI Act). So after the amendment has been inserted according to Shri Miraj D Shah takes effect from 1 st April, 2021 i.e AY 2021-22 and subsequent assessment year and if the remittance of PF/ESI Employees’ Contribution is not made within the time prescribed by the PF/ESI Act then the remittance cannot be allowed as a deduction which is prospective in operation. Whereas according to Ld. CIT(A), the amendment brought in is clarificatory in nature so, retrospective in operation. So we have to adjudicate this issue whether the amendment brought in by Finance Act, 2021 is prospective or retrospective in operation. We note that before this amendment has been inserted by Finance Bill, 2021, the ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 5 Hon’ble Jurisdictional Calcutta High Court in the case of Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra) has held that the payment of employees’ contribution if made by an assessee before the due date of filing of return of income u/s 139(1) of the Act, is allowable as a deduction. We note that by Finance Act, 2021, the provision of Section 36(1 )(va) as well as Section 43B has been amended to this extend by inserting the Explanation 2 whereby it is clarified that the provision of Section 43B shall not apply and shall be deemed never to have been applied for the purpose ofdetermining the due date under this clause. For ready reference, we reproduce the Explanation-2 to Section 36(1 )(va) as under: “Section 36(1 )(va) Explanation-2 - For the removal of doubts, it is hereby clarified that the provisions of Section 43B shall not apply and shall be deemed never to have been applied for the purpose of determining the ‘due date’ under this clause’ 18. We find that this amendment has been brought in the Act to provide certainty about the applicability of Section 43B in respect of belated payment of employees’ contribution. In order to test whether the amendment brought in later is retrospective or not one has to apply the test as laid by the Hon’ble Supreme Court in the case of M/s Snowtex Investment Ltd. (supra) wherein the Hon’ble Supreme court took note of the law laid down on this issue by the Constitution Bench in M/s Vatika Township Ltd. and held that the intent of the Parliament/legislature need to be looked into for ascertaining whether the amendment should be retrospective or not. In Vatika Township Ltd. (supra) the Hon’ble Supreme Court held that the notes on clauses appended to the Finance Bill will throw light as to the legislative intent; because it has to be borne in mind that Parliament/legislature is aware of three concepts before an amendment is brought in, which can be discerned from reading of the “Notes on Clauses” to the Bill which are (i) prospective amendment with effect from a fixed date; (ii) retrospective amendment with effect from a fixed anterior date; and (iii) clarificatory amendments which are retrospective in nature. So when we adjudicate whether the view of Ld CIT(A) that the explanation 2 brought in by Finance Act, 2021 is retrospective, let us look at the “Notes on Clauses and the relevant clauses 8 & 9 of the Finance Bill, 2021 (supra) pertaining to the issue in hand which in clear and unambiguous terms spells out the intention of Parliament that the amendment shall take effect from 1 st April, 2021 and therefore will accordingly apply to Assessment Year 2021-22 and subsequent years. So since the legislative intent is clear, the amendment brought in by Finance Act, 2021 on this issue as discussed is prospective ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 6 and Ld. CIT(A) erred in holding otherwise. So till AY 2021- 22, the Jurisdictional High Court’s view in favor of assessee will hold good and is binding on us. As discussed the decision of the Hon’ble Delhi High Court in Bharat Hotels Ltd. (supra) which was in favor of revenue has not considered the decision of the Co-ordinate Division Bench decision in M/s Aimil Ltd.(supra) which is in favour of assessee. So we note that later decision of the Delhi/Hyderabad Tribunal have followed the decision favouring assessee in the light of the Hon’ble Supreme Court decision in M/s Vegetable Products (supra). In the light of the aforesaid decision and relying on the ratio of the Hon’ble Supreme Court in the case of Vatika Township Pvt. Ltd. (supra) and M/s Snowtex Investment Ltd. (supra) and also taking note of the binding decision of the Hon’ble Jurisdictional Calcutta High Court on this issue before us in Shri Vijayshree Ltd. Ltd.(supra), M/s Philips Carbon Black Ltd.(supra), M/s Coal India Ltd.(supra), M/s Akzo Nobel India Ltd. (supra), we set aside the impugned order of Ld CIT(A) and direct the AO to allow the claim of deduction in respect of employees contribution shares towards ESI, PF, by the assessee before the due date of filing of return u/s 139(1) of the Act. Therefore the appeal of assessee succeeds and so, it is allowed in favor of assessee”. 4. A perusal of the above would reveal that the ITAT, Kolkata has specifically propounded that if employees’ contribution received by an assessee and paid to ESI and PF accounts before the due date of filing of the return, then the assessee will be eligible to claim the deduction of such amounts. With the assistance of ld. representatives, we have specifically gone through the record and find that payments have been made within the due dates of filing of the return. With the above observation, these appeals of the assessee are treated as allowed. The disallowances stand deleted in both the appeals”. 4. Respectfully following the order of the Coordinate Bench, we allow both the appeals of the assessee and delete the disallowances. 5. In the result, both the appeals of the assessee are allowed. Order pronounced in the open Court on August 02, 2022. Sd/- Sd/- (Girish Agrawal) (Rajpal Yadav) Accountant Member Vice-President (KZ) Kolkata, the 2 nd day of August, 2022” 9. Respectfully following the above decision of this Tribunal, we find that since on merits, the assessee will succeed before the ld. Assessing ITA No. 57/RAN/2021 Assessment Year : 2015-2016 M/s. Central Coalfields Limited 7 Officer, there will be no prejudice to the Revenue and, therefore, the assessment order dated 19.03.2018 is not held to be prejudice to the interest of revenue and do not call for any revisionary proceeding for the issues raised in the show-cause notice under section 263 of the Act. We, therefore, quash the impugned order under section 263 of the Act and restore the assessment order under section 147 read with section 143(3) of the Act dated 19.03.2018 and allow the grounds raised by the assessee. 10. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on October 10 th , 2022. Sd/- Sd/- (Rajpal Yadav) (Manish Borad) Vice-President (KZ) Accountant Member Kolkata, the 10 th day of October, 2022 Copies to : (1) M/s. Central Coalfields Limited, Darbhanga House, Office of GM Finance, Opp. Governor House, Ranchi-834001, Jharkhand (2) Principal Commissioner of Income Tax, Office of the Pr. Commissioner of Income Tax, Central Revenue Building, Main Road, Ranchi-834001, Jharkhand (3) CIT--------, Ranchi (4) The Departmental Representative (5) Guard File TRUE COPY By order Assistant Registrar, Income Tax Appellate Tribunal, Kolkata Benches, Kolkata Laha/Sr. P.S.