ACIT 10(1), MUMBAI V. HERMAN FINOCHEM LTD, MUMBAI

ITA 5795/MUM/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 55428 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 2 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-09-2011
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: H
• Assessment Year: 2007-2008
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: GOLI SRINIVAS RAO
• Section: 43B; 143(3); 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH H, MUMBAI BEFORE SHRI R.S. SYAL, A.M. AND SHRI V. DURGA RAO, J.M. ITA NO. 5795/MUM/2010 ASSESSMENT YEAR : 2007-08 THE ASSTT. COMMISSIONER OF INCOME-TAX, APP ELLANT RANGE 10(1), ROOM NO. 455, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020. VS. M/S HERMAN FINOCHEM LTD., RESPONDENT 107-A, VINAYA BHAVYA COMPLEX, 199-A, CST ROAD, KALINA, SANTACRUZ (EAST), MUMBAI 400 059 (PAN AABCH3223J) APPELLANT BY : MR. GOLI SRINIVAS RAO RESPONDENT BY : MR. MADHUR AGARWAL DATE OF HEARING : 15/09/2011 DATE OF PRONOUNCEMENT : 23/09 /2011 ORDER PER V. DURGA RAO, J.M.: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAI NST THE ORDER OF CIT(A)- 21, MUMBAI, PASSED ON 06/05/2010 FOR THE AS SESSMENT YEAR 2007-08 WHEREIN THE REVENUE HAS RAISED THE FOLLOWIN G GROUND OF APPEAL:- ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE A ND IN LAW, THE LEARNED CIT(A) ERRED IN DELETING THE DISALLOWAN CES OF EMPLOYEES CONTRIBUTION TO PF AMOUNTING TO RS. 6,61, 614/- WITHOUT APPRECIATING THAT EXPLANATION TO SECTION 36(1)(VA) SPEAKS OF DUE DATE AND NOT THE GRACE PERIOD. 2. BRIEFLY STATED THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A LIMITED COMPANY ENGAGED IN MANUFACTURING OF BULK DR UGS. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE COMPANY HAD F ILED ITS RETURN OF INCOME DECLARING TOTAL INCOME AT RS. 15,95,90,833/- , WHICH WAS ITA NO.5795 /MUM/2010 M/S HERMAN FINOCHEM LTD. 2 PROCESSED U/S 143(3) OF THE ACT, DETERMINING THE TO TAL INCOME AT RS. 16,04,40,577/- BY THE AO, DISALLOWING THE EMPLOYEES CONTRIBUTION OF PF BY INVOKING THE PROVISIONS OF SECTION 43B & SECT ION 36(1)(VA) R.W.S.2(24)(X) OF THE ACT, BY NOT ACCEPTING THE ASS ESSEES ARGUMENT THAT THE PAYMENT MADE IN THE GOVERNMENT ACCOUNT OF EMPLOYEES CONTRIBUTION OF PF WITHIN THE GRACE PERIOD SHOULD B E CONSIDERED AS PAYMENT MADE WITHIN DUE DATE PRESCRIBED IN THE PF A CT. ON APPEAL, THE CIT(A) DELETED THE DISALLOWANCE BY OBSERVING AS UNDER:- 2.2 I HAVE CONSIDERED THE FACTS OF THE CASE. IN THE CASE UNDER CONSIDERATION, THOUGH THE EMPLOYEES CONTRIBUTION WA S PAID AFTER THE DUE DATE BUT WITHIN GRACE PERIOD ALLOWED UNDER THE PF ACT. VARIOUS COURTS/ITAT INCLUDING THE JURISDICTIONAL IT AT, MUMBAI ARE TAKING A CONSISTENT VIEW THAT THE EMPLOYEES CON TRIBUTION PAID WITHIN GRACE PERIOD SHOULD BE CONSIDERED AS PAYMENT WITHIN THE DUE DATE PRESCRIBED IN THE PF ACT AND NOT LIABLE FO R DISALLOWANCE U;/S 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT. FOLLOWIN G THE DECISIONS OF COURTS AND JURISDICTIONAL ITAT ON THIS ISSUE, THE D ISALLOWANCE MADE BY THE AO, IS DELETED. 3. THE LEARNED COUNSEL FOR THE ASSESSEE HAS CANVASS ED THAT THE ISSUE IS COVERED BY THE DECISION OF THE KERALA HIGH COURT IN THE CASE OF CIT VS. POPULAR VEHICLES AND SERVICES LTD., [201 0] 325 ITR 523 (KER). ON THE OTHER HAND, THE LEARNED DR HAS NOT CO NTROVERTED TO THE SUBMISSION OF THE LEARNED COUNSEL FOR THE ASSESSEE. 4. WE HAVE HEARD THE LEARNED REPRESENTATIVES OF THE PARTIES, PERUSED THE RECORD AND GONE THROUGH THE ORDERS OF T HE AUTHORITIES BELOW AS WELL AS GONE THROUGH THE DECISION CITED. T HE HONBLE KERALA HIGH COURT IN THE CASE OF POPULAR VEHICLES AND SERV ICES LTD. (SUPRA) HELD THAT THE GRATUITY FUND WAS MAINTAINED FOR THE BENEFIT OF THE EMPLOYEES AND THE PAYMENT OF THE PREMIUM WAS TO THE FUND OPERATED BY THE LIC. THEREFORE, SECTION 43B(B) WAS ATTRACTED TO THE PAYMENT INVOLVED. THE DEDUCTION SHOULD BE ALLOWED IF REMITT ANCE WAS MADE AT LEAST BEFORE THE DATE OF FILING THE RETURN, EVEN TH OUGH SUCH PAYMENT WAS NOT MADE BEFORE THE END OF THE PREVIOUS YEAR. IN VIEW OF THE SAID DECISION OF THE HONBLE KERALA HIGH COURT AND VARIO US COURTS/ITAT ARE ALSO TAKING A CONSISTENT VIEW THAT THE EMPLOYEES C ONTRIBUTION PAID ITA NO.5795 /MUM/2010 M/S HERMAN FINOCHEM LTD. 3 WITHIN GRACE PERIOD SHOULD BE CONSIDERED AS PAYMENT WITHIN THE DUE DATE PRESCRIBED IN THE PF ACT AND NOT LIABLE FOR DI SALLOWANCE U;/S 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT, WE FIND NO IN FIRMITY IN THE ORDER OF THE CIT(A) IN DELETING THE DISALLOWANCE OF RS. . 6,61,614/- MADE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION OF PF. ACCORDINGLY, WE CONFIRM THE ORDER OF THE CIT(A) AND DISMISS THE GRO UND RAISED BY THE REVENUE IN THIS REGARD. 5. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSE D. PRONOUNCED IN THE OPEN COURT ON THIS 23 RD DAY OF SEPTEMBER, 2011. SD/- SD/- (R.S. SYAL) ( V. DURGA RAO) ACCOUNTANT MEMBER JUDI CIAL MEMBER MUMBAI, DATED: 23 RD SEPTEMBER, 2011 KV COPY TO:- 1) THE APPELLANT. 2) THE RESPONDENT. 3) THE CIT (A) CONCERNED. 4) THE CIT CONCERNED. 5) THE DEPARTMENTAL REPRESENTATIVE, H BENCH, I.T .A.T., MUMBAI. BY ORDER //TRUE COPY// ASST. REGISTRAR, I.T.A.T., MUMBAI.