The ACIT, Visakhapatnam V. Hindustan Shipyard Ltd, Visakhapatnam

ITA 59/VIZ/2016

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 6600 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 10 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-01-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2006-2007
• Appeal Filed On: 15-02-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: G GURUSWAMY
• Assessee Lawyers: A ARUNA ARS
• Section: 43B; 143(3); 147

Judgement Text

ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 1 , , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . , $ BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI G. MANJUNATHA, ACCOUNTANT MEMBER ./I.T.A.NO.59/VIZAG/2016 ( / ASSESSMENT YEAR: 2006-07) ACIT, CIRCLE - 3(1), VISAKHAPATNAM VS. HINDUSTAN SHIPYARD LTD., VISAKHAPATNAM [PAN: AAACH4275P ] ( % / APPELLANT) ( &'% / RESPONDENT) / APPELLANT BY : SHRI G. GURUSWAMY, DR / RESPONDENT BY : SHRI G.V.N . HARI, & SMT. A. ARUNA, ARS / DATE OF HEARING : 04.01.2017 / DATE OF PRONOUNCEMENT : 06.01.2017 / O R D E R PER G. MANJUNATHA, ACCOUNTANT MEMBER: THIS APPEAL FILED BY THE REVENUE IS DIRECTED AGAIN ST ORDER OF THE CIT(A), VISAKHAPATNAM DATED 15.12.2015 AND IT PERTA INS TO THE ASSESSMENT YEAR 2006-07. ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 2 2. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSE E, A PUBLIC SECTOR UNDERTAKING ENGAGED IN THE BUSINESS OF CONTRACT WOR KS FOR BUILDING SHIPS AND OFFSHORE PLATFORMS, FILED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR 2006-07 ON 25.11.2016 DECLARING NIL INCOME AFT ER SETTING OFF OF BROUGHT FORWARD BUSINESS LOSSES OF EARLIER YEARS. THE CASE WAS SELECTED FOR SCRUTINY AND THE ASSESSMENT WAS COMPLETED U/S 1 43(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER CALLED AS 'THE AC T') ON 31.10.2008. THEREAFTER, THE ASSESSMENT WAS RE-OPENED FOR THE RE ASON THAT THE INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMEN T WITHIN THE MEANING OF SECTION 147 OF THE ACT AND THE ASSESSMEN T WAS COMPLETED U/S 143(3) R.W.S. 147 OF THE ACT ON 28.10.2011 DETE RMINING TOTAL INCOME AT ` 9,52,61,173/-. SUBSEQUENTLY, ONCE AGAIN THE ASSES SMENT WAS RE- OPENED U/S 147 OF THE ACT, FOR THE REASON THAT THE ASSESSEE HAS BELATEDLY REMITTED EMPLOYEES CONTRIBUTION TO PROVI DENT FUND OF ` 4,01,48,903/-, WHICH PARTAKES THE NATURE OF INCOME AS PER THE PROVISIONS OF SECTION 2(24)(X) R.W.S. 36(1)(VA) OF THE ACT, IF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND IS REMITTED AFTER TH E DUE DATE REFERRED TO IN THE RESPECTIVE PROVISIONS OF THE ACT, AND ACCORD INGLY, THE INCOME CHARGEABLE TO TAX HAD BEEN ESCAPED ASSESSMENT WITHI N THE MEANING OF SECTION 147 OF THE ACT. THE A.O. HAS COMPLETED ASS ESSMENT U/S 143(3) ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 3 R.W.S. 147 OF THE ACT, BY DISALLOWING EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND OF ` 4,01,48,903/-. 3. AGGRIEVED BY THE ASSESSMENT ORDER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). BEFORE THE CIT(A), THE A SSESSEE SUBMITTED THAT THE SECOND PROVISO TO SECTION 43B OF THE ACT, WHICH PROVIDES THAT NO DEDUCTION SHALL BE ALLOWED UNLESS SUCH SUM HAS ACTU ALLY BEEN PAID ON OR BEFORE DUE DATE AS DEFINED IN EXPLANATION 36(1)(VA) OF THE ACT WAS OMITTED AND THE FIRST PROVISO WAS AMENDED BY THE FI NANCE ACT, 2003 W.E.F. 1.4.2004 AND ACCORDINGLY, AS PER THE AMENDED PROVISION OF SECTION 43B OF THE ACT, ANY SUM PAYABLE BY THE ASSESSEE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO PROVIDENT FUND SHALL BE ALLOWED, IF IT IS PAID ON OR BEFORE DUE DATE OF FILING RETURN OF INCOME. IN SUP PORT OF HIS ARGUMENTS, RELIED UPON PLETHORA OF JUDGEMENTS INCLUDING THE DE CISION OF HONBLE SUPREME COURT OF INDIA, IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. 319 ITR 306 (SC). THE CIT(A) AFTER CONSIDERING THE EXP LANATIONS FURNISHED BY THE ASSESSEE AND ALSO RELIED UPON THE DECISION O F HONBLE SUPREME COURT, IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (SUPRA) AND HONBLE HIGH COURT OF KARNATAKA, IN THE CASE OF ESSAE TERAO KA PVT. LTD. VS. DCIT 43 TAXMAN 33, HELD THAT THE ASSESSEE WOULD BE ENTIT LED FOR DEDUCTION OF THE EMPLOYEES CONTRIBUTION OF PROVIDENT FUND MADE BEFORE THE DUE DATE ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 4 OF FILING OF THE RETURN OF INCOME U/S 139(1) OF THE ACT. AGGRIEVED BY THE CIT(A) ORDER, THE REVENUE IS IN APPEAL BEFORE US. 4. THE LD. D.R. SUBMITTED THAT THE LD. CIT(A) ERRED IN DELETING THE ADDITION MADE BY THE A.O. TOWARDS BELATED REMITTANC ES OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND U/S 36(1)(VA) R.W.S. 2(24)(X) OF THE ACT, AS ANY AMOUNT OF EMPLOYEES CONTRIBUTION TO PROVIDE NT FUND IS REMITTED BEYOND THE DUE DATE SPECIFIED UNDER THE RESPECTIVE ACT, PARTAKES THE NATURE OF INCOME WITHIN THE MEANING OF SECTION 2(24 )(X) OF THE ACT AND ACCORDINGLY, NOT ALLOWABLE AS DEDUCTION U/S 36(1)(V A) OF THE ACT. THE D.R. FURTHER SUBMITTED THAT THE CIT(A) OUGHT TO HAV E CONSIDERED THE PROVISIONS OF SECTION 43B OF THE ACT AND ALSO CBDT CIRCULAR NO.22/2015 DATED 17.12.2015, WHEREIN IT WAS CATEGORICALLY STAT ED THAT EMPLOYEES CONTRIBUTION TO PROVIDENT FUND NOT REMITTED WITHIN THE DUE DATE SPECIFIED UNDER THE PROVIDENT FUND ACT, CANNOT BE ALLOWED U/S 36(1)(VA) OF THE ACT WHILE COMPUTING INCOME FROM BUSINESS OR PROFESS ION. 5. ON THE OTHER HAND, THE LD. A.R. FOR THE ASSESSEE STRONGLY SUPPORTING THE ORDER OF THE CIT(A), SUBMITTED THAT THE ISSUE IS SQUARELY COVERED BY THE DECISION OF ITAT, VISAKHAPATNAM IN T HE CASE OF M/S. EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. VS. DCIT IN ITA NO.609/VIZAG/2014 DATED 29.7.2016. THEREFORE, REQU ESTED TO DELETE ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 5 ADDITIONS MADE BY THE A.O. TOWARDS EMPLOYEES CONTR IBUTION TO PROVIDENT FUND. 6. WE HAVE HEARD BOTH THE PARTIES, PERUSED THE MATER IALS AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. THE ONLY ISSUE CAME UP FOR OUR CONSIDERATION IS WHETHER EMPLOYEES CONTRIBUTION TO PROVIDENT FUND, NOT DEPOSITED WITHI N THE DUE DATE SPECIFIED UNDER THE PROVIDENT FUND ACT, IS NOT ALLO WABLE AS DEDUCTION U/S 36(1)(VA) OF THE ACT, WHILE COMPUTING INCOME FROM P ROFITS AND GAINS OF BUSINESS OR PROFESSION. THE ISSUE IS NO LONGER RES INTEGRA. THE HONBLE SUPREME COURT OF INDIA, IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (SUPRA), HELD THAT DEDUCTION SHOULD BE ALLOWED FOR THE PAYMENT OF EMPLOYEES CONTRIBUTION MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. A SIMILAR ISSUE HAS BEEN CONSIDERED BY THE HONBLE HIGH COURT OF KARNATAKA, IN THE CASE OF ESSAE TERAOKA VS. DCIT (SUPRA) AND OBSERVED THAT THE WORD CONTRIBUTI ON OCCURING IN SECTION 43B OF THE ACT, WOULD INCLUDE EMPLOYEES CO NTRIBUTION TO PROVIDENT FUND IN THE LIGHT OF THE DEFINITION OF TH E WORD CONTRIBUTION AS PER THE PROVISIONS OF SECTION 2C OF THE PF ACT. TH E COORDINATE BENCH OF THE ITAT, VISAKHAPATNAM IN THE CASE OF EASTERN POWE R DISTRIBUTION COMPANY OF AP LTD. VS. DCIT (2016) 160 ITD 432 HAS CONSIDERED SIMILAR ISSUE AND AFTER CONSIDERING DECISION OF HONBLE KAR NATAKA HIGH COURT, IN ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 6 THE CASE OF ESSAE TERAOKA VS. DCIT (SUPRA) HELD THA T THERE IS NO DISTINCTION BETWEEN EMPLOYEES AND EMPLOYER CONTRIB UTION TO PROVIDENT FUND AND IF THE TOTAL CONTRIBUTION IS DEPOSITED ON OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE AC T, THEN NO DISALLOWANCE CAN BE MADE TOWARDS EMPLOYEES CONTRIB UTION TO PROVIDENT FUND U/S 36(1)(VA) OF THE ACT. THE RELEVANT PORTIO N OF THE ORDER IS EXTRACTED BELOW: CONSIDERING THE FACTS AND CIRCUMSTANCES OF THIS CAS E AND ALSO FOLLOWING THE JUDICIAL PRECEDENTS AS DISCUSSED ABOV E, WE ARE OF THE VIEW THAT THERE IS NO DISTINCTION BETWEEN EMPLOYEES AND EMPLOYER CONTRIBUTION TO PF, AND IF THE TOTAL CONTRIBUTION IS DEPOSITED O N OR BEFORE THE DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE AC T, THEN NO DISALLOWANCE CAN BE MADE TOWARDS EMPLOYEES CONTRIBUTION TO PROV IDENT FUND. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS RIGHT LY DELETED THE ADDITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTE RFERE WITH THE ORDER OF THE CIT(A). HENCE, WE INCLINED TO UPHOLD THE CI T(A) ORDER AND DISMISS THE APPEAL FILED BY THE REVENUE. 7. IN THIS VIEW OF THE MATTER AND ALSO RESPECTFULLY FOLLOWING THE DECISION OF COORDINATE BENCH OF ITAT, IN THE CASE O F EASTERN POWER DISTRIBUTION COMPANY OF A.P. LTD. VS. DCIT (SUPRA), WE ARE OF THE VIEW THAT NO DISALLOWANCE CAN BE MADE TOWARDS EMPLOYEES CONTRIBUTION TO PROVIDENT FUND, IF THE SAME IS REMITTED ON OR BEFOR E DUE DATE OF FURNISHING RETURN OF INCOME U/S 139(1) OF THE ACT. THE CIT(A) AFTER CONSIDERING THE RELEVANT DETAILS RIGHTLY DELETED AD DITIONS MADE BY THE A.O. WE DO NOT SEE ANY REASONS TO INTERFERE WITH TH E ORDER OF THE ITA NO.59/VIZAG/2016 HINDUSTAN SHIPYARD LTD., VSKP 7 CIT(A). HENCE, WE INCLINED TO UPHOLD THE CIT(A) OR DER AND DISMISS APPEAL FILED BY THE REVENUE. 8. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. THE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 6 TH JAN17. SD/- SD/- ( . ) ( . ) (V. DURGA RAO) (G. MANJUNATHA) /JUDICIAL MEMBER /ACCOUNTANT MEMBER # /VISAKHAPATNAM: ' /DATED : 6.1.2017 VG/SPS )# *# /COPY OF THE ORDER FORWARDED TO:- 1. / THE APPELLANT THE ACIT, CIRCLE-3(1), VISAKHAPA TNAM 2. / THE RESPONDENT M/S. HINDUSTAN SHIPYARD LTD., G ANDHIGRAM, VISAKHAPATNAM 3. + / THE CIT, VISAKHAPATNAM 4. + ( ) / THE CIT (A), VISAKHAPATNAM 5. # . , . , # / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // 12 . (SR.PRIVATE SECRETARY) . , # / ITAT, VISAKHAPATNAM