Parasol Laboratories India Pvt.Ldt, Chandigarh V. ACIT,Circle-5(1), Chandigrh

ITA 60/CHANDI/2021

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 7441 (ITAT-CHANDIGARH)
• Duration Of Justice: 3 month(s) 26 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2019-2020
• Appeal Filed On: 30-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHOK KHANNA
• Keywords: Retrospective amendment; Set aside
• Section: 43B; 143(1); 43

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BE NCH A, CHANDIGARH (VIRTUAL COURT) .. , .. , # % BEFORE: SHRI. N.K. SAINI, VP & SHRI, R.L. NEGI, JM ./ ITA NO. 60/CHD/2021 / ASSESSMENT YEAR : 2019-2020 PARASOL LABORATORIES INDIA PVT. LTD., PLOT NO. 45, NEW TIMBER MARKET, SECTOR 26, CHANDIGARH THE ACIT, CIRCLE 5(1), CHANDIGARH ./ PAN NO: AABCP9203G %/ APPELLANT &'%/ RESPONDENT ( * / ASSESSEE BY : SHRI T.N. SINGLA, C.A. * / REVENUE BY : SHRI ASHOK KHANNA, ADDL. CIT * // DATE OF HEARING : 02/06/2021 * // DATE OF PRONOUNCEMENT : 25/08/2021 / ORDER PER R.L. NEGI, JUDICIAL MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER DATED 12/04/2021, PASSED BY THE LD. COMMISSIONER OF INCOME TAX (APPEALS), NATIONAL FACELESS APPEAL CENTRE, DELHI PERTAINING T O THE ASSESSMENT YEAR 2019- 20, WHEREBY THE LD. CIT(A) HAS DISMISSED THE APPEAL FILED BY THE ASSESSEE AGAINST THE ASSESSMENT ORDER PASSED U/S 143(1) OF T HE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE FI LED ITS RETURN OF INCOME FOR THE ASSESSMENT YEAR UNDER CONSIDERATION DECLARING T HE TOTAL INCOME OF RS. 6,71,670/- DURING THE COURSE OF ASSESSMENT PROCEEDI NGS IT WAS NOTICED FROM THE TAX AUDIT REPORT THAT THE ASSESSEE HAD RECEIVED A S UM OF RS. 3,18,265/- FROM HIS EMPLOYEES AS CONTRIBUTION TO PROVIDENT FUND AND ESI WHICH WAS NOT REMITTED TO PARASOL LABORATORIES INDIA PVT. LTD. ITA NO. 60/CHD/2021 2 THE EMPLOYEES ACCOUNT ON OR BEFORE THE DUE DATE AS PER THE PROVISIONS OF LAW. ACCORDINGLY, THE AO MADE DISALLOWANCE OF THE SAID A MOUNT ON ACCOUNT OF DELAYED DEPOSIT OF EMPLOYEES CONTRIBUTION TO THE P ROVIDENT FUND AND ESI U/S 36(1) (VA) READ WITH SECTION 2(24) (X) OF THE ACT. THE ASSESSEE CHALLENGED THE ACTION OF THE AO BEFORE THE LD. CIT(A). THE LD. CIT (A) AFTER HEARING THE ASSESSEE CONFIRMED THE ACTION OF THE AO AND DISMISSED THE AP PEAL FILED BY THE ASSESSEE. AGAINST THE SAID FINDINGS OF THE LD. CIT(A), THE AS SESSEE HAS PREFERRED THE PRESENT APPEAL. 3. THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER P ASSED BY THE LD. CIT(A) BY RAISING THE FOLLOWING EFFECTIVE GROUNDS: - 1. THAT THE ORDER OF LD CIT(A) IS BAD AND AGAINST T HE FACTS AND LAW. 2. THAT THE LD CIT(A) HAS UPHELD THE ADDITION MADE U/S 143(1) WITHOUT ISSUE OF NOTICE U/S 143(2)OF THE ACT. 3. THAT THE LD CIT(A) HAS WRONGLY UPHELD DISALLOWAN CE OF EXPENSE ON DEBATABLE ISSUE U/S 143(1) OF THE ACT. 4. THAT THE LD CIT(A) HAS ERRED IN UPHOLDING THE DE CISION OF THE AO REGARDING THE DEDUCTION OF EMPLOYEES CONTRIBUTION T O PROVIDENT FUND AND ESI AMOUNTING TO RS. 3,18,265/- WHICH WAS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE SUBMITTED BEFORE US THAT THE IMPUGNED ORDER PASSED BY THE LD. CIT(A) IS CONTRARY TO THE SETTLED POSITION OF LAW ON THE RELEVANT ISSUE. SINCE THE ASSESSEE COMPANY HAD DEPOSITED THE CONTRIBUTION RECEIVED FROM ITS EMPLOYEES TOWARDS PR OVIDENT FUND /ESI BEFORE THE PARASOL LABORATORIES INDIA PVT. LTD. ITA NO. 60/CHD/2021 3 DATE OF FILING OF RETURN OF INCOME, THE LD. CIT(A) OUGHT TO HAVE SET ASIDE THE ACTION OF THE AO. THE LD. COUNSEL FURTHER RELIED ON THE FOLLOWING JUDGEMENTS TO SUBSTANTIATE THE CONTENTION OF THE ASSESSEE: - I) CIT VS M/S NIPSO POLYFABRIKS LTD. [2013] 350 ITR 327 IT VS ALOM EXTRUSIONS LTD., 185 TAXMAN 416(SC) II) CIT VS SOLAR EXPORTS, 27 TAXMAN.COM 289 (SC) III) CIT VS LAKHANI RUBBER WORKS, 188 TAXMAN 132 ( P&H) IV) CIT VS RAI AGRO INDUSTRIES LTD (2011) 334 ITR 122 (9&H) V) CIT VS HEMLA EMBROIDERY MILLS PVT LTD (2014) 36 6 ITR 167 (P&H) VI) CIT VS MARK AUTO INDUSTRIES LTD. (2013) 358 IT R 43 (P&H) VII) CIT VS NUCHEM LTD. ITA NO. 609 OF (2015) 59 T AXMANN.COM 455 (P&H) DATED 22.09.2014 VIII) H.P. TOURISM DEV. CORPN. LTD 328 ITR 508 (H. P.) 5. THE LD. COUNSEL FURTHER SUBMITTED THAT SINCE THE FINDINGS OF THE LD. CIT(A) ARE NOT IN ACCORDANCE WITH THE RATIO LAID DOWN BY T HE HON'BLE SUPREME COURT, HON'BLE JURISDICTIONAL HIGH COURT AND THE HON'BLE H IMACHAL PRADESH HIGH COURT, THE SAME IS LIABLE TO BE SET ASIDE. 6. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESEN TATIVE (DR) SUPPORTING THE ORDER PASSED BY THE LD. CIT(A) SUBMITTED THAT S INCE THE ASSESSEE HAD NOT DEPOSITED THE AMOUNT OF EMPLOYEES CONTRIBUTION TO THE PROVIDENT FUND AND ESI ETC. ON THE DUE DATE, THE LD. CIT(A) HAS RIGHTLY CO NFIRMED THE DISALLOWANCE MADE U/S 36(1)(VA) OF THE ACT. PARASOL LABORATORIES INDIA PVT. LTD. ITA NO. 60/CHD/2021 4 7. WE HAVE HEARD THE RIVAL SUBMISSIONS OF THE PARTI ES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE CASES RELIED UPON BY THE LD. COUNSEL FOR THE ASSESSEE. AS POINTED OUT BY THE LD. COUNSEL, IN TH E PRESENT CASE THE ASSESSEE HAS DEPOSITED THE AMOUNT IN QUESTION BEFORE THE DAT E OF FILING OF THE ASSESSMENT. THE REVENUE HAS NOT DISPUTED THIS FACT . THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS M/S NIPSO POLYFABRIKS LTD. [2013] 350 ITR 327 HAS HELD THAT THE EMPLOYEES CONTRIBUTION TO THE PROVIDENT F UND PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME CANNOT BE DISALL OWED. THE RELEVANT PARA OF THE JUDGEMENT READ AS UNDER: - THE DELETION OF THE SECOND PROVISO TO SECTION 43B WHICH SPECIFICALLY MADE A REFERENCE TO SECTION 36(L)(VA) WAS CURATIVE IN NATURE AND, HENCE, WOULD APPLY WITH RETROSPECTIVE EFFECT FROM APRIL 1, 1988. THE SECOND PROVISO TO SECTION 43B(B) SPECIFICALLY REFERRED TO THE DUE DATE UNDER SECTION 36(L)(VA) OF THE ACT AND AS SUCH, IT CANNOT BE URGED THAT THE PROVISIONS OF SECTION 43B AND SECTION 36(1) (VA) SH OULD NOT BE READ TOGETHER. THE LAW WAS ENACTED TO ENSURE THAT THE PA YMENT OF THE CONTRIBUTIONS TOWARDS THE PROVIDENT FUNDS, THE ESI FUNDS OR OTHER SUCH WELFARE SCHEMES MUST BE MADE BEFORE FURNISHING THE RETURN OF INCOME UNDER SUB-SECTION (1) OF SECTION 139. ON A CONJOINT READING OF SECTION 36(L)(VA) AND SECTION 43B IT IS OBVIOUS THAT EARLIE R SECTION 43B MADE REFERENCE TO THE DUE DATE AS PRESCRIBED UNDER SECTI ON 36(1)(VA). THERE WAS A CONFLICT BETWEEN THE FIRST AND THE SECOND PRO VISOS AND THE SECOND PROVISO WAS DELETED. THE BENEFIT OF THIS AMENDMENT MUST BE EXTENDED TO THE EMPLOYEES' CONTRIBUTION ALSO. 8. SIMILARLY, THE COORDINATE BENCH OF THE TRIBUNAL HAS DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN THE CASE OF M/S NEW TIME CONTRACTORS AND BUILDER (P) LTD. VS. DCIT ITA NO. 1243/CHD/2018 FOR THE A.Y. 2013-14 HOLDING AS UNDER: PARASOL LABORATORIES INDIA PVT. LTD. ITA NO. 60/CHD/2021 5 (10) WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH TH E PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. IN THE PR ESENT CASE, IT IS AN ADMITTED FACT THAT THERE WAS DELAY IN DEPOSITING TH E EMPLOYEES CONTRIBUTION OF PROVIDENT FUND AND ESIC. HOWEVER, I T IS ACCEPTED BY THE AO THAT THE DEPOSIT WAS MADE BEFORE FILING OF THE RE TURN OF INCOME ON 27.09.2013. (11) ON A SIMILAR ISSUE THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS. HEMLA EMBROYDERY MILLS (P.) LTD .(SUPRA) HELD AS UNDER: THE SECOND PROVISO TO SECTION 43B OF THE INCOME-TA X ACT, 1961, OMITTED BY THE FINANCE ACT, 2003, WITH EFFECT FROM APRIL 1, 2004, WAS CLARIFICATORY IN NATURE AND WAS TO OPERATE RETROSPECTIVELY. THUS, THE ASSESSEE, FOR THE ASSESSMENT YEAR 2003-04, WAS ENTITLED TO DEDUCTION IN RESPECT OF THE EMPLOYERS AND EMPLOYEES CONTRIBUTIONS TO THE EMPL OYEES STATE INSURANCE AND PROVIDENT FUND AS THE 4 CONTRIBUTIONS HAD BEEN DEPOSITED PRIOR TO THE FILING OF THE RETURN UNDER S ECTION 139(1). 9. SINCE THE ISSUE INVOLVED IN THE PRESENT APPEAL I S IDENTICAL TO THE ISSUE INVOLVED IN THE CASES DISCUSSED ABOVE AND SINCE THE HON'BLE JURISDICTIONAL HIGH COURT AND THE CO-ORDINATE BENCH OF THE TRIBUNAL HAV E DECIDED THE IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE AND THE FINDINGS OF THE LD. CIT(A) ARE NOT IN ACCORDANCE WITH THE RATIO LAID BY THE HON'BLE JURIS DICTIONAL HIGH COURT, WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL THAT THE ISSUE INVOLVED IN THE PRESENT CASE IS COVERED IN FAVOUR OF THE ASSESSEE BY THE JU DGMENTS OF THE HON'BLE SUPREME COURT AND THE HON'BLE HIGH COURTS REFERRED ABOVE. IN THE CASE OF CIT VS. M/S NIPSO POLYFABRIKS LTD. (SUPRA), THE HON'BLE JURISDICTIONAL HIGH COURT HAS HELD THAT IF THE EMPLOYER DOES NOT DEPOSIT SUCH CON TRIBUTIONS WITHIN THE TIME PRESCRIBED BY THE RESPECTIVE ACTS, THE EMPLOYER MAY FACE CRIMINAL CASE AND BECOME LIABLE TO PAY FINE OR PENALTY, BUT THAT CANN OT BE THE REASON TO DENY THE BENEFIT OF SECTION 43B OF THE ACT, WHICH CONTEM PLATES THAT THE ASSESSEE CAN TAKE THE BENEFIT OF SUCH CONTRIBUTIONS IF THE SAME ARE PAID BEFORE FURNISHING THE PARASOL LABORATORIES INDIA PVT. LTD. ITA NO. 60/CHD/2021 6 RETURN OF INCOME. HENCE, IN OUR CONSIDERED VIEW, TH E FINDINGS OF THE LD. CIT(A)) ARE CONTRARY TO THE RATIO LAID DOWN BY THE HONBLE SUPREME COURT AND HIGH COURTS INCLUDING THE HON'BLE JURISDICTIONAL HIGH CO URT. WE THEREFORE, ALLOW THE APPEAL OF THE ASSESSEE AND SET ASIDE THE ORDER PASS ED BY THE LD. CIT(A). ACCORDINGLY, WE DIRECT THE AO TO DELETE THE ADDITIO N MADE U/S 36(1)(VA) OF THE ACT. IN THE RESULT, THE APPEAL FILED BY T HE ASSESSEE IS ALLOWED. ORDER PRONOUNCED 25 TH AUG, 2021. SD/- SD/- .., .. ( N.K. SAINI) (R.L. NEGI ) / VICE PRESIDENT # %/ JUDICIAL MEMBER RKK DATE: 25/08/2021 * &56 76/ COPY OF THE ORDER FORWARDED TO : 1. %/ THE APPELLANT 2. &'%/ THE RESPONDENT 3. 8/ CIT 4. 8 ()/ THE CIT(A) 5. 6 &=, / =, @/ DR, ITAT, CHANDIGARH 6. / GUARD FILE