DCIT, Bangalore V. M/s Adecco Peopleone India Ltd., Bangalore

ITA 613/BANG/2009

• Counselvise Citation: [2010] 136 COUNSELVISE.COM (IT) 8495 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2010
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 10-03-2010
• Assessment Year: 2005-2006
• Appeal Filed On: 11-06-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: V S SREELEKHA
• Assessee Lawyers: R KESAVADAS
• Section: 43B; 80G

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL BANGALORE BENCH B BEFORE DR. O.K. NARAYANAN, VICE PRESIDENT AND SHRI GEORGE GEORGE K, JUDICIAL MEMBER ITA NO.613(BNG)/09 (ASSESSMENT YEAR : 2005-06) THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE 11(1), BANGALORE. VS. M/S. ADECCO PEOPLEONE INDIA LTD., REGENT COURT, II FLOOR, PLOT 17, 80 FEET ROAD, KORAMANGALA, BANGALORE. APPELLANT. RESPONDENT. APPELLANT BY : SMT. V.S. SREELEKHA, ADDL. CIT. RESPONDENT BY : SHRI R. KESAVADAS, C.A. O R D E R PER SHRI GEORGE GEORGE K : THIS APPEAL BY THE REVENUE IS DIRECT ED AGAINST THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS)-I, BANGALORE DT.24.3.2009 FOR THE ASSESSMENT YEAR 2005- 06. THE EFFECTIVE GROUNDS RAISED READS AS FOLLOWS : (I) THE CIT(A) ERRED IN DIRECTING THE A.O. T O ALLOW AS DEDUCTION, THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND WITHOUT A PPRECIATING THAT DELAYED MONTHLY PAYMENTS OF SUCH CONTRIBUTIONS, ARE REQUIRED TO BE CONSIDERED AS INCOME UNDER SECTION 36(1)(VA) OF TH E INCOME TAX ACT, 1961, AND THE AMENDMENT OF THE PROVISIONS OF SECTIO N 43B BY THE FINANCE ACT, 2003 WITH EFFECT FROM 1.4.2004, HAVE N O RELEVANCE IN THIS REGARD. (II) THE CIT(A) IS NOT JUSTIFIED IN DELETING THE AD DITION OF RS.68,150 ON ACCOUNT OF DISALLOWANCE OF THE DEDUCTION CLAIMED UN DER SECTION 80G OF THE INCOME TAX ACT, 1961 ON THE GROUND THAT NO DEDU CTION WAS ACTUALLY CLAIMED BY THE ASSESSEE UNDER SECTION 80G. (III) THE CIT(A) OUGHT TO HAVE APPRECIATED THE FACT THAT THE ASSESSEE HAS DEBITED THE ABOVE EXPENDITURE OF RS.68,150 BEING TS UNAMI CONTRIBUTION UNDER THE HEAD ESTABLISHMENT EXPENSES IN THE P & L ACCOUNT AND HAS SHOWN IT AS LIABILITY IN THE BALANCE SHEET, THEREBY CLAIMING A DEDUCTION OF RS.68,150 WHICH IS NOT ALLOWABLE AS BUSINESS EXPEND ITURE. (IV) THE CIT(A) WAS NOT JUSTIFIED IN DELETING THE A DDITION MADE UNDER SECTION 43B ON ACCOUNT OF DISALLOWANCE OF RS.38,87, 687 BEING OUTSTANDING SERVICE TAX, WITHOUT APPRECIATING THAT THE SERVICE TAX COLLECTED IS A PART OF THE SALE PROCEEDS AND BY NOT CREDITING THE SERVICE ITA NO.613(BNG)/09 - 2 - TAX COLLECTED TO THE PROFIT AND LOSS ACCOUNT, THE A SSESSEE HAS IN EFFECT CLAIMED A DEDUCTION. 2. THE FACTS IN REGARD TO THE FIRST GROUND REFERRED TO ABOVE ARE AS FOLLOWS : 2.1 THE ASSESSING OFFICER HAS DISALLOWED UNDER SE CTION 43B AN AMOUNT OF RS.15,28,298 BEING CONTRIBUTION RECEIVED FROM EMPLO YEES TOWARDS PROVIDENT FUND WHICH WAS NOT DEPOSITED ON OR BEFORE THE DUE DATE A S PRESCRIBED UNDER THE EMPLOYEES PROVIDENT FUND AND MISCELLANEOUS PROVISIO NS ACT, 1952. 2.2 IT WAS SUBMITTED BEFORE THE CIT(A) THAT THE AM OUNTS WERE PAID WELL WITHIN THE DUE DATE FOR FILING OF INCOME TAX RETURN. THE CIT( A) BY FOLLOWING THE DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT VS. S ABARI ENTERPRISES (298 ITR 141) DIRECTED THE ASSESSING OFFICER TO ALLOW EMPLOYEES C ONTRIBUTION TO THE PROVIDENT FUND TO THE EXTENT OF RS.15,28,924. 2.3 AT THE VERY OUTSET, IT WAS SUBMITTED BY THE LEA RNED AUTHORISED REPRESENTATIVE THAT THE DECISION OF JURISDICTIONAL HIGH COURT CITE D SUPRA IS ON IDENTICAL FACTS AND HENCE ISSUE IN QUESTION IS SQUARELY COVERED BY THE JUDGMENT CITED SUPRA. IT WAS FURTHER SUBMITTED, THE JUDGMENT OF THE JURISDICTION AL HIGH COURT WAS CONFIRMED BY THE DECISION OF HON'BLE SUPREME COURT IN THE CASE OF CI T VS. ALOM EXTRUSIONS LTD. (319 ITR 306). 2.4 WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THE JURISDICTIONAL HIGH COURT IN THE CASE OF SABARI ENTERPRISES (SUPRA) HAD CATEGORICALLY HELD THAT CONTRIBUTION RE CEIVED FROM EMPLOYEES TOWARDS PROVIDENT FUND, IF THE PAYMENTS WERE MADE BY THE AS SESSEE BEFORE THE DUE DATE OF SUBMISSION OF RETURN OF INCOME, THE AMOUNTS CANNOT BE DISALLOWED UNDER SECTION ITA NO.613(BNG)/09 - 3 - 43B. THE DECISION OF THE HON'BLE JURISDICTIONAL HI GH COURT WAS UPHELD BY THE HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIO NS LTD. (SUPRA). HENCE THIS GROUND RAISED BY THE REVENUE IS DISMISSED. 3. AS REGARDS THE SECOND AND THIRD GROUNDS REFERRED TO ABOVE, THE FACTS IN BRIEF ARE AS FOLLOWS : 3.1 THE ASSESSEE COMPANY HAD CLAIMED DEDUCTION UNDE R SECTION 80G OF THE ACT TOWARDS TSUNAMI CONTRIBUTION AMOUNTING TO RS.68,150 . THE ASSESSING OFFICER, ON EXAMINATION OF THE PAYMENT HELD THAT THE ASSESSEE C OMPANY HAD PAID THE SAME DURING THE MONTH OF MARCH, 2007 AS AGAINST F.Y. 200 4-05 AND SINCE THE SAME HAS NOT BEEN PAID WITHIN THE DUE DATE, SUM OF RS.68,150 WAS DISALLOWED AND BROUGHT TO TAX. THE CIT(A) ALLOWED THE APPEAL OF THE ASSESSEE BY STATING THAT ON PERUSAL OF THE STATEMENT OF COMPUTATION OF TOTAL INCOME FILED ALON G WITH RETURN OF INCOME FOR A.Y. 2005-06 REVEALED THAT THE DEDUCTION UNDER SECTION 8 0G HAS NOT BEEN CLAIMED BY THE ASSESSEE AND CONSEQUENTLY THE QUESTION OF DISALLOWI NG THE AMOUNT DOES NOT ARISE. 3.2 WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. WE FIND THAT THERE IS NO INFIRMITY IN THE FINDING OF THE CIT(A), SINCE THE ASSESSEE COMPANY HAD NOT CLAIMED THE AMOUNT AS A DE DUCTION IN THE RETURN OF INCOME. THEREFORE THE ACTION OF THE CIT(A) IS CONF IRMED ON THIS SCORE. IN THE RESULT THE GROUND NOS.(II) & (III) MENTIONED ABOVE ARE DIS MISSED. 4. BRIEFLY STATED THE FACTS WITH REFERENCE TO GROUN D NO.(IV) REFERRED TO ABOVE ARE AS FOLLOWS : ITA NO.613(BNG)/09 - 4 - 4.1 THE ASSESSING OFFICER BROUGHT TO TAX AN AMOUNT OF RS.38,87,687 UNDER SECTION 43B OF THE INCOME TAX ACT, 1961 BEING OUTST ANDING LIABILITY OF SERVICE TAX. AGGRIEVED, THE ASSESSEE APPEALED BEFORE THE CIT(A) AND SUBMITTED THAT THE ASSESSING OFFICER HAS INVOKED THE SECTION 43B IGNOR ING THE FACT THAT THE SERVICE TAX HAS NOT BEEN DEBITED TO THE P & L ACCOUNT OF THE AS SESSEE COMPANY. IT WAS FURTHER SUBMITTED THAT IN THE CASE OF SERVICE TAX IS TO BE ON DEBTORS ACCOUNT AND IT BECOMES PAYABLE TO THE GOVERNMENT ONLY WHEN DEBTORS PAYS T HE DEBT. HENCE IT WAS SUBMITTED THAT THERE WAS NO REAL LIABILITY FOR SERV ICE TAX WHICH IS SHOWN IN THE ACCOUNTS AS MEMORANDUM ENTRY FOR THE PURPOSE OF FLO W UP. THE CIT(A) EXAMINED THE PAYMENT DETAILS MADE BY THE ASSESSEE DURING THE SUBSEQUENT YEARS AND FOLLOWING THE DECISION OF THE HON'BLE DELHI HIGH CO URT IN THE CASE OF CIT VS, NOBLE & HEWITT (INDIA) PVT. LTD. (305 ITR 324) AND ALSO THE ORDER OF THE ITAT, CHENNAI BENCH IN THE CASE OF ACIT VS. REAL IMAGE MEDIA TECHNOLOGI ES PVT. LTD., 306 ITR (AT) 106 DIRECTED THE ASSESSING OFFICER TO DELETE THE DISALL OWANCE OF OUTSTANDING SERVICE TAX LIABILITY TO THE TUNE OF RS.38,87,867 MADE UNDER SE CTION 43B OF THE ACT. 4.2 HAVING HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD, WE ARE OF THE VIEW THAT THE ISSUE IN QUESTION IS COVER ED BY THE DECISION OF THE HON'BLE DELHI HIGH COURT IN THE CASE OF NOBLE & HEWITT (IN DIA) PVT. LTD. (SUPRA). IN THAT CASE THE ASSESSEE WAS FOLLOWING MERCANTILE SYSTEM OF ACC OUNTING, DID NOT PAY TO GOVERNMENT ACCOUNT A PORTION OF SERVICE TAX COLLECT ED BY IT. ASSESSEE HAD NEITHER DEBITING THE SAME TO ITS P & L ACCOUNT AS EXPENDITU RE NOR CLAIMING ANY DEDUCTION IN THE RETURN OF INCOME. THE HON'BLE DELHI HIGH COU RT HELD THAT WHEN THE ASSESSEE HAD NOT DEBITED IN THE P & L ACCOUNT AS EXPENDITURE AND HAD NOT CLAIMED IT AS A ITA NO.613(BNG)/09 - 5 - DEDUCTION, THE QUESTION OF DISALLOWING THE SAME UND ER SECTION 43B DOES NOT ARISE. IN THE INSTANT CASE, WE FIND THE SERVICE TAX IS NOT ACTUALLY COLLECTED BY THE ASSESSEE COMPANY AND AS AND WHEN THE SAME IS COLLECTED, THE AMOUNTS ARE PAID OVER TO THE GOVERNMENT ACCOUNT. IN LIGHT OF THE AFORESAID REAS ONING, WE FIND THE ORDER OF THE CIT(A) IS CORRECT AND IN ACCORDANCE WITH LAW AND NO INTERFERENCE IS CALLED FOR. IN THE RESULT THE GROUND NO.(IV) MENTIONED ABOVE IS DISMIS SED. IN THE RESULT THE APPEAL FILED BY THE REVENUE IS D ISMISSED. PRONOUNCED IN THE OPEN COURT ON 12 TH MARCH, 2010. SD/- SD/- (O.K.NARAYANAN) (GEORGE GEORGE K) VICE PRESIDENT JUDICIAL MEMBER BANGALORE, DT.12.03.2010. COPY TO : 1. THE ASSESSEE. 2. THE ASSESSING OFFICER. 3. CIT(APPEALS) 4. CIT 5. DEPARTMENTAL REPRESENTATIVE, ITAT, BANGALORE. 6. GUARD FILE, ITAT, BANGALORE. 7. GUARD FILE, ITAT, NEW DELHI. * GPR BY OR DER ASSISTANT REGISTRAR, ITAT, BANGALORE.