BSCPL Infrastructure Limited, Hyderabad V. P. Srinivas, Hyderabad

ITA 708/Hyd/2020

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 2725 (ITAT-HYDERABAD)
• Duration Of Justice: 11 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-10-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB-A
• Assessment Year: 2016-2017
• Appeal Filed On: 20-11-2020
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: BALA KRISHNA
• Assessee Lawyers: RAVI BHARDWAJ
• Keywords: Charitable institution; Additional evidence; TDS; FORM 26AS
• Section: 43B; 40(a)(ia)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL HYDERABAD BENCHES A : HYDERABAD (THROUGH VIDEO CONFERENCE) BEFORE SHRI S.S.GODARA, JUDICIAL MEMBER AND SHRI LAXMI PRASAD SAHU, ACCOUNTANT MEMBER I.T.A. NO. 708/HYD/2020 ASSESSMENT YEAR: 2016-17 DY.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDERABAD VS M/S.BSCPL INFRASTRUCTURE LIMITED, HYDERABAD [PAN: AAACB8316K] (APPELLANT) (RESPONDENT) FOR REVENUE : SHRI BALA KRISHNA, CIT-DR FOR ASSESSEE : SHRI RAVI BHARDWAJ, AR DATE OF HEARING : 09-09-2021 DATE OF PRONOUNCEMENT : 27-10-2021 O R D E R PER S.S.GODARA, J.M. : THIS REVENUES APPEAL FOR AY.2016-17 ARISES FROM THE CIT(A)-1, HYDERABADS ORDER DATED 14-09-2020 PASSED IN CASE NO.10616 / 2019-20 / DCIT-1(2) / HYD / CIT(A)-1 / 2 020-21, IN PROCEEDINGS U/S.143(3) OF THE INCOME TAX ACT, 1961 [IN SHORT, THE ACT]. HEARD BOTH THE PARTIES. CASE FILE PERUSED. 2. THE REVENUE HAS RAISED THE FOLLOWING SUBSTANTIVE GROUNDS IN THE INSTANT APPEAL: I.LD.CIT(A) ERRED IN VIOLATING RULE 46A AS NO OPPO RTUNITY WAS GIVEN TO AO TO VERIFY THE CONTENTION OF THE ASSESSEE WITH NECESSARY EVIDENCES IGNORING THAT IT WAS NEVER RAISED BEFORE ASSESSING OFFICER. ITA NO. 708/HYD/2020 :- 2 -: II.WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE C ASE, THE LD.CIT(A) IS CORRECT IN DIRECTING THE AO TO DELETE THE ADDITI ON OF RS.1,68,48,149/- PERTAINING TO THE LATE PAYMENTS OF THE EMPLOYEES CONTRIBUTION TO PROVIDENT FUND & ESI IF THE PAYMENT S WERE MADE BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCO ME. III.WHETHER, ON THE FACTS AND CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN LAW IN NOT CONSIDERING THAT THE LATE D EPOSIT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND & ESI IS NOT AL LOWABLE AS DEDUCTION UNDER THE PROVISIONS OF SECTION 2(24)(X) READ WITH SECTION 36(1)(VA) OF THE INCOME TAX ACT, 1961. 3. WE COME TO THE FORMER ISSUE OF SECTION 43B AS WELL AS SECTION 40(A)(IA) DISALLOWANCE(S) PERTAINING TO STATU TORY DUES AND NON-DEDUCTION OF TDS, WE NOTE THAT THE CIT(A)S DETA ILED DISCUSSION TO THIS EFFECT READS AS UNDER: 8) GROUND NO.1 IN APPEAL RELATE TO DISALLOWANCE TO WARDS INTEREST PAYABLE TO BANKS AND FINANCIAL INSTITUTIONS. FACTS, ISSUES AND CIRCUMSTANCES OF THE INSTANT CASE HAVE BEEN CONSIDE RED. IT IS SEEN FROM THE ASSESSMENT ORDER THAT THE ASSESSING OFFICE R DISALLOWED THE INTEREST PAYABLE TO BANKS/FINANCIAL INSTITUTIONS ST ATING THAT THE APPELLANT HAD NOT PAID BEFORE THE FILING OF RETURN OF INCOME. THE ASSESSING OFFICER DISALLOWED THE INTEREST PAYABLE O F RS.12,32,61,341/- TO BANKS/FINANCIAL INSTITUTIONS U /S.43B OF THE INCOME TAX ACT. IN THIS CONTEXT, THE APPELLANT SUBM ITTED THAT IT HAD PAID THE OUTSTANDING INTEREST DUES TO BANKS AND FIN ANCIAL INSTITUTIONS BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S .139(1) OF THE ACT. IN SUPPORT OF THE CLAIM THE APPELLANT SUBMITTED COPIES OF BANK STATEMENTS/FINANCIAL INSTITUTIONS AND LEDGER EXTRAC TS. THE DETAILS, SUCH AS, NAME OF THE BANK/FINANCIAL INSTITUTION, AM OUNT PAYABLE AND MONTH OF PAYMENT SUBMITTED BY THE APPELLANT HAVE BE EN EXTRACTED SUPRA. THE APPELLANT ALSO PLACED RELIANCE ON THE FO LLOWING DECISIONS: 1. DCIT KOLKOTA VS TELELINK NICCO LTD [ITA NO.1629 OF 1996] 2. S.R.F. CHARITABLE TRUST V. HIGH COURT OF DELHI [ ITA NO.193 OF 1992] 3. MURALI EXPORT HOUSE VS CIT CALCUTTA. [ITA NO.238 OF 1999). 8.1) THE APPELLANT FURTHER PLACED RELIANCE ON THE R ULING OF HON'BLE SUPREME COURT IN THE CASE OF ALOM EXTRUSIONS [185 T AXMAN 416]. FROM THE SUBMISSIONS, IT IS APPARENT THAT THE APPEL LANT HAD REMITTED THE OUTSTANDING INTEREST DUES TO BANKS/FINANCIAL IN STITUTIONS BEFORE THE DUE DATE FOR FILING RETURN OF INCOME U/S.139(1) OF THE ACT I.E. 30 TH NOVEMBER, 2016. RESPECTFULLY FOLLOWING THE DECISION OF THE HON'BLE SUPREME COURT SUPRA AND OTHER JUDICIAL DECISIONS, T HE ASSESSING OFFICER IS DIRECTED TO ALLOW THE INTEREST PAID TO B ANKS/FINANCIAL ITA NO. 708/HYD/2020 :- 3 -: INSTITUTIONS, AS THE APPELLANT HAD' PAID INTEREST T O BANKS/FINANCIAL INSTITUTIONS BEFORE THE FILING OF RETURN OF INCOME U/S.139(1). CONSIDERING THE FACTS, ISSUES AND CIRCUMSTANCES OF THE INSTANT CASE, GROUND NO.1 IN APPEAL IS ALLOWED. 9) GROUND NO.2 IN APPEAL RELATE TO DISALLOWANCE OF EXPENSES FOR NON- PAYMENT OF TDS WITHIN DUE DATES. FACTS, ISSUES AND CIRCUMSTANCES OF THE INSTANT CASE HAVE 'BEEN PERUSED:' FROM THE ASSE SSMENT ORDER IT IS SEEN THAT THE ASSESSING OFFICER INVOKED' PROVISIONS OF SECTION 40(A)(IA) FOR NOT COMPLYING WITH THE PROVISIONS OF SECTION '1 94A, 192B AND 194C, SINCE THE APPELLANT FAILED TO FURNISH THE PRO OF FOR DEPOSITING THE SAME INTO THE GOVERNMENT ACCOUNT WITHIN THE STIPULA TE TIME AND DISALLOWED RS.23,47,01,368 U/S.40(A)(IA) OF THE INC OME TAX ACT, (30% OF EXPENDITURE OF-RS.78,23,37,894/-). FURTHER, THE ASSESSING OFFICER ALSO MADE DISALLOWANCE U/S.40(A)(IA) OF THE INCOME TAX ACT, RS.87,19,18,376/- (@ 30% OF 290,63,94,587/-) STATIN G THAT THE TAX AUDIT REPORT AT COL.NO.34A, IT WAS MENTIONED THAT T HE AMOUNT OF TAX DEDUCTED ON THE EXPENDITURE BUT NOT CREDITED TO THE ACCOUNT OF THE CENTRAL GOVERNMENT. 9.1) DURING THE COURSE OF APPELLATE PROCEEDINGS, TH E APPELLANT SUBMITTED THAT THE TAX AUDITOR HAD INADVERTENTLY DI SCLOSED ERRONEOUS AND CONTRADICTORY FACTS AND IT HAD MADE ALL THE PAY MENTS TO THE GOVERNMENT WITHIN DUE DATES OF FILING RETURN OF INC OME. THE DETAILS SUBMITTED BY THE APPELLANT HAVE BEEN EXTRACTED SUPR A. THE APPELLANT FURTHER PLACED RELIANCE ON THE FOLLOWING DECISIONS: (I) ACIT BANGALORE VS VIMALA S WARAD [ITA NO.1419 OF 2012] (II) S.S. WARAD VS ACIT, BANGALORE [ITA NO.375 OF 2 012] (III) ALLAHABAD WHOLESALE CENTRAL CO-OP. STORE LTD VS CIT ALLAHABAD [ITA NO.597 OF 2016] (IV) LAKOZY MOTORS (P) LTD VS. INCOME-TAX, MUMBAI [ ITA NO.6982 & 7146 OF 2012) (V) USHODAYA ENTERPRISES LTD VS DCIT HYDERABAD [ITA NO.676 OF 2009 & 411 OF 2010) 9.2) CONSIDERING THE FACTS, ISSUES AND CIRCUMSTANCE S, THE CONTENTION OF THE APPELLANT COMPANY HOLDS MERIT. THE RATIO OF THE JUDICIAL DECISIONS RELIED UPON BY THE APPELLANT REGARDING MI STAKES/ ERROR BY A CA HAVE BEEN SEEN. IT IS TRUE THAT A MISTAKE BY A C A OR AUDITOR SHOULD NOT NORMALLY IMPACT THE ASSESSMENT PROCEEDIN GS. IN THE INSTANT CASE, THE ASSESSING OFFICER SHOULD HAVE VER IFIED THE TDS AND OTHER DETAILS DURING THE COURSE OF ASSESSMENT PROCE EDINGS ESPECIALLY AS THESE DETAILS HAD BEEN FURNISHED TO THE ASSESSIN G OFFICER. THIS WOULD HAVE BEEN THE APPROPRIATE COURSE OF ACTION. H OWEVER, THIS WAS NOT APPARENTLY DONE. CONSIDERING THE ISSUES, THE AS SESSING OFFICER IS DIRECTED TO ALLOW THE SAME AS THE APPELLANT HAD DED UCTED TAX AT SOURCE AND REMITTED INTO CENTRAL GOVERNMENT ACCOUNT BEFORE THE DUE ITA NO. 708/HYD/2020 :- 4 -: DATE OF FILING OF RETURN OF INCOME U/S.139(1). CONS IDERING THE FACTS, ISSUES AND CIRCUMSTANCES, GROUND NO.2 IN APPEAL IS ALLOWED. 10) GROUND NO.3 IN APPEAL RELATE TO DISALLOWANCE OF EMPLOYEE CONTRIBUTION OF PF AND ESI. FACTS, ISSUES AND CIRCU MSTANCES OF THE INSTANT CASE HAVE BEEN PERUSED. IT IS SEEN FROM THE SUBMISSIONS OF THE APPELLANT THAT THERE WAS A DELAY IN PAYMENT OF ESI AND PF IN THE GOVERNMENT ACCOUNT. IT WAS SUBMITTED BY THE APPELLA NT THAT THE APPELLANT COMPANY MADE PAYMENTS OF ESI AND PF WITHI N THE DUE DATE OF FILING OF RETURN U/ S.139(1) OF THE ACT. TH E APPELLANT PLACED RELIANCE ON VARIOUS DECISIONS WHICH HAVE BEEN EXTRA CTED SUPRA. THE APPELLANT FURTHER SUBMITTED THAT THE HON'BLE APEX C OURT HAD DISMISSED THE SLP OF THE DEPARTMENT AGAINST THE ORD ER OF THE HON'BLE HIGH COURT OF RAJASTHAN IN THE CASE OF RAJASTHAN ST ATE BEVERAGES CORPORATION LIMITED [250 TAXMANN 16]. IT IS SEEN FR OM THE DETAILS FURNISHED BY THE APPELLANT THAT THE PF AND ESI OF E MPLOYEES CONTRIBUTION WAS REMITTED TO THE GOVERNMENT ACCOUNT BEFORE FILING OF RETURN OF INCOME U/S.139(1). THE CONTENTION OF THE APPELLANT HOLDS MERIT. CONSIDERING THE FACTS, ISSUES, CIRCUMSTANCES AND FOLLOWING THE DECISION OF HON'BLE ITAT, HYDERABAD AND OTHER DECIS IONS, WHICH HAVE BEEN BROUGHT OUT SUPRA, THE AO IS DIRECTED TO GIVE CREDIT FOR THE PAYMENTS MADE AFTER DUE DATE BUT BEFORE DUE DATE OF FILING OF RETURN OF INCOME. CONSIDERING THE FACTS, ISSUES AND CIRCUM STANCES, GROUND NO.3 IN APPEAL IS ALLOWED. 11) GROUND NO.4 IN APPEAL RELATE TO GIVING LESS TDS CREDIT THAN THAT CLAIMED. FACTS, ISSUES AND CIRCUMSTANCES OF THE INS TANT CASE HAVE BEEN PERUSED. THE APPELLANT SUBMITTED THAT WHILE CO MPUTING TAX, CREDIT FOR TDS WAS CONSIDERED AT RS.16,30,30,432J - AND REQUESTED TO GIVE CREDIT FOR TDS AS PER FORM 26AS WHICH THE APPE LLANT SUBMITTED WAS RS.17,82,88,246.60. 11.1) IT IS SEEN FROM THE RETURN OF INCOME FOR THE AY 2016-17 THAT THE APPELLANT HAD CLAIMED TDS OF RS.17,82,10,116. THIS CAN BE SEEN FROM THE RETURN OF INCOME OF THE APPELLANT UNDER TH E TAXES PAID COLUMN WHICH IS AT PART B-TTI, COMPUTATION OF TAX L IABILITY ON TOTAL INCOME AT COL.NO.10(B). HOWEVER, IN THE COMPUTATION OF TOTAL INCOME, THE ASSESSING OFFICER HAD GIVEN CREDIT FOR TDS AT R S.16,30,30,432/-. THIS CAN BE SEEN FROM THE COMPUTATION SHEET DATED 3 1.12.2019 WHICH HAS GONE TO THE APPELLANT ALONG WITH THE ORDE R U/S.143(3) (PAGE3 OF THE COMPUTATION SHEET AT COL. NO.43). IT WAS NOT KNOWN AS TO HOW AND WHY THIS DISCREPANCY HAS OCCURRED WHILE PASSING THE ASSESSMENT ORDER UJS.143(3) DATED 31. 12.2019 NOR I S IT KNOWN IF THE RECONCILIATION OF THESE FIGURES HAS BEEN DONE WITH THE FORM-26AS OF THE APPELLANT COMPANY. CONSIDERING THE FACTS AND CI RCUMSTANCES, THE ASSESSING OFFICER IS DIRECTED TO VERIFY AND ALLOW T HE CREDIT FOR TDS AS PER FORM 26AS AFTER VERIFICATION. CONSIDERING THE F ACTS, ISSUES AND CIRCUMSTANCES, GROUND NO.4 IN APPEAL IS PARTLY ALLO WED. ITA NO. 708/HYD/2020 :- 5 -: 4. LEARNED CIT-DR VEHEMENTLY CONTENDED DURING THE COUR SE OF HEARING THAT THE CIT(A) HAD ERRED IN LAW AND ON FAC TS IN DELETING THE IMPUGNED DISALLOWANCES/ADDITIONS AFTER ADM ITTING ADDITIONAL EVIDENCE IN VIOLATION OF RULE 46A OF INCOM E TAX RULES. WE DO NOT SEE ANY SUCH ADDITIONAL EVIDENCE B EING FILED EITHER IN ASSESSEES SUBMISSIONS OR IN THE CIT(A)S DETAILED DISCUSSION (SUPRA) WHICH COULD LEAD US TO THE CONCLUS ION THAT THERE HAS BEEN ANY VIOLATION OF RULE 46A. BE THAT AS I T MAY, IT HAS COME ON RECORD THAT THE CORRESPONDING PAYEES BANKS/FINANCIAL INSTITUTIONS PRIMA FACIE STAND ASSESSED AND VERIFIED IN THE LOWER APPELLATE PROCEEDINGS. WE THUS S EE NO REASON TO ACCEPT THE REVENUES INSTANT TECHNICAL ARGUMENT ALLEGING VIOLATION OF RULE 46A OF THE RULES WITHOUT AF FORDING ANY OPPORTUNITY TO THE ASSESSING OFFICER. THE REVENUE FAILS IN ITS INSTANT FORMER ISSUE THEREFORE. 5. NEXT COMES THE LATTER ISSUE OF ESI/PF DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO THE TUNE OF RS.1,68,48,149/- FOR THE REASON THAT THE SAME HAD BEEN PAID NOT BEFORE THE DUE D ATE AS PER THE CORRESPONDING STATUTE(S). THE REVENUES PLEA B EFORE US IS THAT THE SAME HAD BEEN PAID BEFORE THE DUE DATE OF FILING SEC.139(1) RETURN ONLY THAN AFTER THE DUE DATE PRESCRIBE D IN THE CORRESPONDING STATUTES; RESPECTIVELY. WE NOTICE IN TH IS FACTUAL BACKDROP THAT THE LEGISLATURE HAS NOT ONLY INCOR PORATED NECESSARY AMENDMENT IN SECTIONS 36(1)(VA) BUT ALSO U /S.43B OF THE ACT VIDE FINANCE ACT, 2021 FOLLOWED BY THE CBDT S MEMORANDUM OF EXPLANATION THAT THE SAME APPLIES W.E.F. 01- 04-2021 ONLY. IT IS FURTHER NOT AN ISSUE THAT THE FOR EGOING LEGISLATIVE AMENDMENTS HAVE PROPOSED EMPLOYERS CONTRIBUTION/DISALLOWANCE U/S.43B AS AGAINST EMPLOYEE S ITA NO. 708/HYD/2020 :- 6 -: CONTRIBUTION U/S.36 (VA) OF THE ACT; RESPECTIVELY. H OWEVER, KEEPING IN MIND THE FACT THAT THE SAME HAS BEEN CLARIFIE D TO BE APPLICABLE W.E.F.01-04-2021 ONLY. WE HOLD THAT THE IMP UGNED DISALLOWANCE HAS BEEN RIGHTLY DELETED IN THE CIT(A)S ORDER IN VIEW OF ALL THESE LATEST LEGISLATIVE DEVELOPMENTS. THE REVENUE FAILS IN ITS LATTER SUBSTANTIVE GRIEVANCE THEREFORE. 6. THIS REVENUES APPEAL IS DISMISSED IN ABOVE TERMS . ORDER PRONOUNCED IN THE OPEN COURT ON 27 TH OCTOBER, 2021 SD/- SD/- (LAXMI PRASAD SAHU) (S.S.G ODARA) ACCOUNTANT MEMBER JUDICIAL MEM BER HYDERABAD, DATED: 27-10-2021 TNMM ITA NO. 708/HYD/2020 :- 7 -: COPY TO : 1.DY.COMMISSIONER OF INCOME TAX, CIRCLE-1(1), HYDER ABAD. 2.M/S.BSCPL INFRASTRUCTURE LIMITED, 8-2-502/1/A, JI VI TOWERS, ROAD NO.7, BANJARA HILLS, HYDERABAD. 3.CIT(APPEALS)-1, HYDERABAD. 4.PR.CIT-1, HYDERABAD. 5.D.R. ITAT, HYDERABAD. 6.GUARD FILE.