UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR V. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-4, JAIPUR

ITA 710/JPR/2019

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 5575 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2014-2015
• Appeal Filed On: 16-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JAI SINGH JCIT DHK
• Keywords: Related party transaction; Transfer pricing; Revenue expenditure
• Section: 43B; 143(3); 250; 144C; 139(1)

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCH B JAIPUR JH FOT; IKY JKWO] U;KF;D LNL; ,O A JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA- @ ITA NO. 710/JP/2019 FU/KZKJ.K O'K Z @ ASSESSMENT YEARS : 2014-15. UTTAM BHARAT ELECTRICALS PVT. LTD., B-189A, ROAD NO. 9, VKI AREA, JAIPUR. CUKE VS. THE DCIT, CIRCLE-4, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO. AAACU 2962 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI ROHAN SOGANI (CA) AND SHRI RAJEEV SOGANI (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI JAI SINGH (JCIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 03.09.2019. ?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 04/09/2019. VKNS'K@ ORDER PER VIJAY PAL RAO, J.M. THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 20 TH MARCH, 2019 OF LD. CIT (A)-2, JAIPUR ARISING FROM ASSESSME NT ORDER PASSED UNDER SECTION 143(3) READ WITH SECTION 144C OF THE IT ACT FOR THE ASSESSMENT YEAR 2014-15. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL :- 1. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT (A) HAS ERRED IN SUSTAINING THE DISALLOWANCE AM OUNTING TO RS. 1,50,528/- MADE ON ACCOUNT OF INTEREST ON LOAN FROM RELATED PARTIES. THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAINST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY QUASHING THE SAID DISALLOWANCE OF RS. 1, 50,528/-. 2 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. 2. IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW, THE LD. CIT (A) HAS ERRED IN CONFIRMING THE ORDER OF LD. AO IN MAKING DISALLOWANCE OF RS. 1,03,508/- U/S 36(1)(VA) AND, T HEREBY, ADDING THE SAME AS INCOME U/S 2(24)(X). THE ACTION OF THE LD. CIT (A) IS ILLEGAL, UNJUSTIFIED, ARBITRARY AND AGAI NST THE FACTS OF THE CASE. RELIEF MAY PLEASE BE GRANTED BY ALLOWING THE EXPENSE OF RS. 1,03,508/- U/S 36(1)(VA). 3. THE ASSESSEE CRAVES ITS RIGHT TO ADD, AMEND, OR ALTER ANY OF THE GROUNDS ON OR BEFORE THE HEARING. GROUND NO. 1 IS REGARDING THE ADDITION MADE BY THE TPO/AO ON ACCOUNT OF ADJUSTMENT IN RESPECT OF THE PAYMENT OF INTEREST TO RELATED PARTIES. 2. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF MANUFACTURING AND SALE OF TRANSFORMERS, PCC POLES ETC. THE ASSESSEE FILED ITS RETURN OF INCOME ON 01.10.2014 DECLARING TOTAL INCOME OF RS. 3,53,27,44 0/-. THE CASE WAS SELECTED FOR SCRUTINY AND THE AO NOTED THAT THE ASSESSEE HAS ENT ERED INTO CERTAIN SPECIFIED DOMESTIC TRANSACTIONS ON ACCOUNT OF PAYMENT OF INTE REST TO THE RELATED PARTIES. ACCORDINGLY THE AO MADE A REFERENCE UNDER SECTION 9 2CA TO THE TPO FOR DETERMINATION OF ARMS LENGTH PRICE IN RESPECT OF T HE SPECIFIED DOMESTIC TRANSACTIONS ENTERED INTO BY THE ASSESSEE WITH THE ASSOCIATED ENTERPRISES. THE ASSESSEE FILED ITS TRANSFER PRICING STUDY ANALYSIS UNDER RULE 10D OF IT RULES BEFORE THE TPO AND SUBMITTED THAT THE TRANSACTIONS OF PAYM ENT OF LOAN TO THE RELATED PARTIES ARE AT ARMS LENGTH AS THE INTEREST PAID TO THE UNRELATED PARTIES ALONG WITH BROKERAGE IS MORE THAN THE INTEREST PAID TO THE REL ATED PARTIES. THUS THE ASSESSEE ADOPTED INTERNAL CUP COMPARABLE AS MOST APPROPRIATE METHOD TO BENCHMARK ITS SPECIFIED DOMESTIC TRANSACTIONS. THE ASSESSEE POIN TED OUT THAT THE EFFECT COST OF 3 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. LOANS TAKEN FROM UNRELATED PARTIES COMES AT AN AVER AGE RATE OF 15.36% IN COMPARISON TO THE INTEREST PAID TO THE RELATED PART IES @ 15%. ACCORDINGLY, THE ASSESSEE CONTENDED BEFORE THE TPO THAT THE SPECIFIE D DOMESTIC TRANSACTIONS OF PAYMENT OF INTEREST ON LOANS TAKEN FROM THE RELATED PARTIES ARE AT ARMS LENGTH AND NO ADJUSTMENT IS CALLED FOR. THE TPO DID NOT ACCEP T THIS CONTENTION OF THE ASSESSEE AS WELL AS THE BENCHMARKING AND PROCEEDED TO APPLY EXTERNAL CUP AS MOST APPROPRIATE METHOD FOR DETERMINATION OF ARMS LENGT H PRICE AS THE INTEREST PAID TO THE RELATED PARTIES. THE TPO ACCORDINGLY APPLIED A VERAGE SBI BASE RATE FOR THE FINANCIAL YEAR 2013-14 AT 9.83% AND FURTHER ADDED 3 00 BASIS POINTS TO THE BASE RATE ON ACCOUNT OF UNSECURED LOAN AND RISK FACTORS. THU S THE TPO HAS APPLIED THE ARMS LENGTH PRICE OF INTEREST AT 12.83% BASED ON EXTERNA L CUP IN COMPARISON TO THE INTEREST PAID BY THE ASSESSEE AT 15% TO THE RELATED PARTIES AND CONSEQUENTLY PROPOSED AN ADJUSTMENT OF RS. 6,53,288/- UNDER SECT ION 92CA(2) OF THE ACT. THE AO CONSEQUENTLY PASSED A DRAFT ASSESSMENT ORDER DATED 30.11.2017. HOWEVER, THE ASSESSEE DID NOT PREFER TO FILE THE OBJECTION AGAIN ST THE DRAFT ASSESSMENT ORDER BEFORE THE DRP AND CHOOSE TO FILE THE APPEAL WITH L D. CIT (A). CONSEQUENTLY, THE AO PASSED THE FINAL ASSESSMENT ORDER DATED 05.12.2017 WHEREBY AN ADDITION OF RS. 6,53,288/- WAS MADE ON ACCOUNT OF ADJUSTMENT PROPOS ED BY THE TPO IN RESPECT OF THE SPECIFIED DOMESTIC TRANSACTIONS PAYMENT OF INTE REST TO THE RELATED PARTIES. THE ASSESSEE FILED THE APPEAL BEFORE THE LD. CIT (A) AN D CONTENDED THAT WHEN THE SPECIFIED DOMESTIC TRANSACTION IS AT ARMS LENGTH I F TESTED WITH THE ARMS LENGTH PRICE BASED ON INTERNAL CUP, THEN NO ADJUSTMENT IS CALLED FOR ON THIS ACCOUNT. THE LD. CIT (A) ACCEPTED THE CLAIM OF THE ASSESSEE REGA RDING MOST APPROPRIATE METHOD BEING INTERNAL CUP. HOWEVER, WHILE COMPUTING AT ARM S LENGTH PRICE, THE LD. CIT (A) 4 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. HAS TAKEN THE INTEREST PAID TO THE UNRELATED PARTIE S AND EXCLUDED THE BROKERAGE PAID BY THE ASSESSEE IN RESPECT OF SUCH TRANSACTIONS OF LOAN TAKEN FROM UNRELATED PARTIES. THEREFORE, THE LD. CIT (A) HAS ARRIVED TO THE ARMS LENGTH INTEREST RATE AT 14.5% BEING THE AVERAGE INTEREST RATE EXCLUDING BROKERAGE PAID BY THE ASSESSEE TO THE UNRELATED PARTIES. 3. BEFORE US, THE LD. A/R OF THE ASSESSEE HAS SUBMI TTED THAT WHEN THE INTERNAL CUP IS ACCEPTED BY THE LD. CIT (A) AS MOST APPROPRI ATE METHOD THEN THE ACTUAL COST OF FINANCE OBTAINED FROM THE UNRELATED PARTIES OUGH T TO HAVE BEEN TAKEN AT ARMS LENGTH PRICE TO BENCHMARK THE SPECIFIED DOMESTIC TR ANSACTIONS OF PAYMENT OF INTEREST TO THE RELATED PARTIES. HE HAS REFERRED TO THE DETAILS OF THE INTEREST PAID TO THE RELATED PARTIES AS WELL AS TO UNRELATED PARTIES AND SUBMITTED THAT THE TPO AS WELL AS THE AO HAS NOT DISPUTED THE ACTUAL COST OF LOAN TAKEN FROM THE UNRELATED PARTIES BEING INTEREST AND BROKERAGE AT 15.36% IN COMPARISO N TO THE INTEREST PAID TO THE RELATED PARTIES AT 15%. THEREFORE, THE LD. A/R HAS SUBMITTED THAT THE TRANSACTION OF PAYMENT OF INTEREST TO THE RELATED PARTIES IS AT AR MS LENGTH AND NO ADJUSTMENT/ADDITION IS CALLED FOR ON THIS ACCOUNT. THEREFORE THE ADDITION MADE BY THE AO AND SUSTAINED BY THE LD. CIT (A) IS UNJUSTIFIED. 4. ON THE OTHER HAND, THE LD. D/R HAS SUBMITTED THA T THE LD. CIT (A) HAS FOLLOWED THE ARMS LENGTH INTEREST AS APPLIED FOR T HE IMMEDIATE PRECEDING YEAR AT 14.5% WHICH WAS ACCEPTED BY THE ASSESSEE AND, THERE FORE, THE LD. CIT (A) HAS TAKEN A REASONABLE AND CONSISTENT VIEW ON THIS ISSUE. HE HAS RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS THE RELEVANT MATERIAL ON RECORD. THE ASSESSEE HAS PAID INTEREST TO 16 RELAT ED PARTIES @ 15% PER ANNUM. 5 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. THEREFORE, THE TRANSACTION OF PAYMENT OF INTEREST F ALLS IN THE CATEGORY OF SPECIFIED DOMESTIC TRANSACTIONS REQUIRED TO BE EXAMINED AS PE R THE PROVISIONS OF TRANSFER PRICING. BEFORE THE TPO, THE ASSESSEE FILED ITS TRA NSFER PRICING STUDY ANALYSIS AND CLAIMED THAT AS PER THE INTERNAL CUP OF PAYMENT OF INTEREST TO THE UNRELATED PARTIES, THE ASSESSEE IS PAYING AVERAGE INTEREST AND BROKERA GE AMOUNTING TO 15.36%. THE ASSESSEE CLAIMED THAT THE SPECIFIED DOMESTIC TRANSA CTION INTEREST TO THE RELATED PARTIES AT 15% IS AT ARMS LENGTH. THE TPO HAS PRO CEEDED TO ADOPT EXTERNAL CUP AS MOST APPROPRIATE METHOD INSTEAD OF INTERNAL CUP. WE FIND THAT FOR REJECTING THE INTERNAL CUP AS MOST APPROPRIATE METHOD BY THE TPO, NO PLAUSIBLE REASON HAVE BEEN GIVEN EXCEPT THE STATEMENT THAT FOR THE PURPOS E OF BENCHMARKING, HE PROPOSED EXTERNAL CUP AS MOST APPROPRIATE METHOD. ONCE THE TRANSACTION OF INTEREST PAID TO THE UNRELATED PARTIES IS AVAILABLE ON RECORD, THEN THE INTERNAL CUP SHOULD BE PREFERRED AS AGAINST THE EXTERNAL CUP AS MOST APPRO PRIATE METHOD FOR DETERMINATION OF ARMS LENGTH PRICE. WE FIND THAT THE ASSESSEE H AS PAID INTEREST TO 16 RELATED PARTIES AND 15 UNRELATED PARTIES. THEREFORE, ALMOS T EQUAL NUMBERS OF TRANSACTIONS OF PAYMENT OF INTEREST TO RELATED PARTIES AS WELL A S UNRELATED PARTIES HAVE BEEN ENTERED INTO BY THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION. THE DETAILS OF THE RELATED PARTY TRANSACTIONS AS WELL AS UNRELATED PAR TY TRANSACTIONS ARE AS UNDER :- S. NO. NAME PB NO. RELA- TIVE INTEREST RATE INTEREST AMOUNT BROKERA -GE TOTAL (INTEREST + BROKERAGE) FREQUEN-CY EFFECTIVE INTEREST RATE 1 ABHAS AGARWAL 18 Y 15% 185,614 - 15% ANNUALLY 15% 2 AKHIL AGRAWAL 19 Y 15% 403,339 - 15% ANNUALLY 15% 3 AKHIL AGRAWAL HUF 20 Y 15% 86,970 - 15% ANNUALLY 15% 4. ALOK AGRAWAL 21 Y 15% 577,555 - 15% ANNUALLY 15% 5. ALOK AGRAWAL HUF 22 Y 15% 297,714 - 15% ANNUALLY 15% 6. ATUL AGRAWAL 23- 24 Y 15% 578,513 - 15% ANNUALLY 15% 7. ATUL AGRAWAL HUF 25 Y 15% 327,449 - 15% ANNUALLY 15% 6 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. 8. DEEPALI GARAWAL 26 Y 15% 356,401 - 15% ANNUALLY 15% 9. HIMANSHI AGARWAL 27 Y 15% 80,114 - 15% ANNUALLY 15% 10. PURVA AGARWAL 28 Y 15% 239,577 - 15% ANNUALLY 15% 11 PUSHPA AGARWAL 29 Y 15% 641,333 - 15% ANNUALLY 15% 12 SAPNA AGARWAL 30 Y 15% 541,065 - 15% ANNUALLY 15 % 13. SIDDHANTH AGARWAL 31 Y 15% 1,366 - 15% ANNUALLY 15% 14. TANMAY AGARWAL 32 Y 15% 113,392 - 15% ANNUALLY 15% 15. VEDANT AGARWAL 33 Y 15% 74,053 - 15% ANNUALLY 15% 16 VEENA AGARWAL 34 Y 15% 11,352 - 15% ANNUALLY 15% AVERAGE 15% 4,515,807 15% 15% UNRELATED PARTIES 17. HARSHIT SHARMA 35 N 14.40% 48,000 1.20% 15.60% BI-MONTHLY 16.65% 18 SMT SHAKUNTALA BAJAJ 36 N 13.20% 20,198 - 13.20% QUARTERLY 13.87% 19 KIRTI GARG 37 N 13.20% 39,600 - 13.20% QUARTERLY 13.87% 20 REKHA TIWARI 38 N 14.40% 74,200 1.20% 15.60% BI- MONTHLY 16.65% 21 AMRITA BAJAJ 39 N 13.20% 5,500 - 13.20% QUARTERL Y 13.87% 22 VINOD KUMAR AGRAWAL HUF 40 N 14.40% 74,200 1.20% 15.60% BI-MONTHLY 16.65% 23 USHA BAJAJ 41 N 13.20% 112,860 - 13.20% QUARTERL Y 13.87% 24 ANURADHA RAWLA N 12.00% 180,000 3.60% 15.60% BI -MONTHLY 16.65% 25 DHURLABHJI PROPERTIES PVT. LTD. N 12.00% 185,500 3.60% 15.60% BI-MONTHLY 16.65% 26 DEEPAK KUMAR SHARMA 42 N 13.20% 26,400 2.40% 15.60% BI-MONTHLY 16.65% 27 KUSUM BANSAL 43 N 13.20% 125,868 - 13.20% ANNUAL LY 13.20% 28 OM KUMAR GOVIL 44- 45 N 13.20% 303,600 - 13.20% MONTHLY 14.03% 29 PUSHPA DEVI SHARMA 46 N 13.20% 105,600 2.40% 15.60% BI-MONTHLY 16.65% 30 KANCHAN DEVI GODIKA N 13.80% 26,833 1.20% 15.00% BI-MONTHLY 15.97% 31 SEEMA SHARMA N 14.40% 26,200 1.20% 15.60% BI-MO NTHLY 16.65% AVERAGE 13.09% 1,354,559 14.51% 15.36% THERE IS NO DISPUTE THAT THE INTEREST PAID TO THE R ELATED PARTIES IS AT 15% PER ANNUM WHEREAS THE INTEREST PAID TO THE UNRELATED PARTIES VARIES FROM 13.20% TO 15.60%. APART FROM THE INTEREST, THE ASSESSEE HAS ALSO PAID BROKERAGE IN RESPECT OF THE PAYMENT TO THE UNRELATED PARTIES. THUS THE EFFECTI VE RATE OF INTEREST INCLUSIVE OF BROKERAGE COMES TO 15.36% ON AVERAGE. ONCE THE AVE RAGE EFFECTIVE RATE OF INTEREST PAID TO THE UNRELATED PARTIES IS NOT IN DISPUTE AT 15.36%, THEN THE SPECIFIED DOMESTIC TRANSACTIONS OF PAYMENT OF INTEREST TO THE RELATED PARTIES HAVE TO BE 7 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. TESTED WITH THE INTERNAL CUP BEING AVERAGE RATE OF INTEREST PAID TO THE UNRELATED PARTIES. THE ASSESSEE HAS ALSO TAKEN A PLEA BEFORE THE AUTHORITIES BELOW THAT THE PAYMENT OF INTEREST TO THE UNRELATED PARTIES IS BI- MONTHLY/QUARTERLY AS AGAINST ANNUALLY TO THE RELATED PARTIES. THIS IS ALSO A COS T ADDING FACTOR IN RESPECT TO THE UNRELATED PARTY PAYMENT OF INTEREST. HAVING REGARD TO THE UNDISPUTED FACT THAT THE ASSESSEE HAS PAID THE EFFECTIVE AVERAGE RATE OF INT EREST INCLUSIVE OF BROKERAGE AT 15.36%, THEN THE PAYMENT OF INTEREST TO RELATED PAR TIES AT 15% IS AT ARMS LENGTH. IT IS ALSO PERTINENT TO NOTE THAT EVEN BY APPLYING THE ARMS LENGTH INTEREST AT 14.50% BASED ON THE INTERNAL CUP WHICH IS AN AVERAG E OF 15 TRANSACTIONS THEN THE TOLERANCE RANGE PROVIDED UNDER SECOND PROVISO TO SE CTION 92C(2) IS ALSO APPLICABLE IN THE CASE OF THE ASSESSEE AND, THEREFORE, IN ANY CAS E THE SPECIFIED DOMESTIC TRANSACTIONS PRICE FALLS IN THE TOLERANCE RANGE OF (+)(-) 3%. ACCORDINGLY, THE ADDITION SUSTAINED BY THE LD. CIT (A) IS DELETED. GROUND NO. 2 IS REGARDING DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PF & ESI PAID AFTER THE DUE DATE AS PROVIDED UND ER THE RELEVANT ACTS. HOWEVER, IT WAS PAID BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. 6. WE HAVE HEARD THE LD. A/R AS WELL AS THE LD. D/R AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. CIT (A) HAS NOT DISPUT ED THE FACT THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION TO PF & ESI WAS MADE BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT. H OWEVER, THE CLAIM OF THE ASSESSEE WAS DISALLOWED IN PARA 3.3 AS UNDER :- 8 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. 3.3. I HAVE PERUSED THE FACTS OF THE CASE, THE AS SESSMENT ORDER AND THE SUBMISSIONS OF THE APPELLANT. THE LD. AUTHORIZE D REPRESENTATIVE ARGUED THAT ASSESSEE DEPOSITED ESI A ND PF CONTRIBUTION AFTER THE DUE DATE BUT BEFORE DUE DATE OF FILING OF RETURN OF INCOME. I FIND THAT IN A RECENT CASE OF M /S. RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED, JAIPUR FOR AS SESSMENT YEARS 2012-13, 2010-11 AND 2011-12 IN D.B.I.T. APPE AL NOS. 10/2018, 11/2018 AND 12/2018 DATED 13.03.2018 THE H ONBLE RAJASTHAN HIGH COURT HAS DECIDED THE FOLLOWING QUES TIONS OF LAW. II. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ITAT WAS JUSTIFIED IN DELETING THE ADDIT ION OF RS. 3,95,066/- MADE FOR DEPOSITION THE EMPLOYEES CONTR IBUTION TO PF AND ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDE D IN THE RESPECTIVE ACTS. III. WHETHER IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW THE ITAT WAS JUSTIFIED IN HOLDING THAT EMPLO YEES CONTRIBUTION TO PF AND ESI GOVERNED BY THE PROVISIO N OF SECTION 43B AND NOT BY SECTION 36(I)(VA) R.W.S. 2(24)(X) OF THE I.T. ACT ? THE HONBLE JURISDICTIONAL COURT HAS DECIDED AS F OLLOWS : 6. WITH REGARD TO ISSUE NO. 2 AND 3 THE CONTROVERS Y IS PENDING BEFORE THE SUPREME COURT IN CIT, JAIPUR VS. M/S. STATE BANK OF BIKANER AND JAIPUR IN SLP NO. 16249/2014, THEREFORE, SUBJECT TO DECISION OF SLP, FOR THE PRESENT, THESE ISSUES ARE DECIDED IN FAVOUR OF THE DEPARTMENT AND AGAINST THE ASSESSEE. IT WILL BE OPEN FOR THE DEPARTMENT TO RECOVER THE A MOUNT IF THE DECISION IS IN THEIR FAVOUR. IN VIEW OF THE SAME THE DISALLOWANCE MADE BY THE AS SESSING OFFICER IS CONFIRMED. THIS GROUND OF APPEAL IS DISMISSED. THE LD. A/R OF THE ASSESSEE HAS SUBMITTED THAT THE LD. CIT (A) HAS MISUNDERSTOOD THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT A ND AN IDENTICAL ISSUE HAS BEEN CONSIDERED BY THE TRIBUNAL IN CASE OF RAJASTHAN COT TAGE INDUSTRIES VS. ITO IN ITA 9 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. NO. 983/JP/2018 VIDE DECISION DATED 24.04.2019. A T THE OUTSET, WE NOTE THAT THIS TRIBUNAL HAS TAKEN A CONSISTENT VIEW ON THIS ISSUE AND IN CASE OF RAJASTHAN COTTAGE INDUSTRIES VS. ITO (SUPRA) THE TRIBUNAL AFTER CONSI DERING THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF PCIT VS. M/S. RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED IN DB IT APPEAL NO. 10, 11 & 12 /2018 DATED 13.03.2018 WHICH WAS FOLLOWED BY THE LD. CIT (A) WHILE PASSING THE I MPUGNED ORDER, HAS DECIDED THIS ISSUE IN FAVOUR OF THE ASSESSEE IN PARA 2 AS UNDER :- 2. THE ONLY ISSUE IN THIS APPEAL IS REGARDING DISAL LOWANCE OF EMPLOYEES CONTRIBUTION TO PF & ESI AFTER THE DUE DATE OF PAYMENT AS PER RE SPECTIVE ACTS PF & ESI HOWEVER, IT WAS PAID BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME U/S 139(1) OF THE ACT. THE LD. CIT(A) HAS ACCEPTED THE FACT THAT THE ASSESSEE HAS PAID THE CONTRIBUTION TOWARDS TO PF & ESI PRIOR TO DUE DATE OF FILING OF RETURN O F INCOME U/S 139(1) OF THE ACT BUT THE CLAIM WAS DISALLOWED ON THE BASIS OF THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF IN CASE OF PCIT VS. M/S RAJASTHAN RENEWABLE ENERGY CORPORATION LIMITED IN DB ITA NO. 10,11 & 12/2018 DATED 13.03.2 018 WHICH WAS MISUNDERSTOOD BY THE LD. CIT(A). WE NOTE THAT THERE WAS TYPOGRAPH ICAL MISTAKE IN THE SAID DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT WHEREAS TH E HONBLE HIGH COURT HAS FOLLOWED THE EARLIER DECISION IN CASE OF CIT VS. JA IPUR VIDYUT VITRAN NIGAM LTD. 363 ITR 307. THE LD. AR HAS POINTED OUT THAT THE DECISI ON OF HONBLE JURISDICTIONAL HIGH COURT IN CASE OF PCIT VS. RAJASTHAN STATE BEVERAGES CORPORATION LTD. 250 TAXMANN 32 HAS BEEN UPHELD BY THE HONBLE SUPREME COURT REPORT ED IN 250 TAXMANN 16. THUS, THE ISSUE IS COVERED BY A SERIES OF DECISIONS OF HO NBLE JURISDICTIONAL HIGH COURT INCLUDING THE DECISION IN CASE OF PCIT VS. RAJASTHA N STATE BEVERAGES CORPORATION LTD. (SUPRA) AS HELD IN PARA 5 AS UNDER:- 5. SO FAR AS THE QUESTION RELATING TO PRIVILEGE FE ES AMOUNTING TO RS.26.00 CRORES IN THE INSTANT YEAR AS WELL AS THE DEDUCTION OF CLAIM OF RS.17,80,765/- ON ACCOUNT OF PROVIDENT FUND (PF) AND ESI IS CONCER NED, THIS COURT HAS EXTENSIVELY CONSIDERED THE AFORESAID TWO QUESTIONS IN ASSESSEE'S OWN CASE VIDE JUDGMENT AND ORDER DT.26.05.2016 REFERRED TO ( SUPRA) AND HAS HELD THAT THE PRIVILEGE FEES BEING A REVENUE EXPENDITURE, IS REQUIRED TO BE ALLOWED AS A REVENUE EXPENDITURE. THIS COURT IN THE AFORESAID CASE HAS ALSO ALLOWED THE CLAIM OF THE ASSESSEE, IN SO FAR AS PAYMENT OF PF & ESI ETC. IS CONCERNED, ON THE FINDING OF FACT THAT THE AMOUNTS IN QUESTION WE RE DEPOSITED ON OR BEFORE 10 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR. THE DUE DATE OF FURNISHING OF THE RETURN OF INCOME AND TAKING IN CONSIDERATION JUDGMENT OF THIS COURT IN COMMISSIONE R OF INCOME TAX VS. STATE BANK OF BIKANER & JAIPUR AND COMMISSIONER OF INCOME TAX VS. JAIPUR VIDYUT VITARAN NIGAM LTD. (2014) 363 ITR 70 (RAJ.) AND ACCORDINGLY BOTH THE QUESTIONS ARE COVERED BY THE AFORESAID JUDGMENT AND AGAINST THE REVENUE. THE SAID DECISION WAS CHALLENGED BY THE REVENUE BEF ORE THE HONBLE SUPREME COURT BUT THE SLP FILED BY THE REVENUE HAS BEEN DISMISSED BY THE HONBLE SUPREME COURT REPORTED 250 TAXMANN 32. ACCORDINGLY, DISALLOWANCES /ADDITIONS MADE BY THE AO ON ACCOUNT OF EMPLOYEES CONTRIBUTION TO PF & ESI IS DE LETED AND CLAIM OF THE ASSESSEE IS ALLOWED. ACCORDINGLY, IN THE FACTS AND CIRCUMSTANCES OF THE CASE AND FOLLOWING THE EARLIER DECISION OF THIS TRIBUNAL, THIS ISSUE IS DECIDED IN FAVOUR OF THE ASSESSEE AND THE ADDITION MADE BY THE AO ON ACCOUNT OF PAYMENT OF EM PLOYEES CONTRIBUTION TO PF AND ESI BEFORE THE DUE DATE OF FILING THE RETURN UN DER SECTION 139(1) IS DELETED. 7. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED . ORDER PRONOUNCED IN THE OPEN COURT ON 04/09/2019. SD/- SD/- FOE FLAG ;KNO FOT; IKY JKWO (VIKRAM SINGH YADAV) (VIJAY PAL RAO) YS[KK LNL;@ ACCOUNTANT MEMBER U;KF;D LNL;@ JUDICIAL MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 04/09/2019. DAS/ VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT-UTTAM BHARAT ELECTRICALS PVT. LTD., J AIPUR. 2. IZR;FKHZ@ THE RESPONDENT-THE DCIT, CIRCLE-4, JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR 6. XKMZ QKBZY@ GUARD FILE {ITA NO. 710/JP/2019} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR 11 ITA NO. 710/JP/2019 M/S. UTTAM BHARAT ELECTRICALS PVT. LTD., JAIPUR.