ACIT, Circle-19(2), New Delhi V. Pearl Global Industries Ltd, New Delhi

ITA 7614/DEL/2017

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 5920 (ITAT-DELHI)
• Duration Of Justice: 6 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-06-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 19-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ASHIMA NEB
• Assessee Lawyers: R K KAPOOR
• Section: 143(3); 142(1); 14A; 115JB

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH SMC, NEW DELHI BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER I.T.A. NO. 7614 /DEL/201 7 A.Y. : 20 1 4 - 1 5 ACIT, CIRCLE 19(2), NEW DELHI ROOM NO. 221, 2 ND FLOOR, CR BUILDING, NEW DELHI 110 002 VS. M/S PEARL GLOBAL INDUSTRIES LTD., A-3, NARAINA INDUSTRIAL AREA, PHASE-II, NEW DELHI 110 028 (PAN: AAACM0175F) (APPELLANT) (APPELLANT) (APPELLANT) (APPELLANT) (RESPONDENT) (RESPONDENT) (RESPONDENT) (RESPONDENT) DEPARTMENT BY : MS. ASHIMA NEB, SR. DR ASSESSEE BY : SH. R.K. KAPOOR, CA ORDER ORDER ORDER ORDER THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS)-38, NEW DELHI DATED 20.09.2017 PERTAINING TO ASSESSMENT YEAR 2014-15 ON THE FOLLOW ING GROUNDS:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN LAW BY DELETING THE ADDITION / DISALLOWANCE OF RS. 38,61,219/- MADE BY THE AO U/S. 2(24)(X) R.W.S. 36(1)(VA) ON ACCOUNT OF DELAYED PAYMENT OF EPF AND ESIC, IGNORING THE CLARIFICATION ISSUED BY THE BINDING CIRCULAR NO. 22/2015 OF CBDT. 2. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) HAS ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS. 10,26,674/- U/S. 14A OF THE I.T . 2 ACT IGNORING THE MANDATORY NATURE OF RULE 8D AND THE BINDING CBDT CIRCULAR NO. 5/2014 DATED 11.2.2014. 3. ON THE FACTS AND UNDER THE CIRCUMSTANCES OF THE CASE, LD. CIT(A) ERRED IN LAW IN DELETING THE DISALLOWANCE OF RS. 3,10,000/- ON ACCOUNT OF PROVISION MADE FOR WEALTH TAX. 4. THE APPELLANT CRAVES TO BE ALLOWED TO ADD AND ALTE R ANY FRESH GROUND(S) OF APPEAL AND / OR DELETE OR AMEND ANY OF THE GROUND(S) OF APPEAL. 2. THE BRIEF FACTS OF THE CASE ARE THE ASSESSEE FI LED E-RETURN OF INCOME ON 30.11.2014 DECLARING AT NIL INCOME. FURTHER REV ISED RETURN WAS FILED ON 6.2.2015 DECLARING AGAIN NIL INCOME. THE CASE OF THE ASSESSEE COMPANY WAS SELECTED FOR COMPLETE SCRUTINY UNDER CASS AND STATUTORY NOTICE U/S. 143(2) OF THE I.T. ACT WAS ISSUED ON 1 7.09.2015 AND SERVED UPON THE ASSESSEE COMPANY. SUBSEQUENTLY, NOTICE U/S . 142(1) OF THE ACT ALONGWITH QUESTIONNAIRE WAS ISSUED ON 13.05.2016 IN FORMATION IN SUPPORT OF ITS CLAIM WAS CALLED FOR. IN COMPLIANCE THERETO , THE A.R. OF THE ASSESSEE ATTENDED THE PROCEEDINGS FROM TIME TO TIME AND FILED THE DETAILS / INFORMATION ETC. AO OBSERVED THAT ASSESSEE HAS N OT PAID THE AMOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND /ESI WITHIN THE DUE DATE PRESCRIBED AS NOTED IN COLUMN NO. 16(B) FORM 3CD. H ENCE, THE AO WAS OF THE VIEW THAT DUE DATE AS PER EXPLANATION TO SECTIO N 36(1)(VA) WOULD MEAN THE DUE DATE OF DEPOSIT AS PER THE RESPECTIVE ACTS I.E. ESI & EPF. HE 3 FURTHER DRAW SUPPORT FROM THE CIRCULAR ISSUED BY TH E CBDT BEING CIRCULAR NO. 22/2015, THE AMOUNT WERE DISALLOWED BY THE AO T O THE EXTENT OF RS. 38,61,219/- AND TREATED THE SAME AS ASSESSEES INCO ME U/S 2(24)(X) OF THE ACT. AO FURTHER OBSERVED THAT ASSESSEE COMPA NY HAS ADDED BACK DISALLOWANCE OF RS. 10,26,674/- ON ACCOUNT OF U/S 1 4A IN ITS NORMAL PROVISIONS OF INCOME. ALSO A PROVISION FOR WEALTH TAX OF RS. 3,10,000/- HAS BEEN ADDED BACK TO ITS NORMAL INCOME. SINCE TH ESE TWO DISALLOWANCE ARE REQUIRED TO BE ADDED BACK FROM BOOK PROFIT OF T HE ASSESSEE COMPANY, A SHOW CAUSED VIDE NOTE SHEET DATED 23.12,2016 HAS BEEN GIVEN TO THE A.R. OF THE ASSESSEE COMPANY BY THE AO AND IN RESPO SNE4 TO THE SAME THE AR FILED A NOTE WHICH WAS NOT ACCEPTABLE TO T HE AO, THEREFORE, MAT INCOME WAS MADE AND DISALLOWANCE OF RS U/S. 14A R.W . RULE 8D AMOUNTING TO RS. 10,26,674/- AND PROVISION OF WEALTH TAX AMOU NTING TO RS. 3,10,000/- WERE MADE AND INCOME OF THE ASSESSEE WAS ASSESSED AT RS. 38,61,219/- UNDER NORMAL PROVISION AND THE DECLARED BOOK PROFIT U/S. 115JB AT RS. 14,27,79,863/- WAS TAKEN AS ASSESSED I NCOME VIDE ORDER DATED 23.12.2016 PASSED U/S. 143(3) OF THE I.T. A CT, 1961. 3. AGAINST THE AFORESAID ASSESSMENT ORDER, THE ASSE SSEE APPEALED BEFORE THE LD. CIT(A)-38, NEW DELHI, WHO VIDE ITS IMPUGNED ORDER DATED 20.9.2017 HAS PARTLY ALLOWED THE APPEAL OF THE AS SESSEE AND DELETED THE ADDITIONS IN DISPUTE. 4. AGGRIEVED WITH THE IMPUGNED ORDER, THE REVENUE I S IN APPEAL BEFORE THE TRIBUNAL. 4 5. AT THE TIME OF HEARING, LD. DR RELIED UPON THE O RDER PASSED BY THE AO AND REITERATED THE CONTENTIONS RAISED BY THE RE VENUE IN THE GROUNDS OF APPEAL. 6. ON THE OTHER HAND, LD. COUNSEL OF THE ASSESSEE RELIED UPON THE ORDER OF THE LD. CIT(A) AND REITERATED THE CONTENTI ONS MADE BEFORE THE LD. CIT(A). HE FURTHER STATED THAT SINCE THE LD. C IT(A) HAS PASSED A WELL REASONED ORDER WHICH DOES NOT NEED ANY INTERFERENCE ON OUR PART. HENCE, THE APPEAL OF THE REVENUE MAY BE DISMISSED. 7. I HAVE HEARD BOTH THE PARTIES AND PERUSED THE RE LEVANT RECORDS AVAILABLE WITH US, ESPECIALLY THE ORDERS OF THE REV ENUE AUTHORITIES. APROPOS GROUND NO. 1 RELATING TO DISALLOWANCE OF RS . 38,61,219/- IS CONCERNED, I FIND THAT LD. CIT(A) HAS ALLOWED THE R ELIEF TO THE ASSESSEE BY FOLLOWING THE JUDGMENT OF HONBLE DELHI HIGH COURT ON THIS ISSUE IN THE CASE OF CIT VS. AIMIL LIMITED 321 ITR 508 (DEL) WHE REIN, IT HAS BEEN HELD THAT EVEN IF THE AMOUNTS OF EMPLOYEES CONTRIBUTION ARE DEPOSITED BEYOND THE SPECIFIED DATES AS PER THE PROVISIONS OF PF AND ESI ACT, THE ASSESSEE NOT ONLY PAYS INTEREST BUT CAN ALSO BE SUBJECT TO P ENAL PROVISIONS. HOWEVER, SO FAR AS INCOME TAX ACT IS CONCERNED, THE ASSESSEE CAN GET BENEFIT IF ACTUAL PAYMENT HAS BEEN MADE BEFORE THE FILING OF INCOME TAX RETURN. I FURTHER NOTE FROM THE ASSESSMENT ORDER T HAT INCOME TAX RETURN HAS BEEN FILED BY THE ASSESSEE ON 30.11.2014 AND AL L THE PAYMENTS HAVE BEEN MADE BY THE ASSESSEE EITHER IN 2013 ITSELF OR BY APRIL, 2014 AS PER DETAILS IN THE ASSESSMENT ORDER. THE DELAY IN DEPOS IT EVEN AS PER THOSE 5 SPECIFIC DATES RANGE BETWEEN 1 TO 7 DAYS AND MOST O F THE DEPOSITS HAVE BEEN MADE ON 31 ST OR 22 ND OF THE MONTH AS AGAINST THE DUE DATE OF 20 TH OF EACH MONTH. IN VIEW OF THE AFORESAID FACTS AND CIRCUMSTANCES OF THE CASE AS WELL AS APPLYING THE RATIO OF THE AFORESAI D PRECEDENT I.E. CIT VS. AIMIL LTD. (SUPRA), I AM OF THE CONSIDERED VIEW THA T LD. CIT(A) HAS RIGHTLY DELETED THE ADDITION IN DISPUTE AND ALLOWED THIS GROUND WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHO LD THE SAME AND REJECT THE GROUND NO.1 RAISED BY THE REVENUE. 8. APROPOS GROUND NO. 2 RELATING TO RELIEF OF RS. 10,26,674/- U/S. 14A OF THE ACT AND GROUND NO. 3 RELATING TO DISALLOWANC E OF PROVISION FOR WEALTH TAX OF RS. 3,10,000/- U//S. 115JB OF THE ACT ARE CONCERNED, I NOTE THAT THE AO NOTICED THAT THE ASSESSEE HAD MADE CERT AIN DISALLOWANCE UNDER THE NORMAL PROVISIONS OF THE ACT. BUT HOWEVER THE BOOK PROFITS HAVE NOT BEEN ENHANCED BY THESE DISALLOWANCES. THE AO, T HEREFORE, HAS ENHANCED THE BOOK PROFITS U/S. 115JB BY THESE TWO A MOUNT. I NOTE THAT THE ISSUE OF ENHANCEMENT OF BOOKS PROFITS BY THE AM OUNTS OF DISALLOWANCE MADE U/S. 14A OF THE ACT IS SQUARELY COVERED BY THE SPECIAL BENCH OF DELHI, ITAT DECISION IN THE CASE OF ACIT VS. VIREET INVESTMENT PVT. LTD. 82 TAXMAN.COM 415 (DELHI) ITAT(SB) WHEREIN, IT HAS BE EN HELD THAT WHILE CALCULATING MINIMUM ALTERNATIVE TAX (MAT), THE PROV ISIONS OF SECTION 14A R.W. RULE 8D ARE NOT APPLICABLE, HENCE, THE QUESTIO N OF INCREASING BOOK PROFIT DUE TO DISALLOWANCE U/S. 14A DOES NOT ARISE, THEREFORE, LD. CIT(A) HAS RIGHTLY DELETED THE DISALLOWANCE BY APPLYING TH E AFORESAID PRECEDENT, WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HE NCE, I UPHOLD THE 6 SAME. AS REGARDS THE ENHANCEMENT OF BOOK PROFITS BY THE PROVISIONS OF WEALTH TAX IS CONCERNED, I FIND THAT LD. CIT(A) HAS FOLLOWED THE DECISION OF SPECIAL BENCH OF KOLKATA, ITAT IN THE CASE OF US HA MARTIN LTD. 81 TTJ 1518 (ITAT-KOL) WHEREIN, THE TRIBUNAL HAS HELD THA T WEALTH TAX PAID OR PAYABLE OR A PROVISION THEREOF CANNOT BE TREATED AT PAR WITH INCOME TAX ACT AND THE SAME IS NOT REQUIRED TO BE ADDED BACK T O THE BOOK PROFITS OF THE ASSESSEE U/S. 115JB OF THE INCOME TAX ACT. IN VIEW OF THE ABOVE DISCUSSIONS AND PRECEDENTS RELIED UPON BY THE LD. C IT(A), I AM OF THE CONSIDERED VIEW THAT LD. CIT(A) HAS RIGHTLY ALLOWED THESE GROUND WHICH DOES NOT NEED ANY INTERFERENCE ON MY PART, HENCE, I UPHOLD THE SAME AND REJECT THE GROUND NOS.2 & 3 RAISED BY THE REVENUE. 9. IN THE RESULT, THE APPEAL FILED BY THE REVENUE S TANDS DISMISSED. ORDER PRONOUNCED ON 21/06/2018. S SS SD DD D/ // /- -- - [ [[ [H.S. SIDHU H.S. SIDHU H.S. SIDHU H.S. SIDHU] ]] ] JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER DATE 21/06/2018 SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR SRBHATNAGAR COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: COPY FORWARDED TO: - -- - 1. APPELLANT - 2. RESPONDENT - 3. CIT 4. CIT (A) 5. DR, ITAT TRUE COPY BY ORDER, ASSISTANT REGISTRAR, ITAT, DELHI BENCHES