Nu Tek India Ltd., Gurgaon V. DCIT, New Delhi

ITA 782/DEL/2010

• Counselvise Citation: [2011] 140 COUNSELVISE.COM (IT) 53029 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 8 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-10-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 13-10-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 22-02-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R S NEGI
• Keywords: Question of law
• Section: 43B; 14A

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH E DELHI BEFORE SHRI RAJPAL YADAV AND SHRI K.G. BANSAL ITA NO. 782(DEL)/2010 ASSESSMENT YEAR: 2006-07 NU TEK INDIA LTD., DEP UTY COMMISSIONER OF INCOME B-27, INFOCITY, VS. TA X, CIRCLE 13(1), NEW DELHI. SECTOR-34, GURGAON. PAN: AAACN2270L (APPELLANT) (RESPON DENT) APPELLANT BY : SHRI SATYEN SETHI, ADVOCATE RESPONDENT BY: SHR I R.S. NEGI, SR. DR DATE OF HEARING : 13.10.2011 DATE OF PRONOUNCEMENT : 25.10.2011. ORDER PER K.G. BANSAL : AM IN THIS APPEAL, THE ASSESSEE HAS TAKEN UP THREE GROUNDS REGARDING DISALLOWANCE OF RS. 25,05,190/- AND RS. 2,36,098/ - U/S 36(1)(VA) OF THE INCOME-TAX ACT, 1961 (THE ACT FOR SHORT) IN RESP ECT OF EMPLOYEES CONTRIBUTION TO PROVIDENT FUND AND ESI; AND RS . 5,25,320/- BY INVOKING THE PROVISION CONTAINED IN SECTION 14A. 1.1 THE APPEAL WAS LATE BY 34 DAYS. AN APPLI CATION HAS BEEN FILED PAYING THAT THE DELAY MAY BE CONDONED. IT IS MENT IONED THAT THE ASSESSEE RECEIVED THE IMPUGNED ORDER ON 27.11.2009, THERE FORE, THE APPEAL SHOULD ITA NO. 782(DEL)/2010 2 HAVE BEEN FILED ON OR BEFORE 27.01.2010, AS 26.0 1.2010 WAS A PUBLIC HOLIDAY. THE ASSESSEE FORWARDED THE ORDER TO HI S CHARTERED ACCOUNTANT, SUMAN JEET AGGARWAL & CO., FOR NECESSARY ACTION. HOWEVER, HIS OFFICE DELAYED THE MATTER AND, THUS, NO NEGLIGENCE CAN BE ATTRIBUTED TO THE ASSESSEE. AN AFFIDAVIT FROM SHRI SUMAN JEET AGGA RWAL WAS ALSO FILED, IN WHICH IT IS DEPOSED THAT HE WAS ENGAGED FOR FIL ING THE APPEAL FOR WHICH THE IMPUGNED ORDER WAS FORWARDED TO HIS OFFICE. THE DELAY OCCURRED IN HIS OFFICE AS THE CASE WAS NOT ENTERED IN THE LIST O F CASES IN WHICH THE APPEAL IS TO BE FILED. THERE WAS NO MOTIVE FOR DELAY IN FILING THE APPEAL. THESE VERY FACTS WERE REITERATED BEFORE US. THE LD. DR DID NOT OPPOSE THE APPLICATION. THEREFORE, THE DELAY IS CONDONED. 2. IN SO FAR AS THE DISALLOWANCE IN RESPECT OF EMPLOYEES CONTRIBUTION TO PF AND ESI IS CONCERNED, THE ADMITTED POSITIO N IS THAT THE MATTER STANDS COVERED BY THE DECISION OF HONBLE DELHI HIGH COURT IN THE CASE OF CIT VS. AIMIL LTD., (2010) 321 ITR 508. I T IS ALSO STATED BY BOTH THE PARTIES THAT THE FACT REGARDING PAYMENT OF T HESE SUMS BEFORE THE DUE DATE OF FILING RETURN U/S 139(1) MAY BE VERIFIED BY THE AO AND HE MAY GRANT THE DEDUCTION OF THE AMOUNT PAID ON OR BEFORE THE SAID DUE DATE. IN THE CASE OF AIMIL LTD. (SUPRA), IT HAS BEEN HELD THAT THE DELETION OF THE ITA NO. 782(DEL)/2010 3 SECOND PROVISO TO SECTION 43B IS TREATED RETROSPEC TIVE IN NATURE AND WOULD NOT APPLY AT ALL. THEREFORE, THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE FIRST PROVISO. THE RELEVANT PO RTION OF THE JUDGMENT IS REPRODUCED BELOW:- 12. WE ARE IN RESPECTFUL AGREEMENT WITH THE REASON ING OF THE MADRAS HIGH COURT IN NEXUS COMPUTER PVT LTD T.C.A. NO. 1192 OF 2008 [2009) 313 ITR 144 (MAD). THE JUDICIAL DISCIPLINE REQUIRES US TO FOLLOW THE V IEW OF THE SUPREME COURT IN VINAY CEMENT LTD.S CASE [20 07] 213 CTR 268; [2009] 313 ITR (ST.) 1, AS ALSO THE VIEW OF THE DIVISION BENCH OF THIS COURT IN DHARMENDRA SHARMAS CASE [2008] 297 ITR 320(DEL). 13. IN THESE CIRCUMSTANCES, WE RESPECTFULLY DISAGR EE WITH THE APPROACH ADOPTED BY A DIVISION BENCH OF THE BOM BAY HIGH COURT IN M/S PAMWI TISSUES LTD [2008] 215 CT R 150; [2009] 313 ITR 137. 14. IN THESE CIRCUMSTANCES INDICATED ABOVE, WE ARE OF THE OPINION THAT NO SUBSTANTIAL QUESTION OF LAW ARI SES FOR OUR CONSIDERATION IN THE PRESENT APPEAL. THE APPEAL IS, THUS, DISMISSED. 18. IT ALSO BECOMES CLEAR THAT DELETION OF THE SECO ND PROVISO IS TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT APPLY AT ALL. THE CASE IS TO BE GOVERNED WITH THE APPLICATION OF THE FIRST PROVISO. 19. WE MAY ONLY ADD THAT IF THE EMPLOYEES CONTR IBUTION IS NOT DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELE VANT ACTS AND IS DEPOSITED LATE, THE EMPLOYER NOT ONLY PAYS I NTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR W HICH SPECIFIC PROVISIONS ARE MADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THEREFORE, THE ACT PERMITS THE EMPL OYER TO MAKE ITA NO. 782(DEL)/2010 4 THE DEPOSIT WITH SOME DELAYS, SUBJECT TO THE AFORES AID CONSEQUENCES. INSOFAR AS THE INCOME TAX ACT IS CONC ERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED, AS PER THE PRINCIPLE LA ID DOWN BY THE SUPREME COURT IN VINAY CEMENT [2009] 313 ITR (ST.) 1. 20. WE, THUS, ANSWER THE QUESTION IN FAVOUR OF TH E ASSESSEE AND AGAINST THE REVENUE. AS A CONSEQUENCE, THE APPE ALS FILED BY THE ASSESSEES STAND ALLOWED AND THOSE FILED BY T HE REVENUE ARE DISMISSED. 2.1 IN VIEW OF THE AFORESAID DECISION OF THE JUR ISDICTIONAL HIGH COURT, WE THINK IT FIT TO RESTORE THE MATTER TO THE FILE OF THE AO FOR ASCERTAINING THE AMOUNT PAID ON OR BEFORE THE DUE DATE AND ALLOW THE DEDUCTION OF THE AMOUNT SO PAID IN COMPUTING THE TOTAL INCOME. 3. IN RESPECT OF DEDUCTION U/S 14A OF THE ACT, IT I S SUBMITTED BY THE LD. COUNSEL FOR THE ASSESSEE THAT THE AO DISALLOWED A SUM OF RS. 2,08,617/- BY INVOKING THE PROVISION CONTAINED IN SECTION 14A. THE LD. CIT(APPEALS) ENHANCED THE DISALLOWANCE TO RS. 5,25,320/- WIT HOUT GRANTING ANY OPPORTUNITY TO THE ASSESSEE OF BEING HEARD. TH E DISALLOWANCE WAS MADE OUT OF INTEREST ALSO WHILE NO BORROWINGS WERE M ADE FOR INVESTMENT IN ASSETS WHICH YIELDED TAX-FREE INCOME. ITA NO. 782(DEL)/2010 5 3.1 IN RESPECT OF THIS GROUND ALSO, THE ADMITTED P OSITION IS THAT RULE 8D EMPLOYED BY THE LD. CIT(APPEALS) IS NOT APPLICABL E TO THE PROCEEDINGS OF ASSESSMENT YEAR 2006-07 AS PER DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF GODREJ & BOYCE MANUFACTURING CO. L TD. VS.DCIT, (2010) 194 TAXMAN 203. IT HAS ALSO BEEN HELD THAT T HE ASSESSING OFFICER CAN EXAMINE ALL THE CIRCUMSTANCES AND MAKE REASONABLE DISALLOWANCE FROM EXPENSES BY ATTRIBUTING THEM TOWARDS THE EARNING O F TAX-FREE INCOME. THIS DECISION WAS NOT AVAILABLE TO THE LOWER AUTHORITI ES. ACCORDINGLY, THIS MATTER IS ALSO RESTORED TO THE FILE OF THE AO FOR DECIDING THE MATTER DE- NOVO IN THE LIGHT OF AFORESAID DECISION AND ANY OTHER DECISION WHICH MAY BECOME AVAILABLE TO HIM AT THE TIME OF PASSING THE FRESH ORDER. 4. IN THE RESULT, THE APPEAL IS TREATED AS ALLOWE D FOR STATISTICAL PURPOSES. SD/- SD/- (RAJPAL YADAV) (K.G.BANSAL) JUDICIAL MEMBER ACCOUNTANT MEMBER SP SATIA COPY OF THE ORDER FORWARDED TO:- NU TEK INDIA LTD., GURGAON. DCIT, CIRCLE 13(1), NEW DELHI. CIT(A) CIT THE DR, ITAT, NEW DELHI. ASSISTANT REGISTRAR.