M/s Amar Brothers Global Pvt. Ltd., Kanpur V. Dy. Commissioner of Income Tax-6, Kanpur

ITA 790/LKW/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1195 (ITAT-LUCKNOW)
• Duration Of Justice: 8 month(s) 19 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 18-12-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Retrospective amendment
• Section: 43B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH B , LUCKNOW BEFORE SHRI. T.S. KAPOOR, ACCOUNTANT MEMBER AND SHRI PARTHA SARATHI CHAUDHURY, JUDICIAL MEMBER ITA NO. 790/LKW/2017 ASSESSMENT YEAR: 2013 - 14 AMAR BROTHERS GLOBAL PVT. LTD. 87/112, KALPI ROAD KANPUR V. DCIT - 6 KANPUR T AN /PAN : AAICA6776A (APP ELL ANT) (RESPONDENT) APPELLANT BY: SHRI SWARAN SINGH, C.A. RESPONDENT BY: SHRI AMIT NIGAM, D.R. DATE OF HEARING: 30 08 201 8 DATE OF PRONOUNCEMENT: 07 0 9 201 8 O R D E R PER P ARTHA SARATHI CHAU DHURY, J.M : THIS APPEAL PREFERRED BY THE ASSESSEE EMANATES FROM THE ORDER OF THE LD. CIT(A) - II, KANPUR DATED 17/10/2017 AS PER FOLLOWING GROUNDS OF APPEAL: - 1 . THAT THE LD. C.I.T.(A) - II, KANPUR HAS ERRED IN LAW AND ON FACTS IN SUSTAINING THE DISALLOWANCE OUT OF ALLEGED LATE DEPOSIT OF EMPLOYEE'S CONTRIBUTION OF RS.9,11,599 / - AND RS. 1,05,494 / - TOWARDS EPF AND ESI RESPECTIVELY, BY ARBITRARILY REJECTING EXPLANATION OF THE APPELLANT AND WITHOUT APPRECIATING THAT THE AFORESAID PAYMENTS WERE MADE BEFORE THE FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE INCOME TAX ACT, 1961 BY THE APPELLANT COMPANY. 2 . THAT WHILE SUSTAINING THE ADDITION, THE LD. C.I.T.(A) - II, KANPUR HAS FAILED TO APPRECIATE THE FACT THAT THE 'DUE DATE' AS DEFINED ITA NO.790/LKW/2017 PAGE 2 OF 5 UNDER THE E.P.F. & E.S.I. ACTS OUGHT TO HAVE BEEN RECKONED FROM THE DATE OF DISBURSEMENT OF SALARY AND NOT FROM THE END OF THE RESPECTIVE MONTH. 3 . THAT THE ADDITION(S) SUSTAINED BY THE LD. C.I.T(A) - II, KANPUR IS INSUPPORTABLE IN LAW, WITHOUT PROPER BASIS, CONTRARY TO THE PRINCIPLES OF NAT URAL JUSTICE AND EQUITY AND IS LIABLE TO BE DELETED. 4 . WITHOUT PREJUDICE TO THE ABOVE GROUNDS, THE ADDITION(S) MADE BY THE LD. C.I.T(A) - II, KANPUR IS ARBITRARY, UNSUSTAINABLE IN LAW AND DESERVES TO BE DELETED. 5 . THAT ANY OTHER RELIEF OR RELIEFS AS YOUR HONOUR MAY DEEM FIT IN THE FACTS AND CIRCUMSTANCES OF THE CASE, BE GRANTED. 2 . THOUGH THE ASSESSEE HAS PREFERRED MULTIPLE GROUNDS OF APPEAL, ONLY GRIEVANCE IS AGAINST ADDITION OF RS.9,11,599/ - TOWARDS EPF AND RS.1,05,494/ - TOWARDS ESI DISALLOWED UNDER SECTION 36(1)( VA) OF THE ACT AND ADDED TO THE INCOME OF THE ASSESSEE. 3 . THE FACTS IN THIS CASE ARE THAT FROM A PERUSAL OF TAX AUDIT REPORT OF THE ASSESSEE - COMPANY, IT WAS OBSERVED BY THE ASSESSING OFFICER THAT ASSESSEE - COMPANY HAS RECEIVED EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AMOUNTING TO RS.11,73,163/ - AND TOWARDS ESIC AMOUNTING TO RS.1,88,560/ - . HOWEVER FROM THE DETAILS SUBMITTED BY THE ASSESSEE, IT WAS NOTICED THAT EPF PAYMENTS OF RS.9,11,599/ - AND ESI PAYMENT OF RS.1,05,496/ - WAS PAID AFTER DUE DATE. THE AS SESSEE WAS ASKED TO EXPLAIN WHY THE EXPENDITURE OF RS.9,11,599/ - TOWARD EPF AND OF RS.1,0 5,496/ - TOWARDS ESI WHICH IS PAID AFTER DUE DATE SHOULD NOT BE DISALLOWED IN LIGHT OF THE EXPLANATION TO THE PROVISION OF SE CTION 36(L)(VA). THE ASSESSEE IN ITS REPLY HAS STATED THAT THE COMPANY HAS MADE PAYMENT/DEPOSITED ESI/EPF BEFORE FILING OF THE RETURN , THEREFORE , DEDUCTIBLE UNDER SECTION 43B. ADDITIONS WERE MADE BY THE ASSESSING ITA NO.790/LKW/2017 PAGE 3 OF 5 OFFICER AND THEREAFTER MATTER TRAVELLED UPTO THE FIRST APPELLATE STAGE AND THE LD. CIT (A) AFTER CONSIDERING THE FACTS OF THE CASE, ASSESSMENT ORDER AND THE SUBMISSIONS OF THE ASSESSEE, HELD THAT SINCE THESE PAYMENTS WERE PAID AFTER DUE DATE, THEREFORE, THEY ARE DISALLOWED AS PER PROVISIONS OF SECTION 36(I)(VA) AND ADDED TO THE INCOME OF THE ASSESSEE . 4 . LD. A.R. OF THE ASSESSEE AT THE TIME OF HEARING BEFORE US VEHEMENTLY ARGUED THAT THOUGH PAYMENTS WERE PAID AFTER DUE DATE NONETHELESS THEY HAVE BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF THE RETURN OF INCOME. LD. A.R. OF THE ASSESSEE SUBMI TTED THAT THERE SHOULD NOT BE ANY ADDITION IN THE CASE OF THE ASSESSEE IN VIEW OF PROVISIONS OF SECTION 43B OF THE ACT. HE PLACED STRONG RELIANCE ON THE FOLLOWING JUDICIAL DECISIONS: - ( 1 ) SAGUN FOUNDRY PVT. LTD. VS. CIT, 78 TAXMANN.COM 47 (ALLD). ( 2 ) CIT VS. ALOM EXTRUSIONS LTD., 319 ITR 306 (SC) ( 3 ) ACIT, CIRCLE 2 VS. M/S JAMKASH VEHICLEADES PVT. LTD. IN ITA NO.303/ASR/2014 OF ITAT AMRITSAR BENCH. 5 . PLACING RELIANCE ON ABOVE JUDGMENTS, LD. A.R. OF THE ASSESSEE CONTENDED THAT ASSESSEE ( EMPLOYER) DEPOSITED CONTRIBUTIONS OF THE EMPLOYER AND EMPLOYEES BEYOND DUE DATE PRESCRIBED UNDER THE ACT, BUT BEFORE DUE DATE OF FILING OF RETURN OF INCOME UNDER SECTION 139(1) OF THE ACT AND, THEREFORE, ON THE BASIS OF APEX COURT JUDGMENT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (SUPRA ) ASSESSEE WAS ENTITLED TO DEDUCTION UNDER SECTION 43B OF THE ACT. 6 . LD. D.R., ON THE OTHER HAND, RELIED ON THE ORDERS OF THE AUTHORITIES BELOW. ITA NO.790/LKW/2017 PAGE 4 OF 5 7 . WE HAVE PERUSED THE CASE RECORD AND HEARD THE RIVAL CONTENTIONS. WE OBSERVE THAT IT IS AN UNDISPUTED FACT THAT P AYMENTS OF EPF AND ESI WERE PAID AFTER DUE DATE BUT BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME. WE FURTHER OBSERVE THAT AS A MATTER OF FACT POSITION AS IT STANDS ON TODAY THAT EMPLOYEES AS WELL AS EMPLOYERS CONTRIBUTION TO ANY FUND HAVE TO BE DEP OSITED TOGETHER AND NOT ANY ISOLATION. NOW WHEN SECTION 43B STANDS AMENDED SECTION 36(I)(VA) CANNOT BE READ IN ISOLATION OF THIS AMENDMENT. ASSESSEE HAS TO BE GIVEN BENEFIT FOR THIS AMENDMENT. IF EMPLOYEES CONTRIBUTION IS DEPOSITED BEFORE DUE DATE OF F ILING OF RETURN OF INCOME ALONG WITH EMPLOYERS CONTRIBUTION, THEN SUCH EMPLOYEES CONTRIBUTION WILL NOT BE TREATED AS THE INCOME OF THE ASSESSEE. THIS VIEW HAS BEEN ENSHRINED IN THE JUDGMENT OF HON'BLE APEX COURT IN THE CASE OF CIT VS. ALOM EXTRUSIONS LT D. (SUPRA) WHICH HAS BEEN FOLLOWED BY THE CO - ORDINATE ITAT AMRITSAR BENCH IN THE CASE OF ACIT, CIRCLE 2 VS. M/S JAMKASH VEHICLEADES PVT. LTD. (SUPRA). 8 . IN THE CASE OF CIT VS. DESH RKSHAK AUSHDHALAYA, 218 CTR 7(UK), THE HON'BLE UTTRAKHAND HIGH COURT HELD T HAT WHEN SECTION 43B WAS INCORPORATED IN THE INCOME TAX ACT, 1961 AND CONTAINED THE SECOND PROVISO. THE INTENTION OF THE LEGISLATURE APPEARS TO BE THAT THE DEDUCTION SHOULD BE ONLY GIVEN IF THE DEPOSITS ARE MADE WITHIN DUE DATES UNDER THE ENACTMENT UNDER W HICH THE SAME WERE REALIZED FROM EMPLOYEES AND REQUIRED TO BE DEPOSITED SO THAT EMPLOYERS MAY NOT EARN INTEREST ETC. IN HIS OWN ACCOUNT AND DEPRIVE THE GOVT. OF THE SAME. HOWEVER, LATER THE LEGISLATURE APPEAR S TO HAVE REALIZED THAT WHENEVER SUCH AMOUNT IS DEPOSITED UNDER THE GOVT. TREASURY, IN ANY CASE IT CANNOT BE SAID TO BE TAXABLE INCOME OF THE EMPLOYER/ASSESSEE, AND HAS TO BE DEDUCTED. THIS MIGHT BE REASON DUE TO WHICH THE LEGISLATURE OMITTED SECOND PROVISO TO SEC. 43B THROUGH FINANCE ACT, 2003 WHICH CA ME INTO FORCE W.E.F. 1ST ITA NO.790/LKW/2017 PAGE 5 OF 5 APRIL, 2004. EXPRESSLY IT IS NOT PROVIDED IN THE FINANCE ACT, 2003 THAT THE DELETION IS RETROSPECTIVE OR NOT. THE AMENDMENT WHICH SIMPLY REMOVES THE AMBIGUITY, AND CURATIVE IN NATURE, IMPLIEDLY HAS RETROSPECTIVE EFFECT. THE DELETI ON TO SECOND PROVISO TO SECTION 43B IS RETROSPECTIVE IN NATURE. 9 . WE, THEREFORE, FIND THAT ENTIRE SANCTITY OF PROVISIONS OF SECTION 43B HAS BEEN WELL EXPLAINED IN THE AFORESAID DECISION AND SO FAR AS EXAMINATION OF FACTS IN THIS CASE THE LD. D.R. HAS NOT DIS PUTED THAT PAYMENTS THOUGH WERE PAID AFTER DUE DATE BUT IT WAS PAID BEFORE DUE DATE OF FILING OF THE RETURN OF INCOME AND OBVIOUSLY IT WAS CONTRIBUTION OF BOTH THE EMPLOYER AND EMPLOYEE. IN VIEW OF THE MATTER AND ON THE BASIS OF JUDICIAL PRONOUNCEMENTS AS EXAMINED HEREINABOVE, WE SET ASIDE THE ORDER OF THE LD. CIT(A) ON THIS ISSUE AND ALLOW THE APPEAL OF THE ASSESSEE. 10 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07 / 0 9 / 201 8 . SD/ - SD/ - [ T.S. KAPOOR ] [PARTHA SAR ATHI CHAUDHURY ] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 7 TH SEPTEMBER , 201 8 JJ: COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT(A) 4 . CIT 5 . DR