DMC AUTOMOTIVE PRIVATE LIMITED, TIRUVALLUR V. Assessing Officer, Corporate Ward, Income Tax Department,Nungambakkam

ITA 792/CHNY/2022

• Counselvise Citation: [2022] 103 COUNSELVISE.COM (IT) 9164 (ITAT-CHENNAI)
• Duration Of Justice: 1 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-11-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: A
• Next Hearing Date: 25-10-2022
• Assessment Year: 2017-2018
• Appeal Filed On: 18-09-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: GOVINDARAJAN LD
• Section: 143(3); 115JB

Judgement Text

आयकर अपीलीय अिधकरण “ए” ायपीठ चे ई म । IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, CHENNAI माननीय *ी वी. द ु गा0 राव, ाियक सद2 एवं माननीय *ी मनोज कु मार अ7वाल ,लेखा सद2 के सम9। BEFORE HON’BLE SHRI V. DURGA RAO, JM AND HON’BLE SHRI MANOJ KUMAR AGGARWAL, AM आयकरअपील सं./ IT A No.7 9 2 / Chn y/ 2 0 2 2 ( िनधा0रण वष0 / A sse s s m e n t Ye a r: 2 0 1 7 -1 8 ) M/s. DMC Automotive Private Ltd. No.5, Othappai Village, Uthukottai Taluk Odappai B.O, Poondi, Tiruvallur-602 023. बनाम/ V s. The Assessing Officer Corporate Ward-1(4) Chennai. था यी ले खा सं . / जी आ इ आ र सं . / P A N / G I R N o . AAC C D -4 6 7 1 -P (अ पीलाथ /Appellant) : (#$थ / Respondent) अपीलाथ कीओरसे/ Appellant by : Shri Govindarajan (CA) – Ld. AR #$थ कीओरसे/Respondent by : Shri ARV Sreenivasan – (Addl. CIT) – Ld. DR सुनवाईकीतारीख/ Date of Hearing : 26-10-2022 घोषणाकीतारीख / Date of Pronouncement : 02-11-2022 आदेश / O R D E R Manoj Kumar Aggarwal (Accountant Member): 1. In this appeal for Assessment Year (AY) 2017-18, the sole grievance of the assessee is confirmation of disallowance of Employees’ Contribution to PF / ESI in terms of Sec.43B r.w.s. 36(1)(va) as well as Sec. 2(24)(x). This issue was hitherto being decided by us in assessee’s favor, inter-alia, by relying upon the decision of Hon’ble High Court of Madras in CIT v. Industrial Security & Intelligence India (P.) Ltd. (TCA No. 585 of 2015, dated 24-7-2015). However, now this issue has 2 been decided by Hon’ble Supreme Court in favor of revenue in its recent decision in bunch of appeals titled as Checkmate Services P. Ltd. Vs CIT (Civil Appeal No.2833 of 2016 dated 12.10.2022). It is admitted position that this decision applies to the facts of case before us. In the above background, the appeal is disposed-off as under. The registry has noted a delay of 1 day in the appeal which stand condoned. 2. The assessee’s return was scrutinized u/s 143(3) on 20.12.2019. The Ld. AO made disallowance u/s 36(1)(va) for Rs.14.39 Lacs and reduced the loss declared by the assessee. The said adjustment was made while computing Book Profits u/s 115JB also. The Ld. CIT(A) confirmed the disallowance. Regarding 115JB, Ld. CIT(A) observed that no such disallowance has been made by Ld. AO. Aggrieved, the assessee is in further appeal before us. 3. So far as the reduction of loss in normal provisions is concerned, respectfully following the binding decision of Hon’ble Supreme Court as cited above, the stand of Ld. CIT(A) stand confirmed. The corresponding grounds stands dismissed. 4. The Ld. AR submitted that such a disallowance should not be added while computing Book Profits u/s 115JB. We find that as per provisions of Sec.2(24)(x), the contribution so received by assessee from its employees would become its income and the deduction would be allowed to the assessee if dues are deposited as per the mandate of Sec.36(1)(va). However, Book Profits u/s 115JB means profits as shown in the statement of Profit & Loss Account. The Book Profits are to be further adjusted to the extent as provided in Explanation-1 to Sec.115JB(2). Such an adjustment of employee’s contribution has not been envisaged therein. Further, upon receipt of contribution, the 3 assessee becomes liable to deposit the same and it is reflected as ‘current liabilities’ for the assessee. The same is added to the income of the assessee in the computation of income and if the assessee deposit the same as per the mandate of Sec.36(1)(va), the deduction of the same is allowed to the assessee. Thus, this amount is not credited to Profit & Loss Account but the adjustment of the same is made in the computation of income. Therefore, this disallowance, in our opinion, would not form part of Book Profits u/s 115JB. We order so. The Ld. AO is directed to verify the same and compute correct Book Profits u/s 115JB. The corresponding grounds stands allowed for statistical purposes. 5. The appeal stands partly allowed for statistical purposes. Order pronounced on 02 nd November, 2022. Sd/- (V. DURGA RAO) ाियक सद2 /JUDICIAL MEMBER Sd/- (MANOJ KUMAR AGGARWAL) लेखा सद2 / ACCOUNTANT MEMBER चे5ई / Chennai; िदनांक / Dated : 02-11-2022 EDN/- आदेश की Vितिलिप अ 7ेिषत/Copy of the Order forwarded to : 1. अपीलाथ /Appellant 2. यथ /Respondent 3. आयकर आयु (अपील)/CIT(A) 4. आयकर आयु /CIT 5. िवभागीय ितिनिध/DR 6. गाड फाईल/GF