Appeal details
Counselvise Citation
[2023] 102 COUNSELVISE.COM (IT) 4373 (ITAT-DELHI)
Assessee PAN
Bench
Appeal Number
Duration Of Justice
5 month(s) 8 day(s)
Appellant
Respondent
Appeal Type
Income Tax Appeal
Pronouncement Date
11-06-2023
Appeal Filed By
Assessee
Order Result
Allowed
Bench Allotted
G
Next Hearing Date
31-05-2023
Assessment Year
misc
Appeal Filed On
02-01-2023
Judgement Text
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “G” DELHI BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL MEMBER & SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER I.T.As. No.7 & 8/DEL/2023 Assessment Years 2018-19 & 2019-20 Sentinel Consultants P. Ltd. 504 Ashok Bhawan 93 Nehru Place New Delhi Vs. ACIT Circle-22(2) New Delhi TAN/PAN: AAACS0396L (Appellant) (Respondent) Appellant by: Shri Vijay Kumar Singla, CA Respondent by: Shri S.L. Anuragi, Sr.DR Date of hearing: 01 06 2023 Date of pronouncement: 12 06 2023 O R D E R PER PRADIP KUMAR KEDIA, A.M.: T h e c a pt i on e d a pp e al s h a ve b e e n f i l e d b y t h e a s se s se e a g a i n st t he s e p a r a t e o r d e r s of t h e l d. Co m m i s s i o ne r o f In c om e T a x ( A p p e a l s) - N F A C , D e l hi ( ‘ C I T ( A ) ’ i n s ho r t ) d a t e d 1 2. 1 2. 2 0 2 2 a nd 0 7. 1 2. 2 0 2 2 a r i si n g fr om t h e i n ti m a t i o n o r d e r s d a te d 05 . 11 . 2 0 19 & 1 8. 0 9. 2 02 0 pa s se d b y t h e A s s e s s i n g O f f i c e r ( A O ) un de r S e ct i o n 1 4 3 ( 1 ) o f t he In c o m e T a x A c t , 1 9 61 ( th e A c t ) c o n c e r n i n g A Y s 2 01 8-1 9 & 20 19 - 2 0 r e s p e ct i v e l y. 2. T h e c a p ti o n e d a p p e a l s r e l a t e t o A s s e s s m e n t Y e a r s 2 0 1 8 - 1 9 a n d 20 1 9 - 2 0 i n v o l vi n g i d e n t ic a l i s su e o f d i s al l o w a n c e of e x p e nd i tu r e t ow a r d s e m p l o ye e s c o n t r ib ut i o n t o E S I C / P F un de r S e ct i on 36 ( 1 ) ( v a ) o f t he A c t . 3. B r i e fl y s t a t e d , t h e a s se s s e e i s e n ga ge d i n t h e bu si ne s s o f se c u r i t y I.T.As. No.7 & 8/Del/2023 2 m an p o w e r s u p p l y a n d h a s f i le d t he r e t ur n o f i n c o m e a f t e r g e t t i n g i t s a c c o un t a u d i t ed u n d e r S e ct i o n 4 4 A B of t h e A c t . A n e- n o ti c e u nd e r S e c ti o n 14 3( 1) ( a ) w a s i s s u e d o n t he R O I a s a s ho w ca us e t ow a r d s de l a y i n d e p o s i t o f P F a n d E S I C i n r e l a t io n t o e m plo ye e s c o nt r i bu t i o n. T he r e a f t e r , i n t h e a b s e n c e o f a n y r e s p on se fr om a s se s s ee t h e r e o n , a n i nt i m at i o n u n d e r S e c t i o n 1 43 ( 1 ) w a s i s s ue d w h e r e b y d i s a l l ow a n ce un d e r S e ct i o n 3 6( 1 ) ( va ) w a s c a r r ie d ou t fo r d e l a ye d de p o si t o f e mp l o ye e s c o n t r i b u t i on t o P F a n d E S I C on t h e b a s i s o f i nf or m at i o n a v a i l ab l e i n t h e t a x a u d i t r e p o r t . A di s a l l ow a n c e of R s . 42 , 9 6 , 3 93 / - w a s c ar r i e d o u t o n a c co un t o f l a t e d e p o s i t of e m p l o ye e s’ c o nt r ib ut i o n t o E S IC / P F a n d R s. 1 5 l a k h o n a c co u n t o f s e r vi c e t a x paya b l e f or t he A s s e s sm e nt Y e a r 2 0 1 8- 1 9 i n q u e s t i o n . 4. Li ke w i s e , a di s a l l o w a n c e o f R s . 9 5, 5 8, 2 05 / - w a s ca r r i e d o u t o n a c c o un t o f l a t e d e po s it o f e m pl o ye e s c o nt r i b ut i on s t o E S IC / P F c ou pl e d w i t h a n o th e r d i s a l l ow an c e o f R s. 1 9 , 19 9/ - u n d e r S e c ti o n 40 ( a ) ( i a ) o n a c c o un t o f n o n de d u c t i on o f T D S on in t e r e s t pa i d f or A Y 20 19 - 2 0. 5. T h e C IT ( A ) co n f i r m e d t h e a c t i o n o f t h e A s se s si n g O f f i c e r i n t he r e s p e ct i v e a s s e s s m e n t ye a r s. 6. A g gr i e ve d, t h e a s s e s se e p r e f e r r e d a pp e a l b e f or e t he t r i b u n a l a s pe r c a p t io n e d a p p e a l s. 7. W h en t h e m a t t e r w a s c a l l e d f o r h e ar i n g, t h e l d . c o u n se l f or t he a s s e s se e s ub mi t s a t t h e o ut s e t t h a t s u c h a dj u st m e n ts / d i s a ll o w a nc e s fo r a ll e g ed d e l a y i n d e po s i t o f e m p l o ye e s co n t r i b u ti o n t o P F / E S IC i s n ot pe r m i ss i b l e w h i l e dr a w i n g i n ti m a t i o n u nd er S . 1 4 3 ( 1) of th e A c t ha v in g r e ga r d t o s e v er a l tr i bu na l de c i si o n s. 7. 1 T h e l d . C o u n s e l n e x t c on t e n d s t h a t t h e a s s e s s e e i n t he i ns t a nt c a s e, i s a l a b o ur c o nt r ac t o r a n d e n ga ge d i n p r o fe s si o n o f s up pl y o f se c ur it y m a n p o w e r s t o v a r i ou s f a c t o r i e s w h er e s u c h s e c ur i t y m a n po w e r i s e mp l o ye d . In t h e b a c k dr op o f n a t u r e o f w or k, t he l d. c ou n se l I.T.As. No.7 & 8/Del/2023 3 c on te n d s t h a t t h e s a la r y in s u c h b u si n e s s i s o f t e n di sb u r s e d t o t h e e mp l o ye e s a s a nd w he n t h e f un ds a r e a r r a n g ed fr om th e c l i e nt s. O w i n g t o be l a te d r e c e i p t o f s er vi c e c h a r g e s f r om c l i e n t s , t he d i s b ur s e m e n t o f sa l ar y ar e a l s o, a t t i m e s, p a i d l a t e i n t a nd e m. T h e ‘ d u e d at e ’ fo r de p o si t o f e m p l o ye e s’ c o n t r i b ut i on u n de r t h e r e s p e ct iv e A ct s sh ou l d t he r e f or e b e r e c ko n e d w i t h r e f e r e n c e t o t he m o n t h of a c t ua l sa la r y pa ym e n t a n d n ot w h e n th e li a b il i t y t o p a y a r i s e s t o a n e m p l o ye r . It w a s fu r t h er c o nt e nd e d th a t w h e n t h e d ue da t e u n de r P F /ES I C A c t i s c om pu t e d w i t h r e f e r e n c e t o t he mo nt h i n w hi c h t he sa l a r y h a s be e n a ct u a ll y p a i d, t h e al l e ge d d e l a y i n p a ym e n t o f E S I C/ P F w o ul d be su b st a nt i a l l y i r o n e d o ut . T h e l d . co un s e l st at e s t hat t h e R e v e nu e ha s c om pu t e d t h e d e l a y w i t h r e f e r en c e t o t he m o nt h i n wh i c h t he l i a b i l i t y t o p a y s a l ar y h a s a r i se n t o th e em p lo ye r r a t h e r t h an t he m on t h i n w h i c h su c h s al a r y h a s b e e n a c t ua l l y p a i d r e s ul t i n g in a l le ge d d e l a y gi v i n g r i s e t o i m p u gn e d d is al l o w a n c e . 7. 2 T h e l d. c o u n s e l , i n t he a l t e r n a t i v e, s u b m i t s w it h r e f e r e n c e t o t he a dd it i o n a l gr o un d t h a t t he e x pe n d i t ur e i nc ur r e d t owar d s e m p l o ye e s ’ c on tr i b u t i o n i s , in a n y c a s e , a l l o w a bl e d e du ct i on und er S e c t i o n 37 ( 1 ) of t h e A ct w h i c h h a s no t w e i gh e d i n t h e m in d o f t he l o w e r a ut h or i ti e s. Ce r ta i n T r i bu na l de c i si o n s w e r e pl a c e d t o s u p p o r t thi s a l t er na t e pl e a . 7. 3 A s r e g ar d s ot he r di sa l l o w a n c e s un de r S e ct i o n 4 3B t o w a r d s se r v i ce t a x p a ya b l e, t he l d. co u n se l s ub m i t s t ha t th e p a ym e n t h a s b e e n m ad e b e f o r e t h e d u e d a t e o f f i l i n g o f r e t ur n a n d t hu s n o d e f a ul t u nd e r S . 43 B c a n b e a t t r i b ut e d. T h e i m pu g n e d d is al l o w a n c e i s t h u s n ot j u st i fi e d . 7. 4 T h e d i s al l o w a n c e s o f R s. 1 9 , 19 9/ - w it h t h e a i d o f S . 40 ( a ) ( i a ) o n a c c o un t o f n o n - d e d uc t i on o f TD S o n i n t e r e st w a s a l so a s s a i l e d on t h e gr ou nd t h a t t he a s s e s se e c a n n o t b e t r e a t e d a s a s s e ss e e i n d e f a u l t i n t h e f a c t s o f pr e s e n t c a s e . I.T.As. No.7 & 8/Del/2023 4 8. T h e l d. D R f or t h e Re ve n u e , o n t h e o t h e r ha nd , rel i e d up on t he or de r s o f t h e l ow e r au t ho r i t i es . 9. W e h a ve c a r e f ul l y c on si d e r e d t h e r i v al su b m i s si on s a n d p e r u s e d t he m a t e r i a l a v a i l a b l e o n r e c or d. T h e di sa l l o w a n c e o f e m p l o ye e s ’ c on tr i b u t i o n t o P F / E S IC fo r br e a c h o f c on di t i on u n de r S e ct i o n 36 ( 1 ) ( va ) i s i n c o n tr ov e r s y. 9. 1 W e n ot i c e a t th e o ut s e t t h a t a n op p o r t u n i t y w a s g i v e n vi a e le c t r o ni c p la t f or m o f th e d e p tt . f or t h e p r o po s e d a d j u st m e n t s a n d i n t he a b se nc e o f e - r e sp on s e , t h e a d j u st m en t s w e r e c a rr i e d o u t t he CP C - Be n gl ur u a nd i nt i m a ti o n w a s i s s u e d e n ha n ci n g th e a sse s s e d i nc o m e i n t he c a p t i o n e d a s se s sm e n t ye a r s . T h e C I T( A ) i n t h e fi r s t a p p e a l ha s su s t a i n e d t h e a dj u st me n t s t o w ar d s b el a t e d d e p o si t s o f e m pl o ye e s ’ c on tr i b u t i o n to P F / E S I C i n t h e l i gh t o f t h e j u d g m e nt r e nd e r e d b y t h e H on ’ b l e S u pr e m e C o ur t in C h e c k m a te P v t. L t d . v s. C I T , ( 2 02 2 ) 1 4 3 t ax m a nn . c o m 1 7 8 ( S C ) . Th e c o nt e n t i o n o f t h e A s se s se e t h a t s u c h a dd it i o n s ca n n o t b e m a d e u n d e r th e u mb r e l l a o f S . 1 4 3( 1 ) i s c o v er e d a ga i n st t h e a s s e s s e e t h e de c i si on o f t h e c o - o r d i n a te b e n c h i n t he c a s e of Weather Comfort Engineers Private Limited vs. ACIT-CPC ITA No. 959/Del/2021 order dated 15/02/2023. T he a c t i on o f CP C an d C I T ( A ) t h u s c a n no t b e f a u l t ed w he r e s om e o p p o r t u n i t y w a s a d m i t te dl y g iv e n f o r e - r e s p o n se . 9. 2 W e no w t u r n t o a l t e r n a t e p l ea on b e h a l f o f t h e a s s e s se e fo r gr a n t of d e d uc t i o n u nd e r ge ne r al pr ov i s i o n s f o r de du c t i o n o f e x p e n d i t u r e un d e r S . 37 o f t h e A c t . W e d o n o t s e e a n y m er i t i n su c h p le a th a t t he be l a t ed d e p o s i t o f e m pl o ye e s c o n tr i bu ti o n s t o P F /E SI C g ov e r n e d u n d e r S e c ti o n 36 ( 1 ) ( v a ) i s a l so si m u l t an e o u sl y a m e n a b l e to d e du ct i o n u nd e r S e c ti o n 3 7 ( 1 ) o f t h e A c t . I n t e r m s o f t h e pr o v i si on, S e c t i o n 37 ( 1 ) pe r m i t s d e du ct i o n o f ex p e n di t ur e w h i c h i s n ot i n the n a t u r e o f e x p en di t ur e pr es cr i be d i n S e ct i o n s 3 0 t o 3 6 o f t h e A c t a n d a l so n ot be i n g i n t h e n a t ur e of c a pi t a l e x p e nd i tu r e or p e r son a l e x p e ns e s o f t he I.T.As. No.7 & 8/Del/2023 5 a s s e s se e . T hu s, i n vi e w o f s u c h m a n d a t e o f l a w , t he d e du c t i o n o f e x p en di t ur e u nd e r t he ge n e r a l c l a u se o f S e c t i on 3 7(1) w o ul d n ot e x t e n d t o ex p e n di t u r e sp e c ia l l y c o v e r e d w i t h i n t h e a m b it o f S e c t i o n 36 ( 1 ) ( va ) o f t h e A c t . T he H o n’ b l e S up r e m e Co ur t i n t h e c a se o f Ch e c k m a t e P v t. L t d. ( s u p ra ) i t se l f e x p l a i n s t h i s po s i t i o n i n P a r a 32 o f t he J u d g m e nt . S u c h vi e w a l s o d r a w s s up p o r t f r o m t h e ob se r v a t i o n s m ad e i n r e c e n t j u d gm e n t o f t he H on ’ b l e S up r e m e C ou rt in t h e c a s e o f P r. CI T v s . K h y a ti R e al t o r s ( P ) L t d. ( 20 22 ) 14 1 t a x ma n n . c o m 46 1 ( S C ). T he a l t e r n a t e pl e a i s t h us w it h ou t a n y m e r i t . 9. 3 W e a l s o t a k e no te o f ye t a n o t h e r p l e a m a d e ou t o n b e h a l f t h e a s s e s se e t o w a r d s m e t ho d o l o g y o f c a l c u l a t i o n o f d e f aul t u nd e r t he r e l e va n t P F /E S I C A c t . T he Ld. C o u n s e l co n t e n d s t h a t t he m on t h du r i n g w hi c h th e di sb ur se m en t o f sa l a r y i s a c t u al l y ma d e wo u l d b e r e l e v a nt fo r t he p ur p o s e s o f de t e r m i n a t i on o f du e d a t e o f d ep o s i t un d e r t h e r e s p e ct i v e s t a t u te . T h e a c c r u a l o f l i a bi l i t y t o w a r ds p a ym e nt o f sa l a r y w i t ho u t a c t u a l d i sb u r s e m e n t w o u l d no t f a st en ob l i gat i o n f or d e p os i t s of e mp l o ye e s c o nt r i b ut i on i n t h e l a bo ur A c t s p e r se. a s ob s e r v e d b y t h e c o- or di na t e b e n c h i n K a no i P a pe r a n d I n du st r i e s L t d . v s. A CI T ( 2 0 0 2 ) 75 T T J 4 48 ( Ca l ). T hi s a s p e c t h a s no t be e n fo un d t o be e x am i n ed b y t he A s s e ss in g O f f i c e r or C I T ( A ) . H e n c e w i t h o ut e x p re s s i n g a n y op i ni o n o n m e r i t s o n t hi s a sp e ct , w e d e e m i t e x p e d ie nt t o r e st or e t he m at t e r t o t h e fi l e o f d e s i g na t e d A O . It s ha l l be ope n t o t h e a s s e s se e t o pl a c e f a c tu a l m a t r i x be f or e t h e A O an d t a k e s u c h p le a fo r e v al u a ti o n o f t he A O . T h e A O sh al l e x a m i n e t h is a s p e c t a n d f r e s h or d e r i n a c c o r d a n c e w i t h l a w af t e r giv i n g pr op er op p o r t u ni t y. 10 . A s r e ga r d s t h e ju st i f i c a ti o n s a d va n c e d on be h al f o f t he a ss e s s e e t ow a r d s i m p r o p e r di sa l l o w a n c e s u nd er S . 43 B a n d 4 0(a) ( i a ) i n r e s p e c t of s e r v i c e t a x l i a b i l i t y a nd no n- d e d u c t i o n o f T D S on i nt e r es t e t c . w e a r e n o t i n a p os i t i o n t o e x pr e s s a n y vi e w i n th e a bse n c e o f r e qu i s it e do c um e nt a r y e v i de n c e s. T h e se i s su e s a r e al so r e st ore d t o t h e f i l e o f I.T.As. No.7 & 8/Del/2023 6 A O . T h e a s s e ss e e s ha l l b e a t l i be r t y t o a dd u c e a l l l e g a l a n d fa c t u a l a r gu m e nt s b e f or e t he A ss e s si n g O f f i c e r f or l o g ic a l c o n c l u s i on i n t h e m at t e r . T he A O s h a l l d et e r mi n e t h e i s su e s i n v o l v e d i n a c c or da n c e w i t h l aw a f t e r gi v i n g pr o pe r op po r t un i t y. 11 . H e n c e, i n t e r m s o f s u c h ob s e r v a t i o n s, t h e i n t i ma t i o n s f o r bo t h A s s e s sm e nt Y e a r s 2 0 18 - 1 9 a n d 2 01 9 - 20 a r e s e t a s id e a n d t h e i s su e s i n a pp e a l a r e r e st o r e d b ac k t o th e f i l e o f t h e A s s e s s in g O f f i c e r f o r i t s fr e s h d e te r mi n a ti o n i n a c c or da n c e w i t h l a w . 12 . I n t h e r e s u l t, bo t h t he c a p t i o n e d a pp e a l s o f t he a s s e ss e e a r e a ll o w e d f or st at i s t i c al p ur po se s. Order pronounced in the open Court on 12/06/2023 Sd/- Sd/- [CHANDRA MOHAN GARG] [PRADIP KUMAR KEDIA] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: /06/2023 prabhat
AI Insights
The case involves appeals by Sentinel Consultants P. Ltd. against the orders of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, which arose from the intimation orders passed by the Assessing Officer under Section 143(1) of the Income Tax Act, 1961. The appeals pertained to the disallowance of expenditure towards employees' contributions to ESIC/PF under Section 36(1)(va) of the Act for the assessment years 2018-19 and 2019-20. The Tribunal considered various submissions, including the timing of salary payments and the corresponding deposits of employees' contributions to ESIC/PF, and noted discrepancies in the application of the law by the lower authorities. The Tribunal also addressed additional grounds related to service tax and non-deduction of TDS on interest, restoring these issues to the Assessing Officer for a detailed examination.
