Asst. Commissioner of Income tax, Jabalpur V. M.P. Eletricity Board, Jabalpur

ITA 80/JAB/2013

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1042 (ITAT-JABALPUR)
• Duration Of Justice: 6 year(s) 1 month(s) 13 day(s)
• Appeal Type: Income Tax (Search & Seizure) Appeal
• Pronouncement Date: 28-05-2019
• Appeal Filed By: Assessee
• Bench Allotted: DB
• Assessment Year: 2001-2002
• Appeal Filed On: 15-04-2013
• Court: TRIBUNAL
• Department Lawyers: K KUMAR
• Assessee Lawyers: D R LATHORIYA

Judgement Text

1 IN THE INCOME TAX APPELLATE TRIBUNAL JABALPUR BENCH, JABALPUR BEFORE SHRI D.T. GARASIA, HONBLE JUDICIAL MEMBER AND SHRI B.C. MEENA, HONBLE ACCOUNTANT MEMBER ITA NOS. 79 TO 81/JAB/2013 A.YS. 2000-01 TO 2002-03 ASSTT. COMMR. OF INCOME TAX 2(1) JABALPUR ::: APPELLANT VS M.P. ELECTRICITY BOARD RAMPUR PAN AABC175694E ::: RESPONDENT ` APPELLANT BY SHRI D.R. LATHORIYA RESPONDENT BY SHRI K. KUMAR DATE OF HEARING 19 . 5 .2015 DATE OF PRONOUNCEMENT 6 . 7 .2015 O R D E R PER SHRI B.C. MEENA, AM ALL THESE THREE APPEALS FILED BY THE REVENUE EMAN ATE FROM THE COMMON ORDER OF THE LEARNED CIT(A), JABALPU R, DATED 25.6.2012. THE ONLY ISSUE INVOLVED IN THESE AP PEALS 2 IS AGAINST THE DELETION OF ADDITION MADE ON ACCOUNT OF NOT DEPOSITING THE CONTRIBUTION OF EMPLOYEES TOWARDS PRO VIDENT FUND OF THE EMPLOYEES OF THE ASSESSEE BY INVOKING PROVISIONS OF SECTION 2(24)(X) AND 36(1)(VI) OF THE ACT. 2. THE LEARNED CIT(A) HAS GRANTED THE RELIEF BY HOLDING AS UNDER :- 3. IN GROUND NO. 2 AND 3, THE APPELLANT AGITATES THAT THE ADDITION ON ACCOUNT OF NON- PAYMENT OF PROVIDENT FUND WAS NOT JUSTIFIED AS THE ISSUE HAD ALREADY BEEN SETTLED BY THE HON'BLE ITAT , JABALPUR IN FAVOUR OF THE ASSESSEE IN A.YR. 1994-95. 2.1 THE ISSUE IS MENTIONED IN PARA 8 AND 9 ON PAGE 5-9 OF THE ASSESSMENT ORDER FOR A.YR. 2000- 01. THE A.O. STATES THAT INFORMATION WAS RECEIVED FROM THE M.P.E.B. AND THE PROVIDENT FUND COMMISSIONER WHICH REVEALED THAT THE 3 AMOUNT OF CONTRIBUTION COLLECTED FROM EMPLOYEES FOR THE RELEVANT YEARS, WAS NOT TRANSFERRED TO THE PROVIDENT FUND ACCOUNT. THE ISSUE HAS ALSO BEEN DISCUSSED IN DETAIL IN A.YR. 2004-05. THE ASSESSEE WAS ASKED AS TO WHY THE AMOUNT TRANSFERRED TO PROVIDENT FUND TRUST NOT BE TREATED AS INCOME OF THE ASSESSEE IN CASE IT WAS NOT TRANSFERRED DURING THE YEAR UNDER CONSIDERATION. IN REPLY THE ASSESSEE STATED THAT THIS WAS A PROVIDENT FUND SUBSCRIPTION AND COULD NOT BE ADDED TO THE INCOME OF THE ASSESSEE BECAUSE OF THE FACT THAT THERE WAS NO TIME LIMIT FOR TRANSFERRING THIS AMOUNT OF PROVIDENT FUND AND THAT THE ASSESSEE HAD ALREADY BEEN GRANTED FAVOUR BY THE CIT(A) IN VARIOUS YEARS. THE ISSUE HAD BEEN HEARD AT THE ITAT BUT THE ORDER WOULD BE MADE AVAILABLE SHORTLY AND SUBMITTED A DETAIL 4 RIGHT UP WHICH WAS SUBMITTED TO THE CIT(A) AS WELL AS ITAT, IN THE DETAIL RIGHT UP WHICH IS NOT BEING REPEATED HERE FOR THE SAKE OF BREVITY, IT WAS CONTENDED THAT IN THE CASE OF THE ASSESSEE THE PROVIDENT FUND IS GOVERNED BY THEIR OWN RULES AND CONTRACT OF SERVICE AND THERE IS NO SPECIFIC DATE FOR PAYMENT BUT THE INITIAL ARRANGEMENT WAS SUCH THAT THE PAYMENTS WERE MADE REGULARLY ON AD HOC BASIS AND THE AMOUNT REMAINING UNPAID, IF ANY, WAS TREATED AS INVESTED WITH MPEB AND CARRIED INTEREST. EMPHASIZING ON DUE DATE U/S 36(1)(5A) AND SECTION 2(24)(X) AND DEFINITION OF INCOME, IT WAS STATED THAT THIS AMOUNT COULD NOT BE ADDED TO THE INCOME OF THE ASSESSE. 3.2 THE A.O. DID NOT AGREE WITH THE CONTENTION OF THE COUNSEL AND STATED THAT THE ASSESSEE 5 DEDUCTED THE AMOUNT FROM THE EMPLOYEES FROM THEIR PAY BILL IN THE FORM OF PROVIDENT FUND CONTRIBUTION. IT WAS ALSO A FACT THAT THIS AMOUNT WAS RETAINED AND IT WAS NOT PAID DURING THE ACCOUNTING YEAR TO THE PROVIDENT FUND TRUSTEES FUND. THIS MEANT THAT THE EMPLOYEES WERE PAID LESS SALARY AND THE RECOVERIES MADE WERE RETAINED BY THE ASSESSE. THE FACT REMAINED THAT THE AMOUNT WAS RETAINED BY THE ASSESSEE IN THE FORM OF PROVIDENT FUND CONTRIBUTION AND THE AMOUNT WAS NOT TRANSFERRED TO THE PROVIDENT FUND TRUSTEES FUND HE, THUS, MADE THE ADDITION OF THE PROVIDENT FUND CONTRIBUTION. 3.3 IN THE WRITTEN SUBMISSION, IT WAS CONTENDED THAT THE ASSESSEE HAS REPEATEDLY SUBMITTED THAT THERE WAS NO STIPULATED DATE FOR THE DEPOSIT OF THE PROVIDENT FUND WITH THE 6 TRUSTEES FUND. THE PROVIDENT FUND OF MPEB HAS BEEN GRANTED EXEMPTION BY THE GOVT. OF MPEB AND ITS OWN RULES AND REGULATIONS GOVERNED THE PROVIDENT FUND. GIVING DETAILS OF THE RULES, IT WAS FURTHER CONTENDED THAT THE PROVIDENT FUND STIPULATES THAT THE FUNDS COLLECTED WAS REMAINED INVESTED WITH THE MPEB AND THIS RETAINED AMOUNT WAS CARRIED INTEREST. THE MPEB DEPOSITS THE FUND WITH THE TRUSTEES FUND REGULARLY AND UNPAID AMOUNT IS PAID ALONG WITH THE INTEREST. THE FUNDS UNPAID ARE ULTIMATELY NIL OR WILL BE NIL. THIS ISSUE IS CONSIDERED IN EARLIER YEARS AND PROPERLY EXPLAINED IN A.Y. 1994-95. THE SIMILAR ADDITION WAS MADE TO THE INCOME BUT WAS DELETED BY THE LD. CIT(A). DECISION (GROUND NO. 2 & 3 : ON SIMILAR FACTS AND ISSUE, THE CIT(A) HAD DELETED THE ADDITION 7 MADE ON ACCOUNT OF NON-DEPOSIT OF PROVIDENT FUND BY THE APPELLANT WHICH WAS UPHELD BY THE ITAT IN ITA NO. 69 AND 70/JAB/2005 DATED 22.09.2006. RESPECTFULLY FOLLOWING THE SAME, THE ADDITION MADE ON ACCOUNT OF NON-DEPOSIT OF PROVIDENT FUND OF RS. 62,45,32,201/- (A.YR. 2000-01), RS. 71,16,29,835/- (A.YR. 2001-02) AND RS. 89,02,05,926/- (A.YR. 2002-03) ARE HEREBY DELETED. THESE GROUNDS OF APPEAL ARE ALLOWED. 3. THE LD. DR SUBMITTED THAT SUCH ISSUES HAVE BEEN CONSIDERED BY VARIOUS HIGH COURTS AND HAS BEEN DECIDED IN FAVOUR OF THE REVENUE AND HE RELIED ON THE FOLLOWING CASE LAWS :- (I) CIT VS. SETH B.D. GUPTA (2010) 1 TAX MAN CO 241 (ALL) 8 (II) CIT VS. JAI RAM & SONS (2004) 134 TAXMAN 503 (KER.) (III) CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (2014) 41 TAXMAN.COM 100 (GUJ.) HE ALSO PLEADED THAT THE ASSESSING OFFICER HAS RIGHTLY ADDED THE PROVIDENT FUND NOT DEPOSITED IN TIME TO TH E INCOME OF THE ASSESSE. 4. ON THE OTHER HAND, THE LEARNED AR SUBMITTED THAT THIS ISSUE HAS ALREADY BEEN DECIDED BY ITAT IN FAV OUR OF THE ASSESSEE AND ON THAT BASIS THE LEARNED CIT(A) HAS GRANTED RELIEF TO THE ASSESSEE. HE ALSO SUBMITTED THAT THE APPEAL OF THE DEPARTMENT IS PENDING IN THE HON'BLE HIG H COURT. HE ALSO DISTINGUISHED THE FACTS AND CIRCUMSTANCE S OF CASE LAWS RELIED UPON BY THE REVENUE BY SUBMITTI NG AS FOLLOWING :- (A) CIT VS. SETH B.D. GUPTA (2010) 1 TAX MAN.COM 241 (ALLAHABAD) THIS CASE RELATES TO A PRIVATE PERSON AND WAS GOVERNED BY THE PF AND OTHER GENERAL ACT AND RULES. 9 (B) CIT VS. JAI RAM & SONS (2004) 134 TAXMAN 503 (KERALA) THIS CASE RELATES TO A PARTNERSHIP FIRM AND IS GOVERNED BY THE GENERAL GROUP GRATUITY SCHEME OF LIC CIT VS. GUJRAT STATE ROAD TRANSPORT CORPN. (2014) 41 TAXMAN.COM 100(GUJRAT) THIS CASE IS GOVERNED BY THE PROVIDENT FUND ACT AND ESI ACT WHEREAS THE FACTS OF THE CASE OF THE ASSESSEE ARE ENTIRE LY DIFFERENT I.E. IT IS GOVERNED BY IT OWN RULES AND RE GULATION AND ENJOYS EXEMPTION FROM THE GOVT. HE ALSO SUBMITTED A SHORT SYNOPSIS OF FACTS OF THE ASSESSEES CASE WHICH ARE REPRODUCED HEREUNDER :- 1. CONSTITUTION OF THE MPSEB AND PF TRUST MP ELECTRICITY BOARD IS AN UNDERTAKING CONSTITUTED UNDER THE ACT AND IS FULLY OWNED AND AIDED BY THE GOVT. OF MADHYA PRADESH. IT IS MANAGED BY THE BOARD MEMBERS NOMINATED BY THE GOVT. OF MP. MP ELECTRICITY BOARD HAS ITS OWN PF RULES AND REGULATION. THERE ARE TRUSTEES NOMINATED AS PER THE PROCEDURE PRESCRIBED IN THE REGULATION 4 FOR THE PURPOSES OF MANAGING THE PROVIDENT FUND OF 10 THE STAFF. THIS FUND IS KNOWN AS MADHYA PRADESH ELECTRICITY BOARDS CONTRIBUTORY & GENERAL PROVIDENT FUND REGULATIONS. THIS IS RECOGNISED BY THE GOVT. OF MP AND IS EXEMPTED FROM THE OPERATION OF THE EMPLOYEES PROVIDENT FUND ACT AND SCHEMES SINCE 1964. 2. RULES OF THE PF FOLLOWED THE CLAUSE NO. 11 OF THE PF REGULATION READS AS UNDER :- ALL MONEY CONTRIBUTED TO THE FUND BY THE BOARD OR BY A SUBSCRIBER OR ACCRUING BY WAY OF INTEREST OR OTHERWISE TO SUCH FUND SHALL REMAIN INVESTED WITH THE BOARD OR IN SUCH SECURITIES AS THE TRUSTEES MAY FROM TO TIME DECIDE. IF THE AMOUNT IS LEFT WITH AND MERGED IN THE FUND OF THE BOARD, THE BOARD SHALL CREDIT THE FUND WITH INTEREST ON SUCH AMOUNT COMPUTED ON MONTHLY BALANCE ONCE IN A YEAR AT SAME RATE AS THEY PAY TO THE GOVT. OR THEIR LOANS OR 4 P.C. WHICHEVER IS HIGHER. THUS IN VIEW OF THIS SPECIFIC PROVISION CONTAINED T HE OBLIGATION TO MAKE THE PAYMENT OF PF TO THE TRUST WITHIN ANY DUE DATE IS ELIMINATED. 3. FUND MANAGEMENT THE AMOUNT OF THE PF DEDUCTED FROM THE EMPLOYEES ALL OVER MP IS DEALT BY THE BOARD IN FOLLOWING THREE WAYS : 11 (A) AMOUNTS ARE GIVEN AS LOAN TO THE MEMBERS OF THE FUNDS ALL OVER MP (B) AMOUNTS ARE PAID TO THE P.F. TRUST FROM TIME TO TIME FOR MAKING INVESTMENTS IN THE SECURITIES (C) AMOUNTS RETAINED BY THE MPEB ARE TREATED AS INVESTED WITH THE MPEB ON INTEREST AS PER REGULATION 11 AS REPRODUCED ABOVE (DEEMED INVESTMENT) 4. PROVISION OF INCOME TAX ACT THE EXPLANATION TO SECTION 36(1)(VA) DEFINES THE DUE DATE AS UNDER :- EXPLANATION :- FOR THE PURPOSE OF THIS CLAUSE DUE DATE MEANS THE DATE BY WHICH THE ASSESSEE IS REQUIRED AS AN EMPLOYER TO CREDIT AN EMPLOYEES CONTRIBUTION TO THE EMPLOYEES ACCOUNT IN THE RELEVANT FUND, UNDER ANY ACT, RULES, ORDER, OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORDER, AWARD, CONTRACT OF SERVICE OR OTHERWISE. 5. NO SPECIFIC DATE FOR DEPOSIT OF THE P.F. BY BOARD THUS IN THE CASE OF THE MPSEB THE PF IS GOVERNED BY ITS OWN RULES. THERE IS NO SPECIFIC DATE OF PAYMENT BUT THE INTERNAL ARRANGE IS SUCH THE PAYMENTS ARE MADE REGULARLY ON ADHOC BASIS AND THE AMOUNT REMAINING UNPAID, IF ANY, IS TREATED AS INVESTED WITH THE MPSEB AND CARRIES 12 INTEREST,. THE AMOUNT IS DEEMED AS PAID AND INVESTED WITH THE BOARD AND CARRIES INTEREST ACCORDINGLY TO RULE 11 AS MENTIONED ABOVE. 5. AFTER HEARING BOTH THE SIDES, WE ARE OF THE VIEW THAT THE HON'BLE ITAT HAS ALREADY DECIDED THIS ISSUE IN A.Y. 1994-95 IN FAVOUR OF THE ASSESSEE AND THE APPEAL OF THE DEPARTMENT IS PENDING IN THE HON'BLE HIGH COURT. RESPECTFULLY FOLLOWING THE DECISION OF HON'B LE ITAT, WE DISMISS THE REVENUES APPEAL. 6. IN THE RESULT, THE REVENUES APPEAL STANDS DISMISSED. PRONOUNCED IN OPEN COURT ON 6.7. 2015. SD SD (D.T. GARASIA) (B.C. MEENA) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED - 6.7.2015 DN/-1718.6