Tamil Nadu Cements Corporation Limited, CHENNAI V. ITO Corporate Ward 3(1), CHENNAI

ITA 830/CHNY/2019

• Counselvise Citation: [2020] 110 COUNSELVISE.COM (IT) 1868 (ITAT-CHENNAI)
• Duration Of Justice: 1 year(s) 8 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-12-2020
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2013-2014
• Appeal Filed On: 28-03-2019
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Section: 43B; 139(1)

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH: CHENNAI . , . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.830/CHNY/2019 /ASSESSMENT YEAR: 2013-14 M/S.TAMIL NADU CEMENTS CORP. LTD., NO.735, LLA BUILDING, ANNA SALAI, CHENNAI-600 005. VS. THE INCOME TAX OFFICER, CORPORATE WARD-3(1), CHENNAI. [PAN: AABCT 1819 J] ( /APPELLANT) ( /RESPONDENT) / APPELLANT BY : MR.I.DINESH, ADV. /RESPONDENT BY : MR.ABANI KANTA NAYAK, CIT /DATE OF HEARING : 15.11.2020 /DT. OF PRONOUNCEMENT : 03.12.2020 / O R D E R PER SHRI S. JAYARAMAN, ACCOUNTANT MEMBER: THE ASSESSEE FILED THIS APPEAL AGAINST THE ORDER O F THE COMMISSIONER OF INCOME TAX (APPEALS)-7, CHENNAI, IN ITA NO.66(T) /CIT(A)-7/2016-17 DATED 31.01.2019 FOR THE AY 2013-14. 2. M/S.TAMIL NADU CEMENTS CORP. LTD., THE ASSESSEE, A PUBLIC SECTOR UNDERTAKING WHOLLY OWNED BY THE GOVERNMENT OF TAMIL NADU IN THE BUSINESS OF PRODUCTION OF CEMENT AND CEMENT BASED PRODUCTS C LAIMED, INTER ALIA, PRIOR PERIOD EXPENDITURE AND EMPLOYEES CONTRIBUTION TO T HE PF WHICH WAS PAID BELATEDLY U/S.36(1)(VA) BUT BEFORE THE DUE DATE OF FILING THE RETURN OF ITA NO.830/CHNY/2019 :- 2 -: INCOME FOR THE AY 2013-14. WHILE MAKING THE ASSESSM ENT, THE AO DISALLOWED THEM. AGGRIEVED, THE ASSESSEE FILED AN A PPEAL BEFORE THE CIT(A). THE LD.CIT(A) DISMISSED THE APPEAL. AGGRIEVED AGAI NST THE ORDER OF THE LD.CIT(A), THE ASSESSEE FILED THIS APPEAL WITH THE FOLLOWING GROUNDS OF APPEAL: 1.1 THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF P RIOR PERIOD EXPENSES OF RS.17,06,000/-. 1.2 THE CIT(A) ERRED IN UPHOLDING THAT THE FAILURE ON TH E PART OF THE APPELLANT TO BOOK ITS EXPENSES IN THE GIVEN TIME CANNOT BE CONDONED AND O UGHT TO HAVE SEEN THAT THE AMOUNTS HAVE IN ESSENCE CRYSTALLIZED ONLY DURING TH E YEAR. 1.3 THE CIT(A) ERRED IN HOLDING THAT THE AMOUNTS ARE ON LY RECTIFICATION AND REVISION ENTRIES AND WENT WRONG IN NOT APPRECIATING THE FACT THAT IT IS ONLY THE NET OF THE PRIOR PERIOD INCOME AND PRIOR PERIOD EXPENSES. 2.1 THE CIT(A) ERRED IN UPHOLDING THE DISALLOWANCE OF RS .21,85,824/- VIZ. PAYMENT MADE BY THE APPELLANT AS EMPLOYEES CONTRIBUTION TO EPF. 2.2 THE CIT(A) OUGHT TO HAVE CONSIDERED THE VARIOUS DECI SIONS OF THE JURISDICTIONAL TRIBUNAL AND HIGH COURT WHICH SAYS THAT THE DUE DAT E AS MENTIONED IN SECTION 36(1)(VA) INCLUDES THE DATE OF FILING THE RETURN; IN THE INSTANT CASE THE AMOUNTS BEING PAID BEFORE THE FILING OF THE RETURN OUGHT TO HAVE BEEN ALLOWED IN FULL. 2.3 THE CIT(A) ERRED IN RELYING ON THE ORDER OF THE JURI SDICTIONAL HIGH COURT IN THE CASE OF UNIFAC MANAGEMENT SERVICES INDIA PVT. LTD. VS. D CIT (409 ITR 225) AND FAILED TO SEE THAT THE SAME IS CONTRARY TO THE JUDGMENT OF TH E HONBLE DIVISION BENCH. 3. ANY OTHER GROUND THAT MAY BE RAISED AT THE TIME OF HEARING. 3. THE CASE WAS HEARD THROUGH VIDEO CONFERENCING. THE LD.AR SUBMITTED THAT THE AO WITHOUT DUE EXAMINATION, MECHANICALLY, HAS DISALLOWED THE PRIOR PERIOD EXPENSES. THE LD.CIT(A) ERRED IN UPHOLDING THE SAME WITHOUT APPRECIATING THAT THEY WERE CRYSTALIZED ONLY DURING THE YEAR. WITH REGARD TO THE DISALLOWANCE OF BELATED PAYMENT OF EMPLOYEE S CONTRIBUTION, THE LD.AR RELIED ON THE DIVISION BENCH DECISION OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF CIT V. INDUSTRIAL SECURITY & INTELLI GENCE INDIA LTD., REPORTED IN TAX CASE APPEAL NOS.585 & 586 OF 2015 DATED 24.0 7.2015. 4. PER CONTRA, THE LD.DR SUPPORTED THE ORDERS OF TH E LOWER AUTHORITIES AND FURTHER RELIED ON THE JURISDICTIONAL HIGH COURT DECISION IN THE CASE OF CIT ITA NO.830/CHNY/2019 :- 3 -: V. MADRAS RADIATORS & PRESSINGS LTD., DATED 31.12.2 002 (2003) 129 TAXMAN 709 (MAD). 5. WE HEARD THE RIVAL SUBMISSIONS AND GONE THROUGH THE RELEVANT MATERIALS. ON THE ISSUE OF DISALLOWANCE OF PRIOR PE RIOD EXPENSES, IT IS CLEAR FROM THE ASSESSMENT ORDER THAT THIS ISSUE HAS NOT B EEN PROPERLY EXAMINED. THEREFORE, WE DEEM IT FIT TO REMIT THIS ISSUE TO TH E AO FOR A FRESH EXAMINATION. THE ASSESSEE SHALL LAY RELEVANT EVIDE NCE/MATERIAL IN SUPPORT OF ITS CONTENTION AND COMPLY WITH THE REQUIREMENTS OF THE AO IN ACCORDANCE WITH LAW. THE AO ON DUE EXAMINATION AND AFTER AFFO RDING DUE OPPORTUNITY TO THE ASSESSEE, SHALL DECIDE THE ISSUE ON MERITS. ON THE ISSUE OF DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO THE PF, WHICH THE ASSESSEE PAID BELATEDLY U/S.36(1)(VA) BUT BEFORE THE DUE DATE OF FILING THE RETURN OF INCOME, AS ARGUED BY THE LD.DR ON THIS ISSUE, SOME OF THE HIGH COURT DECISIONS ARE IN FAVOUR OF THE REVENUE WHILE SOME O THER HIGH COURT DECISIONS ARE IN FAVOUR OF THE ASSESSEE. THIS ISS UE WAS ELABORATELY CONSIDERED BY THIS TRIBUNAL IN THE CASE OF DCIT V. REPCO HOME FINANCE (P) LTD., IN ITA NO.2885/CHNY/2017 DATED 17.06.2020 REP ORTED IN [2020] 117 TAXMANN.COM 233 (CHENNAI TRIB.), WHEREIN, THIS TR IBUNAL AFTER EXAMINING THE PROVISIONS OF SECTIONS 2(24)(X), 36(1)(VA), 43B (B) AND THE DECISIONS OF THE HONBLE APEX COURT IN THE CASES OF ALOM EXTRUSI ONS LTD., REPORTED IN 319 ITR 306 (SC), VINAY CEMENT LTD. 213 CTR 2108 (SC), THE DELHI HIGH COURT DECISION IN THE CASE OF AMIL LTD., REPORTED IN 321 ITR 508, THE MADRAS HIGH COURT DECISIONS IN THE CASE OF CIT V. M/S.INDUSTRIA L SECURITY & INTELLIGENCE ITA NO.830/CHNY/2019 :- 4 -: INDIA PVT. LTD., AND ALSO THE HONBLE SINGLE JUDGE DECISION IN THE CASE OF UNIFAC MANAGEMENT SERVICES INDIA PVT. LTD. V. DCIT IN WP NO.5264 OF 2020, WMP NO.6461 OF 2018 VIDE ORDER DATED 23.10.2018 REP ORTED IN (2018) 409 ITR 225 (MAD), ETC., THIS TRIBUNAL HELD AS UNDER: 10.3.11 THUS, KEEPING IN VIEW STRICT AND LITERAL INTERPRETATION OF PROVISIONS OF SECTION 36(1)(VA) OF THE 1961 ACT READ WITH EXPLANATION 1 AND SECTION 2(24)(X) OF THE 1961 ACT , THE ASSESSEE WILL NOT BE ENTITLED FOR DEDUCTION AS THE EMPLOYEE CONTRIBUTION TOWARDS PF RECEIVED BY ASSESSEE WAS DEPOSITED LATE BEYOND THE TIME STIP ULATED UNDER THE RELEVANT STATUTE GOVERNING PF. BUT, IT IS EQUALLY TRUE THAT THE CONS TITUTIONAL COURTS VIZ. HONBE HIGH COURTS AND HONBLE SUPREME COURT IN INDIA HAVE POWERS TO R EAD DOWN THE PROVISIONS OF THE 1961 ACT TO MAKE IT WORKABLE AND TO AVOID ABSURDITY. ON P ERUSAL OF THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION(SUPRA) , IT IS O BSERVED THAT HONBLE SUPREME COURT HAS ELABORATELY DISCUSSED PROVISIONS OF SECTION 36(1)(VA ) ,2(24)(X) AND AMENDMENTS MADE BY FINANCE ACT, 2003 TO SECTION 43B OF THE 1961 ACT, W HICH AMENDMENTS TO SECTION 43B OF THE 1961 ACT WERE HELD TO BE RETROSPECTIVE IN NATURE. T HE HONBLE SUPREME COURT ALSO REFERRED IN ITS DECISION IN ALOM EXTRUSION (SUPRA) TO ITS EAR LIER DECISION IN CIT V. J.H. GOTLA [1985] 156 ITR 323(SC) , PARA 10 THAT INTENTION OF THE LEGISLAT URE IS TO BE FOUND OUT FROM THE LANGUAGE USED AND IF STRICT LITERAL CONSTRUCTION LEADS TO AN ABSURD RESULT I.E. RESULT NOT INTENDED TO BE SUBSERVED BY THE OBJECT OF THE LEGISLATION FOUND IN THE MANNER INDICATED BEFORE, THEN IF ANOTHER CONSTRUCTION IS POSSIBLE APART FROM STRICT LITERAL CONSTRUCTION, THEN THAT CONSTRUCTION SHOULD BE PREFERRED TO THE STRICT LITERAL CONSTRUCT ION. THOUGH EQUITY AND TAXATION ARE OFTEN STRANGERS, ATTEMPTS SHOULD BE MADE THAT THESE DO NO T REMAIN ALWAYS SO AND IF A CONSTRUCTION RESULTS IN EQUITY RATHER THAN IN INJUSTICE, THEN SU CH CONSTRUCTION SHOULD BE PREFERRED TO THE LITERAL CONSTRUCTION. THE HONBLE DELHI HIGH COURT AND HONBLE BOMBAY HIGH COURT AFTER CONSIDERING, ANALYZING AND INTERPRETING THE DECISI ON IN THE CASE OF ALOM EXTRUSION (SUPRA) HAS HELD THAT IT WILL APPLY BOTH TO EMPLOYERS AND E MPLOYEE CONTRIBUTION AND IF THE SAME IS DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN O F INCOME U/S 139(1) OF THE 1961 ACT, THE DEDUCTION SHALL BE ALLOWED , EVEN IF THE SAME IS DE POSITED BEYOND THE TIME STIPULATED AS DUE DATE AS PRESCRIBED UNDER THE PROVISIONS OF STATUTE GOVERNING PF/ESI ACT. THUS, THE APPLICABLE PROVISION AS IS CONTAINED IN SECTION 36(1)(VA) IS REA D DOWN BY MOST OF THE CONSTITUTIONAL COURTS INCLUDING OUR JURISDICTIONAL HIGH COURT (BAR RING HONBLE GUJARAT HIGH COURT AND HONBLE KERALA HIGH COURT) TO MAKE IT WORKABLE AS OTHERWISE THE TAX-PAYER WILL LOSE THE DEDUCTION FOR EVER IF THE EMPLOYEE CONTRIBUTION IS NOT DEPOSITED WITHIN DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE , ALTHOUGH THE SAID CONTRIBUTION S TOOD DEPOSITED BY EMPLOYER BELATEDLY BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME U/S 139(1) OF THE 1961 ACT AND THE AMOUNT WILL STOOD BROUGHT TO TAX AS INCOME KEEPING IN VIEW PROVISIONS OF SECTION 2(24)(X) OF THE 1961 ACT SO FAR EMPLOYEE SHARE OF CONTRIBUTION TOWA RDS PF ,ESI AND OTHER EMPLOYEES WELFARE FUNDS IS CONCERNED. NO DOUBT IT IS WELL CHERISHED OBJECTIVE THAT THERE SHOULD NOT BE AN UNJUST ENRICHMENT OF THE EMPLOYER OF THE AMOUNT WHICH IT C OLLECTS FROM ITS EMPLOYEES TOWARDS EMPLOYEES SHARE OF PF , ESI AND OTHER EMPLOYEES WEL FARE FUNDS AND IN THE IDEAL SITUATION , THE SAID AMOUNTS OUGHT TO HAVE BEEN DEPOSITED BY EM PLOYER WHICH IT COLLECTED FROM ITS EMPLOYEES, TO THE CREDIT OF EMPLOYEE WITH RELEVANT FUNDS WITHIN TIME STIPULATED AS DUE DATE BY RESPECTIVE STATUTE GOVERNING PF/ESI ETC. BUT AT T HE SAME TIME IF THE EMPLOYER DOES NOT DEPOSIT THE CONTRIBUTION TOWARDS PF/ESI ETC WITHIN D UE DATE AS PRESCRIBED UNDER RELEVANT STATUTE GOVERNING PF/ESI ETC, THE EMPLOYERS ARE VISI TED WITH INTEREST FOR DELAYED DEPOSIT OF PF/ESI AS WELL PENALTIES FOR LATE DEPOSIT BEYOND THE TIME STIPULATED UNDER THE RELEVANT STATUTE GOVERNING PF/ESI AND OTHER EMPLOYEES WELFARE FUNDS. REFERENCE IS DRAWN TO SECTION 7Q AND 14 OF THE EMPLOYEES PROVIDENT FUNDS AND MISCELLANE OUS PROVISIONS ACT, 1952 . SIMILARLY, HONBLE MADRAS HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY AND INTELLIGENCE INDIA PRIVATE LIMITED (SUPRA) AFTER CONSIDERING AND INTERPRETING THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF ALOM EXTRUSION (SUPRA) AND HONBLE DELHI HIGH COURT IN THE CASE OF AIMIL LIMITED(SUPRA) HELD THAT DEDUCTION IS TO BE ALLOWED FOR BELATED PAYMENT OF EMPLOYEE CONTRIBUTION TO PF/ESI WHICH IS DEPOSITED BEYOND THE DUE DATE STIPULATED UNDER THE RELEVANT STATUTES GOVERNING PF/ESI , BUT THE SAME STOOD DEP OSITED BEFORE THE DUE DATE FOR FILING OF RETURN OF INCOME AS IS PRESCRIBED U/S 139(1) OF THE 1 961 ACT. WE AT TRIBUNAL BEING INFERIOR JUDICIAL BODY TO HONBLE MADRAS HIGH COURT , ARE BO UND BY DECISION OF HONBLE JURISDICTIONAL ITA NO.830/CHNY/2019 :- 5 -: HIGH COURT IN THE CASE OF INDUSTRIAL SECURITY(SUPRA ) AS A CARDINAL PRINCIPLES OF JUDICIAL DISCIPLINE AND TO INSTILL CERTAINTY AMONG TAX-PAYER S, THUS, RESPECTFULLY FOLLOWING THE DECISION OF HONBLE MADRAS HIGH COURT IN THE CASE OF INDUSTR IAL SECURITY AND INTELLIGENCE(SUPRA) , WE ALLOW THE CLAIM OF THE ASSESSEE FOR DEDUCTION OF RS . 6,31,788/- TOWARDS EMPLOYEES CONTRIBUTION TO PF WHICH WAS DEPOSITED LATE BEYOND DUE DATE AS PRESCRIBED UNDER RELEVANT STATUTE GOVERNING PF , BUT THE SAME STOOD DEPOSITED TO THE CREDIT OF EMPLOYEES WITH RELEVANT FUND BEFORE THE DUE DATE FOR FILING OF RETURN OF IN COME AS PRESCRIBED U/S 139(1) OF THE 1961 ACT. THE REVENUE FAILS ON THIS ISSUE FOR THE REASON S CITED ABOVE. WE ORDER ACCORDINGLY. 6. RESPECTFULLY FOLLOWING THE ABOVE ORDER, WE ALLOW THE CORRESPONDING GROUNDS OF THE ASSESSEES APPEAL. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS PARTLY ALLOWED. ORDER PRONOUNCED ON THE 03 RD DAY OF DECEMBER, 2020, IN CHENNAI. SD/- SD/- ( . ) ( V. DURGA RAO ) /JUDICIAL MEMBER ( . ) (S. JAYARAMAN) /ACCOUNTANT MEMBER /CHENNAI, /DATED: 03 RD DECEMBER, 2020. TLN /COPY TO: 1. /APPELLANT 4. ' /CIT 2. /RESPONDENT 5. /DR 3. ' ( ) /CIT(A) 6. /GF