C. Doctor India Pvt.Ltd., Ahmedabad V. The ACIT.,(OSD),Range-1, Ahmedabad

ITA 852/AHD/2011

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80377 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 6 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-09-2014
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 09-09-2014
• Assessment Year: 2006-2007
• Appeal Filed On: 18-03-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: B L YADAV
• Assessee Lawyers: N B SHAH
• Keywords: Depreciation; Condonation of delay
• Section: 43B; 143(3); 37(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, AHMEDABAD (BEFORE SHRI ANIL CHATURVEDI , A.M. & SHRI KUL BHARAT, J.M. ) I. T. A. NO. 852 / AHD/ 20 1 1 (A SSESSMENT YEAR: 2006 - 07) C. DOCTOR INDIA PVT. LTD., 3607 - 3608, GIDC ESTATE, PHASE - IV, AHMEDABAD V/S ASSISTANT COMMISSIONER OF INCOME TAX (OSD), RANGE - 1, AHMEDABAD ( APPELLANT) (RESPONDENT) PAN: AAACI3673A APPELLANT BY : SHRI N . B. SHAH, A.R. RESPONDENT BY : SHRI B.L. YADAV, SR. D.R ( )/ ORDER DATE OF HEARING : 09 - 09 - 2014 DATE OF PRONOUNCEMENT : 19 - 09 - 2014 PER SHRI ANIL CHATURVEDI,A.M. 1. THIS APPEAL OF THE ASSESSEE IS AGAINST THE ORDER OF CIT(A) - VI, AHMADABAD DATED 04.10.2010 FOR A.Y. 2006 - 07. 2. THE FACTS AS CULLED OUT FROM THE MATERIAL ON RECORD ARE AS UNDER. 3. ASSESSEE IS A COMPANY ST ATED TO BE ENGAGED IN THE BUSINESS OF MANUFACTURING OF HUMIDIFICATION PLANT FOR INDUSTRIAL UNIT. ASSESSEE FILED ITS RETURN OF INCOME FOR A.Y. 2006 - 07 ON 28.12.2006 DECLARING TOTAL INCOME OF RS. NIL. THE CASE WAS SELECTED FOR SCRUTINY AND THEREAFTER THE ASS ESSMENT WAS FRAMED U/S. 143(3) VIDE ITA NO 852/AHD/2011 . A.Y. 2006 - 07 2 ORDER DATED 26.12.2008 AND TOTAL INCOME WAS DETERMINED AT RS. 66,85,653/ - BEFORE SETTING OFF OF BROUGHT FORWARD LOSSES AND DEPRECIATION. AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) VI DE ORDER DATED 04.10.2010 DISMISSED THE APPEAL OF THE ASSESSEE. AGGRIEVED BY THE ORDER CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US AND HAS RAISED THE FOLLOWING GROUND S : - 1. (A) THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI, HAS ERRED IN LAW AND ON FACT S IN CONFIRMING DISALLOWANCE OF RS. 3,52,876/ - BEING EMPLOYEES' CONTRIBUTION TO PROVIDENT FUND AND EMPLOYEES' STATE INSURANCE CONTRIBUTION WHICH WERE PAID BELATEDLY (WITH DELAYS IN PAYMENTS RANGING FROM TWO DAYS TO NINE DAYS FROM THE DUE DATE OF PAYMENTS I NCLUDING GRACE PERIOD), BUT BEFORE THE END OF THE PREVIOUS YEAR EXCEPT FOR THE MONTH OF MARCH, 2006, WHICH WAS PAID IN APRIL, 2006, AFTER DUE DATE. (B)THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - VI HAS ERRED IN LAW AND ON FACTS OF THE CASE IN CONFIRM ING THE IMPUGNED DISALLOWANCE BY INVOKING THE PROVISIONS OF SECTION 36 (1) (VA) WITHOUT APPRECIATING THE FACT THAT SUCH EXPENDITURE IS FULLY ALLOWABLE AS PER THE PROVISIONS OF SECTION 43B AND EXPLANATION THERE - UNDER. RELIANCE PLACED UPON THE FOLLOWING JUDG MENTS: I) HUNSUR PLYWOOD WORKS LTD., 54 ITD 394 II) CIT V. P.M. ELECTRONICS LTD. 15 DTR 258 (DELHI HIGH COURT) III) SMARTCHEM TECHNOLOGIES LTD. VS. ITO 99 TTJ 918 (AHD) IV) SAI CONSULTING ENG. P. LTD. VS. DCIT ITA NO. 2262/AHD/2007 (AHD) 4. T HE REGISTRY HAS INFORMED TH AT THERE HAS BEEN DELAY IN FILING THE APPEAL BY 76 DAYS. BEFORE US, ASSESSEE HAS REQUESTED FOR CONDONATION OF DELAY AND HAS STATED THE REASONS IN ITS LETTER DATED 5 TH MARCH, 2011 FILED ALONG WITH THE APPE AL . AFTER C ONSIDERING THE EXPLANATION FURNISHED BY T HE ASSESSEE IN THE AFORESAID LETTER , THE DELAY IS CONDONED AND THE APPEAL IS ADMITTED FOR HEARING. 5. DURING THE COURSE OF ASSESSMENT PROCEEDINGS, A. O NOTICED THAT ASSESSEE HAS DEPOSITED THE EMPLOYEES CONTRIBUTION OF PROVIDENT FUND AFTER THE DUE DATE PRESCR IBED UNDER THE RELEVANT ACT. HE WAS THEREFORE OF THE VIEW THAT ASSESSEE WAS NOT ELIGIBLE FOR DEDUCTION IN VIEW OF THE PROVISIONS OF SECTION 36(1)(VA) OF THE ACT AND AC CORDINGLY DISALLOWED THE DELAYED PAYMENT OF RS. 3,52,876/ - BEING THE AMOUNT OF PROVIDENT FUND AND ESIC CONTRIBUTION . AGGRIEVED BY THE ORDER OF A.O, ASSESSEE CARRIED THE MATTER BEFORE CIT(A). CIT(A) UPHELD THE ORDER OF A.O AND DISMISSED THE APPEAL OF THE ASSESSEE BY HOLDING AS UNDER: - 2.3 I HAVE CONSIDERED THE FACTS OF THE CASE; ASSESSMENT ORD ER AND APPELLANT'S SUBMISSION. A.O. MADE ADDITION OF EMPLOYEE'S CONTRIBUTION AMOUNTING TO RS. 352876 TO P.F.AND ESIC NOT PAID WITHIN DUE DATES PRESCRIBED IN PF AND ESIC ACT. EMPLOYEE'S CONTRIBUTION IS ALLOWABLE U/S 36(I)(VA) . THE AMENDMENT IN SEC. ITA NO 852/AHD/2011 . A.Y. 2006 - 07 3 43B ON WHICH VARIOUS JUDICIAL DECISIONS AS REFERRED BY THE APPELLANT, IS NOT APPLICABLE TO EMPLOYEE'S CONTRIBUTION. ON A PLAIN READING OF SEC. 43B IT CAN BE SEEN THAT IT RESTRICTS THE ALLOWANCE OF EXPENSES WHICH ARE OTHERWISE ALLOWABLE UNDER THE ACT. THE ITEMS CO VERED U/S 43B ARE LISTED FROM CLAUSE - A TO F. EMPLOYEE'S CONTRIBUTION TO PF. OR OTHER EMPLOYEES' WELFARE FUND IS NOT COVERED IN ANY OF THE CLAUSE MENTIONED IN SEC. 43B. EMPLOYER'S CONTRIBUTION IS MENTIONED IN CLAUSE - B AND'THEREFORE, EMPLOYER'S CONTRIBUTION IS ONLY SUBJECT TO SEC. 43B. SINCE, IT IS OTHERWISE ALLOWABLE U/S 37(1) OF IT. ACT. SINCE, PROVISION OF SEC. 43B IS NOT AT ALL RELEVANT FOR EMPLOYEE'S CONTRIBUTION; THE DECISIONS BASED ON AMENDMENT TO SEC. 43B CANNOT BE APPLIED TO EMPLOYEE'S CONTRIBUTION. IT IS NOT IN DISPUTE THAT FOR EMPLOYEE'S WELFARE, BOTH EMPLOYEE AND EMPLOYER CONTRIBUTE. EMPLOYER'S CONTRIBUTION IS ALLOWABLE AS DEDUCTION ONLY IF THE SAME IS PAID BEFORE THE DUE DATE OF FILING THE RETURN. HOWEVER, EMPLOYEE'S CONTRIBUTION IS TREATED AS INC OME U/S 2(24) (X) AND THE SAME IS ALLOWED AS EXPENSE IF IT IS PAID WITHIN DUE DATE PROVIDED IN PF.ACT. IF THE PAYMENT IS NOT MADE WITHIN DUE DATE THEN THE EXPENSES IS NOT ALLOWABLE U/S 36(1) (VA). SINCE, THE EMPLOYEE'S CONTRIBUTION IS ALLOWABLE ONLY WHEN T HE PAYMENT IS MADE WITHIN DUE DATE MENTIONED IN PF.ACT., THE SAME BECOMES DISALLOWABLE IF PAYMENT IS MADE AFTER DUE DATE AND ACCORDINGLY, THE SEC. 43B CANNOT BE APPLIED. THEREFORE, MIXING EMPLOYEE'S CONTRIBUTION TO PF ALONG WITH EMPLOYER'S CONTRIBUTION IS DISREGARDING THE CLEAR AND UNAMBIGUOUS PROVISIONS OF IT, ACT. EVEN OTHERWISE, IF PROVISIONS OF SEC. 43B ARE APPLIED TO EMPLOYEE'S CONTRIBUTION, IT WILL MAKE SEC. 36(I)(VA) REDUNDANT. FOR EXAMPLE U/S 36(1 )(VA) ANY PAYMENT MADE AFTER 2 0 DAYS FROM THE END OF THE MONTH IS NOT ALLOWABLE, WHICH MEANS PAYMENT OF EMPLOYEE'S CONTRIBUTION TO PF AFTER 20 TH APRIL FOLLOWING THE END OF PREVIOUS YEAR WILL NOT BE ALLOWABLE, WHEREAS IF THE EMPLOYEE'S CONTRIBUTION IS CONSIDERED U/S 43B THEN THE SAME IS ALLOWABLE TILL THE DUE DATE OF FILING THE RETURN. IN VIEW OF THIS, IF SEC. 43B IS APPLIED TO EMPLOYEE'S CONTRIBUTION, IT WILL MAKE PROVISIONS OF SEC. 36(I)(VA) REDUNDANT. THE RULE OF HARMONIOUS CONSTRUCTION REQUIRES THAT INTERPRETATION TO THE STATUTE SHOU LD BE SUCH THAT IT SHOULD NOT RENDER ANY PROVISION REDUNDANT. SINCE, THERE IS A CLEAR PROVISION FOR DISALLOWANCE OF EMPLOYEE'S CONTRIBUTION; THE SAME CANNOT BE MADE REDUNDANT BY LINKING IT WITH SEC. 43B. IN VIEW OF THIS, IT IS CLEAR THAT ALL THE DECISIONS INTERPRETING THE APPLICABILITY OF SEC. 43B WHERE EMPLOYEE'S CONTRIBUTION IS ALSO LOOSELY MENTIONED , DO NOT APPLY TO EMPLOYEE'S CONTRIBUTION COVERED U/S 36(I)(VA). IT IS TRUE THAT THERE ARE CONFLICTING DECISIONS WHEREIN EMPLOYEE'S CONTRIBUTION IS ALSO CLUB BED WITH THE EMPLOYER'S CONTRIBUTION. HOWEVER THERE IS NO JURISDICTIONAL HIGH COURT DECISION ON THIS ISSUE AFTER AMENDMENT TO SECTION 43 B. ON THE ISSUE OF RULE OF INTERPRETATION OF STATUTE, THERE ARE SEVERAL DECISIONS HOLDING THE VIEW THAT THERE SHOULD BE HARMONIOUS CONSTRUCTION WHILE INTERPRETING STATUTE. SOME OF THIS ARE - 1 - ASSAM CO. LTD VS STATE OF ASSAM AND OTHERS, 248 ITR 567 (SC) 2 - LIC OF INDIA VS CIT, 21.9 ITR 410 (SC) 3 - CIT VS S E UPPER SILERU , 152 ITR 752 (AP) IF THE ABOVE RATIONAL AND LOGIC IS F OLLOWED, THERE IS NO CONFUSION OVER APPLICABILITY OF THE CORRECT PROVISION TO EMPLOYEE'S CONTRIBUTION. IN VIEW OF THE CLEAR PROVISIONS AND LEGISLATIVE INTENT, THE EMPLOYEE'S CONTRIBUTION IS ALLOWABLE ONLY IF THE SAME IS PAID WITHIN DUE DATES UNDER P.F. ACT OR OTHER RELEVANT ACT. SINCE, THERE HAS BEEN DELAY IN PAYMENT FOR THE EMPLOYEE'S CONTRIBUTION TO PF AND ESIC THE SAME IS NOT ALLOWABLE U/S 36 (1) (VA). ADDITION MADE BY THE AO IS THEREFORE, CONFIRMED. 6. AGGRIEVED BY THE ORDER CIT(A), ASSESSEE IS NOW IN APPEAL BEFORE US. 7. BEFORE US, LD. A.R. SUBMITTED THAT THOUGH THERE HAS BEEN DELAY IN DEPOSITING OF EMPLOYEES CONTRIBUTION OF P.F. FUND BUT SINCE THE AMOUNTS HAVE BEEN DEPOSITED BEFORE THE DUE DATE OF FILING OF RETURN, THE CLAIM OF THE ASSESSE BE ALLOWED. HE PLACED RELIANCE ON THE DECISION IN THE CASE OF HINDUSTAN ORGANICS CHEMICALS LTD. IN ITA NO. 399/A/2012 AND ALSO PLACED RELIANCE ON THE DE C ISION IN THE CASE OF ESSAE TERAOKA (P) LTD. VS. DCIT (2014) 266 CTR ITA NO 852/AHD/2011 . A.Y. 2006 - 07 4 (KAR) 246 . HE FURHER SUBMITTED THAT HON BLE KAR NATAKA HIGH COURT HAS AFTER CO N SIDERING THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION 2014 41 TAXMAN.COM 100 (GUJ.) HAS ALLOWE D THE APPEAL OF THE ASSESSEE AND THEREFORE THE ASSESSEE BE ALLOWED T HE DEDUCTION. THE LD. D.R. ON THE OTHER HAND SUBMITTED THAT HON BLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (SUPRA) HAS HELD THAT THE PAYMENT OF EMPLOYEES CONTRIBUTION IS ONLY ALLOWABLE IF THE SAME IS PAID BEFORE THE DUE DATE. HE THUS SUPPORTED THE ORDER OF CIT(A) AND A.O. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL ON RECORD. IN THE PRESENT CASE, IT IS AN ADMITTED FACT THAT THE AMOUNT OF EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND AND ESIC HA S BEEN DEPOSITED BEYOND THE DUE DATES PRESCRIBED UNDER THE RELEVANT ACT S . THE HON BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION IN ITA NO 637/AHD/2013 HAS HELD AS UNDER: - 'ANY SUM WITH RESPECT TO THE EMPLOYEES CONTRIBUTIO N AS MENTIONED IN S. 36(L)(VA), ASSESSEE SHALL BE ENTITLED TO THE DEDUCTION OF SUCH SUM TOWARDS THE EMPLOYEES CONTRIBUTION IF THE SAME IS DEPOSITED IN THE ACCOUNTS OF THE CONCERNED EMPLOYEES AND IN THE CONCERNED FUND SUCH AS PROVIDENT FUND, ESI CONTRIBUTIO N FUND, ETC PROVIDED THE SAID SUM IS CREDITED BY THE ASSESSEE TO THE EMPLOYEES ACCOUNTS IN THE RELEVANT FUND OR FUNDS ON OR BEFORE THE 'DUE DATE' UNDER THE PROVIDENT FUND ACT, ESI ACT, RULE, ORDER OR NOTIFICATION ISSUED THEREUNDER OR UNDER ANY STANDING ORD ER, AWARD, CONTRACT OR SERVICE OR OTHERWISE. ..' 9. BEFORE US, IT IS LD. A.R S SUBMISSION THAT THE DEC I SION OF HON BLE KARNATAKA HIGH COURT IN THE CASE OF ESSAE TERAOKA PVT. LTD. BE CONSIDERED AND NOT THE DECISION OF HON BLE GUJARAT HIGH COURT IN THE CASE OF GUJARAT STATE TRA N S PORT CORPORATION (SUPRA) BECAUSE THE DECISION OF KARNATAKA HIGH COURT IS A LATER DECISION AND IT IS AFTER CONSIDERING THE GUJARAT HIGH COURT DECISION. WE ARE UNABLE TO AGREE WITH THE SUBMISSION OF LD. A.R. TO FOLLOW THE LATER DECISION O F HON BLE KARNATAKA HIGH COURT IN VIEW OF THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. THANA ELECTR I CITY SUPPLY LTD. (1994) 206 ITR 727 ITA NO 852/AHD/2011 . A.Y. 2006 - 07 5 (BOM) WHERE THE HON BLE BOMBAY HIGH COURT HAS HELD THAT THE DECISION OF THE JURISDICTIONAL HIGH COUR T ARE BINDING ON THE SUBORDINATE COURTS AND AUTHORITIES OR TRIBUNALS UNDER ITS SUPERINTANDENCE THROUGHOUT THE TERRITORIES IN RELATION TO WH I CH IT EXERCISES JURISDICTION. 10. IN VIEW O F THE UNDISPUTED FACT THAT THE E MPLOYEES SHARE OF CONTRIBUTION OF PROVIDENT FUND AND ESIC WAS PAID AFTER THE PRESCRIBED DUE DATE, AND FOLLOWING THE DECISION OF HON'BLE GUJARAT HIGH COUR IN THE CASE OF GUJARAT STATE ROAD TRANSPORT CORPORATION (SUPRA) , WE FIND NO REASON TO INTERFERE WITH THE ORDER OF CIT(A) AND THUS THIS GROUND OF ASSESSEE IS DISMISSED. 11. IN THE RESULT, TH E APPEAL OF ASSESSEE IS DISMISSED. ORDER PRONOUNCED IN OPEN COURT ON 19 - 09 - 201 4 . SD/ - SD/ - (KUL BHARAT ) (ANIL CHATURVEDI) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD. TRUE COPY RAJESH COPY OF THE ORDER FORWARDED TO: - 1. THE APPELLANT. 2. THE RESPONDENT. 3. THE CIT (APPEALS) 4. THE CIT CONCERNED. 5. THE DR., ITAT, AHMEDABAD. 6. GUARD FILE. BY ORDER DEPUTY/ASSTT.REGISTRAR ITAT,AHMEDABAD