The Income Tax Officer Ward-6(1)(4), Bangalore V. M/s S V Edusports Pvt Ltd , Bangalore

ITA 852/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2174 (ITAT-BANGALORE)
• Duration Of Justice: 7 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2013-2014
• Appeal Filed On: 19-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SRINANDINI DAS
• Assessee Lawyers: SUKESH S PATIL
• Section: 43B; 139

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER A ND SHRI LALIET KUMAR, JUDICIAL MEMBER ITA NO. 852 /BANG/201 8 ASSESSMENT YEAR : 20 1 3 - 14 THE INCOME TAX OFFICER, WARD 6 (1) (4), BANGALORE. VS. M/S. S V EDUSPORTS PVT. LTD., NO. 201, 3 RD FLOOR, BRIGADE MANAE, COURT NO. 111, NEAR STANDARD CHARTERED BANK, KORAMANGALA, BANGALORE 560 095. PAN: AAMCS7088P APPELLANT RESPONDENT APPELLANT BY : SMT. SRINANDINI DAS, ADDL. CIT (DR) RESPONDENT BY : SHRI SUKESH S. PATIL, CA DATE OF HEARING : 14 . 11 .2018 DATE OF PRONOUNCEMENT : 16 . 11 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE REVENUE AND THE SAME IS DIRECTED AGAINST THE ORDER OF LD. CIT (A)-6, BANGALORE DATED13.10.2017 FOR ASSESS MENT YEAR 2013-14. 2. THE GROUNDS RAISED BY THE REVENUE ARE AS UNDER. 1. THE ORDER OF THE CIT (APPEALS) IS OPPOSED TO LAW AND THE FACTS AND CIRCUMSTANCES OF THE CASE. 2. ON THE FACTS AND IN CIRCUMSTANCES OF THE CASE, W HETHER THE CIT(A) WAS RIGHT IN DELETING THE ADDITION MADE U/S 2(24)(X ) R.W.S 36(1)(VA) IN LIGHT OF THE FACTS THAT THE ASSESSEE COMPANY HAD FA ILED TO DEPOSIT THE EMPLOYEE'S CONTRIBUTION OF PF AND SI. 3. FOR THESE AND SUCH OTHER GROUNDS THAT MAY BE URG ED AT THE TIME OF HEARING, IT IS HUMBLY PRAYED THAT THE ORDER OF THE CIT(A) IN SO FAR AS IT RELATES TO THE ABOVE GROUNDS MAY BE REVERSED AND TH AT OF THE ASSESSING OFFICE BE RESTORED. 4. THE APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR DELETE ANY OF THE GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING OF THE APPEAL. ITA NO. 852/BANG/2018 PAGE 2 OF 4 3. THE LD. DR OF REVENUE SUPPORTED THE ASSESSMENT O RDER WHEREAS THE LD. AR OF ASSESSEE SUPPORTED THE ORDER OF LD. CIT(A). HE ALS O PLACED RELIANCE ON A JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF CIT VS. ALOM EXTRUSIONS LTD. (319 ITR 306). HE ALSO SUBMITTED C OPY OF A JUDGMENT OF HON'BLE KARNATAKA HIGH COURT RENDERED IN THE CASE O F ESSAETERAOKA PVT. LTD. VS. DCIT IN ITA NO. 480/2013 DATED 04.02.2014 AND P OINTED OUT THAT AS PER THIS JUDGMENT ALSO, THE ISSUE IN DISPUTE IS COVERED IN FAVOUR OF THE ASSESSEE. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT THE ISSUE IN DISPUTE WAS DECIDED IN FAVOUR OF THE ASSESSEE BY LD. CIT (A ) AS PER PARA NOS. 7 TO 7.4 OF HIS ORDER AND THESE PARAS ARE REPRODUCED HEREINB ELOW FOR READY REFERENCE. 7. THE GROUNDS OF APPEAL, APPELLANT'S STATEMENT OF FACTS, AO'S OBSERVATIONS / EXPLANATIONS AND LEGAL POSITION HAVE BEEN DULY CONSIDERED. 7.1 THE APPELLANT IN THE COURSE OF THE APPELLATE PR OCEEDINGS HAS EMPHASISED THE FACT THAT THE AO WAS NOT JUSTIFIED T O HOLD THE EMPLOYEE'S CONTRIBUTION OF PF AND ESI AS INCOME AS CONTEMPLATED U/S. 2(24)(X) R.W.S 36(1)(VA) OF THE ACT DISREGARDI NG THE FACT THAT THE CONTRIBUTION OF THE EMPLOYEE AND EMPLOYER WAS PAID ON OR BEFORE THE DUE DATE SPECIFIED U/S. 139(1) OF THE ACT FOR FILIN G THE RETURN OF INCOME PLACING THE RELIANCE ON THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S ESSAETERAOKA PVT LTD VS DC IT, ITA NO 480/2013 DATED 04 TH FEBRUARY 2014. 7.2 THE RELEVANT FINDINGS OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF M/S ESSAETERAOKA PVT LTD VS DCIT, ITA N O 480/2013 DATED 04TH FEBRUARY 2014 (SUPRA) RELIED UPON BY THE APPELLANT COMPANY ARE REPRODUCED AS UNDER: '19. FROM BARE PERUSAL OF SUB-PARA(1) OF PARAGRAPH- 30, IT IS CLEAR THAT THE WORD 'CONTRIBUTION' IS USED NOT ONLY TO ME AN CONTRIBUTION OF THE EMPLOYER BUT ALSO CONTRIBUTION TO BE MADE ON BEHALF OF THE MEMBER EMPLOYED BY THE EMPLOYER DIRECTLY. 20. PARAGRAPH-38 OF THE PF SCHEME PROVIDES FOR MODE OF PAYMENT OF CONTRIBUTIONS. AS PROVIDED IN SUB-PARA(1), THE E MPLOYER SHALL, BEFORE PAYING THE MEMBER, HIS WAGES, DEDUCT HIS CON TRIBUTION FROM HIS WAGES AND DEPOSIT THE SAME TOGETHER WITH HIS OW N CONTRIBUTION AND OTHER CHARGES AS STIPULATED THEREIN WITH THE PR OVIDENT FUND OR THE FUND UNDER THE ESI ACT WITHIN FIFTEEN DAYS OF T HE CLOSURE OF EVERY MONTH PAY. IT IS CLEAR THAT THE WORD 'CONTRIB UTION' USED IN CLAUSE(B) OF SECTION 43-B OF THE IT ACT MEANS THE C ONTRIBUTION OF THE EMPLOYER AND THE EMPLOYEE. THAT BEING SO, IF TH E CONTRIBUTION IS MADE ON OR BEFORE THE DUE DATE FOR FURNISHING THE R ETURN OF INCOME UNDER SUB-SECTION(1) OF SECTION 139 OF THE IT ACT I S MADE, THE ITA NO. 852/BANG/2018 PAGE 3 OF 4 EMPLOYER IS ENTITLED FOR DEDUCTION.' 7.3 THE HON'BLE HIGH COURT OF KARNATAKA IN THE CASE OF CIT V/S. M/S. SPECTRUM CONSULTANTS INDIA PVT LTD IN WRIT APPEAL N O. 4077 OF 2013 VIDE JUDGMENT DATED 09-122013 HAS ALSO HELD THAT TH E PROVISION OF SECTION 43B OF THE ACT ARE APPLICABLE IN RESPECT OF THE CONTRIBUTIONS OF THE EMPLOYEES AND ALSO THE EMPLOYER ARE ENTITLED FO R DEDUCTION PROVIDED THE PAYMENT WAS MADE ON OR BEFORE THE DUE DATE SPECIFIED U/S. 139(1) OF THE FOR FILING THE RETURN OF INCOME. THE RELEVANT FINDINGS OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE ABOVE CASE ARE REPRODUCED AS UNDER. THE CONTRIBUTION PAYABLE BY THE EMPLOYEE SHALL BE E QUAL TO THE CONTRIBUTION PAYABLE BY THE EMPLOYER IN RESPECT OF SUCH EMPLOYEE. HOWEVER, THE EMPLOYER SHALL, IN THE FIRST INSTANCE, PAY BOTH THE CONTRIBUTION PAYABLE BY HIMSELF I.E. THE EMPLOYER'S CONTRIBUTION AS WELL AS THE EMPLOYEE'S CONTRIBUTION AND THEREAFTER HE IS ENTITLED TO RECOVER BY MEANS OF DEDUCTION FROM THE EMPLOYEE THE CONTRIBUTION WHICH HE HAS PAID AS EMPLOYEE'S CONTRIBUTION. THERE FORE, IN LAW, THE PAYMENT OF CONTRIBUTION BY THE EMPLOYER TO THE FUND UNDER THE SCHEME MEANS BOTH EMPLOYER'S CONTRIBUTION AND EMPLO YEE'S CONTRIBUTION. WHETHER HE DEDUCTS THE EMPLOYEE'S CON TRIBUTION FROM THE SALARY OR NOT, IN LAW, HE IS LIABLE TO PAY THE SAID AMOUNT. THEREFORE, SECTION 2(24)(X) OF THE ACT MAKES IT CLE AR THAT THE EMPLOYEE'S CONTRIBUTION WHICH THE EMPLOYER DEDUCTS FROM HIS SALARY BEFORE IT IS PAID INTO THE FUND, IS TREATED AS THE INCOME OF THE EMPLOYER, AND THE EMPLOYER BY CONTRIBUTING CAN GET THE DEDUCTION. THAT PAYMENT MUST BE MADE WITHIN THE DUE DATE I.E. THE DUE DATE PRESCRIBED UNDER SECTION 139(1) OF THE ACT. BECAUSE IT WAS CAUSING LOT OF PROBLEM AS DISCUSSED IN THE JUDGMENT OF THE APEX COURT, ON A REPRESENTATION MADE BY THE INDUSTRY, SUBSEQUENT AME NDMENT WAS CARRIED OUT TO MITIGATE THE DIFFICULTIES CAUSED TO THE EMPLOYER TINDER SECTION 438 OF THE ACT. THOUGH SUCH CONTRIBU TIONS ARE NOT PAID WITHIN THE TIME PRESCRIBED UNDER THE RELEVANT ACT, IF THOSE CONTRIBUTIONS ARE PAID BEFORE THE DUE DATE PRESCRIB ED UNDER SECTION 139(1) OF THE ACT, THE EMPLOYER SHALL BE EN TITLED TO THE DEDUCTIONS AS PROVIDED UNDER SECTION 36(1) OF THE A CT. WHILE EXTENDING SUCH BENEFIT, THE PARLIAMENT HAS NOT MADE ANY DISTINCTION BETWEEN THE EMPLOYEE'S CONTRIBUTION AND THE EMPLOYER'S CONTRIBUTION. IT IS FOR THE SIMPLE REASON, UNDER TH E PROVIDENT FUND SCHEME, AN EMPLOYER HAS TO PAY BOTH THE CONTRIBUTIO N AND THEN RECOVER FROM THE SALARY OF THE EMPLOYEE. THEREFORE, IN VIEW OF THE AFORESAID JUDGMENT, WE DO NOT FIND ANY SUBSTANCE IN THIS APPEAL. THEREFORE, THE APPEAL IS DISMISSED. 7.4 THE ADDITION MADE BY THE AO IN RESPECT OF THE E MPLOYEES CONTRIBUTION AS CONTEMPLATED U/S 2(24) (X) R.W.S 36 (1) (VA) OF THE ACT IS NOT IN ACCORDANCE WITH THE DECISION OF THE HON'B LE HIGH COURT OF KARNATAKA. IT IS NOT IN DISPUTE THAT THE CONTRIBUTI ON WAS NOT MADE BEFORE THE DUE DATE SPECIFIED U/S 139(1) OF THE ACT . THEREFORE THE ITA NO. 852/BANG/2018 PAGE 4 OF 4 ASSESSEE COMPANY IS ENTITLED FOR THE DEDUCTION IN R ESPECT OF THE CONTRIBUTION OF THE EMPLOYEES. IN THE HIERARCHY OF THE JUDICIAL DISCIPLINE THE DECISION OF THE JURISDICTIONS HIGH C OURT IS IN THE BINDING NATURE AND THE SAME IS REQUIRED TO BE FOLLO WED BY THE CONCERNED AUTHORITIES. THEREFORE RESPECTFULLY FOLLO WING THE DECISION OF THE HON'BLE HIGH COURT OF KARNATAKA IN THE ABOVE CA SES, THE ADDITION MADE BY THE AO BY INVOKING PROVISION OF SECTION 2(2 4)(X) R.W.S 36(1)(VA) OF THE ACT IS LIABLE TO BE DELETED. ACCOR DINGLY THE AO IS DIRECTED TO DELETE THE ADDITION MADE BY WAY OF CAUS ING DISALLOWANCE U/S 36(1) (VA) R.W.S 2(24) (X) OF THE ACT. 5. FROM THE ABOVE PARAS REPRODUCED FROM THE ORDER O F CIT (A), IT IS SEEN THAT LD. CIT (A) HAS FOLLOWED TWO JUDGMENTS OF HON'BLE KARNA TAKA HIGH COURT RENDERED IN THE CASE OF ESSAETERAOKA PVT. LTD. VS. DCIT (SUP RA) AND IN THE CASE OF CIT VS. SPECTRUM CONSULTANTS INDIA PVT. LTD. IN WRIT AP PEAL NO. 4077 OF 2013 DATED 09.12.2013. NO DIFFERENCE IN FACTS COULD BE POINTE D OUT BY LD. DR OF REVENUE IN THE PRESENT CASE AND IN THESE TWO JUDGMENTS AND HEN CE, WE FIND NO REASON TO INTERFERE IN THE ORDER OF CIT (A) ON THIS ISSUE. 6. IN THE RESULT, THE APPEAL FILED BY THE REVENUE I S DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (LALIET KUMAR) (ARUN KUMAR GARODIA) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 16 TH NOVEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.