DCIT, Bangalore V. M/s CICB - Chemicon Pvt. Ltd., Bangalore

ITA 95/BANG/2013

• Counselvise Citation: 9521114 RSA 2013
• Duration Of Justice: 1 year(s) 10 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-12-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 19-11-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 29-01-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: PRISCILLA SINGSIT CITIIIDR
• Keywords: Deemed to accrue or arise in india; Revenue expenditure; Capital expenditure
• Section: 43B; 143(3); 12

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER AND SHRI ABRAHAM P GEORGE , ACCOUNTANT MEMBER ITA NO. 36 /BANG/20 13 (ASSESSMENT YEAR: 20 09 - 10) M/S.CICB - CHEMICON PVT. LTD., NO.239, 12 TH CROS S, 3 RD MAIN, MAHALAKSHMI LAYOUT, BANGALORE . APPELLANT VS. JOINT COMMISSIONER OF INCOME - TAX,(OSD), CIRCLE 11(2), BANGALORE. RESPONDENT PAN:AAACC5980G AND ITA NO. 95 /BANG/20 13 (ASSESSMENT YEAR: 20 09 - 1 0) DEPUTY COMMISSIONER OF I NCOME - TAX, CIRCLE 11(2), BANGALORE. APPELLANT VS. M/S.CICB - CHEMICON PVT. LTD., BANGALORE. RESPONDENT APPELLANT BY: SHRI S.PARTHASARATHI , ADVOCATE. RESPONDENT BY: MS.PRISCILLA SINGSIT, CIT - III(DR). DATE OF HEARING : 1 9 / 11 /20 14 . DATE OF PRONOUNCEMENT: 05 /1 2 /2014. ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 2 OF 12 O R D E R PER SMT. P.MADHAVI DEVI, JM : THESE ARE CROSS APPEALS BOTH BY THE ASSESSEE AND THE REVENUE AGAINST THE ORDER OF THE CIT(A) - I, BANGALORE, DATED 31 / 1 0/201 2 FOR THE ASSESSMENT YEAR 2010 - 11. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A COMPANY WHICH IS CARRYING ON THE BUSINESS OF MANUFACTURING, FABRICATION, ERECTION AND COMMISSION OF STEAM TURBINE GENERATOR SETS, COMPRESSORS, HEAT - EXCHANGERS, STORAGE SYSTEMS ETC., APART FROM DEALING IN S PARES OF THE SAID EQUIPMENTS. IT FILED ITS RETURN OF INCOME FOR THE RELEVANT ASSESSMENT YEAR ON 27/09/2009 DECLARING INCOME OF RS.2,32,52,200/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3) OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO AS 'THE ACT' ], THE ASSESSING OFFICER (AO) CALLED FOR VARIOUS DETAILS AND AFTER CONSIDERING THE ASSESSEE S SUBMISSIONS, MADE CERTAIN DISALLOWANCES AND CONSEQUENT ADDITIONS AND BROUGHT THEM TO TAX. 3. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE C IT(A) WHO PARTLY ALLOWED THE SAME. AGAINST THE CONFIRMATION OF THE ADDITIONS OR DISALLOWANCES MADE BY THE AO, THE ASSESSEE IS IN APPEAL BEFORE US WHILE AGAINST THE RELIEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 3 OF 12 4. IN THE ASSESSE E S APPEAL (ITA NO.36/BANG/2013) THE ASSESSEE IS AGGRIEVED BY THE DISALLOWANCE OF THE CLAIM OF EXPENDITURE OF RS.6,87,21,480/ - ON ACCOUNT OF PERFORMANCE GUARANTEE ISSUED BY THE ASSESSEE TO M/S.TATA COFFEE LTD. 4.1 BRIEF FACTS OF THE CASE RELATIN G TO THIS ISSUE ARE THAT THE ASSESSEE HAD UNDERTAKEN A NEW PROJECT WITH M/S.TATA COFFEE LTD. ( TCL FOR SHORT) FOR SETTING UP OF BIO GAS ELECTRICITY GENERATION UNIT OUT OF COFFEE BEAN WASTE GENERATED OUT OF ITS UNIT SITUATED AT THENI, TAMILNADU. ACCORDING TO THE PURCHASE ORDER WITH M/S.TCL, THE ASSESSEE WAS SUPPOSED TO SET UP ELECTRICITY GENERATION UNIT AND ALSO ENSURE THE PERFORMANCE OF THE UNIT WITHIN A FIXED PERIOD OF TIME. M/S.TCL AGREED TO FINANCE THE PROJECT FOR WHICH THE ASSESSEE HAD TO EXECUTE A PERF ORMANCE BANK GUARANTEE. HOWEVER, THE ASSESSEE COULD NOT COMPLETE THE PROJECT WITHIN THE STIPULATED TIME AND ALSO THE EXTENDED TIME . THEREFORE , M/S.TCL RESERVED THEIR RIGHT TO EXECUTE THE PERFORMANCE GUARANTEE BY ITS COMMUNICATION DATED 16/03/2009 FALLING WITHIN THE RELEVANT PREVIOUS YEAR. THE ASSESSEE, THEREFORE, MADE A PROVISION FOR PERFORMANCE GUARANTEE COST AMOUNTING TO RS.6,87,21,480/ - ON ACCRUAL BASIS. THE AO HELD THAT THE ASSESSEE HAD ENTERED INTO A JOINT VENTURE WITH M/S.TCL FOR SETTING UP OF THE BIOMASS GASIFICATION PLANT AND THEREFORE THE EXPENDITURE INCURRED BY THE ASSESSEE IS A CAPITAL EXPENDITURE AND CANNOT BE ALLOWED AS REVENUE EXPENDITURE. ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 4 OF 12 4 . 2 AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A). THE CIT(A), AFTER CONSID ERING THE ASSESSEE S SUBMISSIONS AT LENGTH , AGREED WITH THE ASSESSEE THAT THE ASSESSEE HAD NOT ENTERED INTO A JOINT VENTURE BUT IT WAS A CONTRACT TO SET UP THE BIOMASS GASIFICATION PLANT AND THEREFORE THE EXPENDITURE INCURRED BY THE ASSESSEE TOWARDS PERFOR MANCE GUARANTEE IS REVENUE EXPENDITURE. HOWEVER, AS REGARDS ALLOWABILITY OF THE SAME DURING THE RELEVANT ASSESSMENT YEAR, THE CIT(A) HELD THAT PERFORMANCE GUARANTEE WAS ENCASHED BY M/S.TCL IN THE SUBSEQUENT YEAR AND THEREFORE, THE SAME CANNOT BE ALLOWED D URING THE RELEVANT ASSESSMENT YEAR. AGGRIEVED BY THIS FINDING OF THE CIT(A), THE ASSESSEE IS IN APPEAL BEFORE US. 4.3 SHRI S.PARTHARATH I , LEARNED COUNSEL FOR THE ASSESSEE, WHILE REITERATING THE SUBMISSIONS MADE BY THE ASSESSEE BEFORE THE AUTHOR ITIES BELOW SUBMITTED THAT THE CIT(A) HAS RIGHTLY TREATED THE EXPENDITURE TO BE REVENUE EXPENDITURE BUT HAS ERRONEOUSLY HELD THAT THE SAME IS NOT ALLOWABLE DURING THE RELEVANT ASSESSMENT YEAR. HE SUBMITTED THAT THE ASSESSEE HAD MADE PROVISION ON ACCRUA L BASIS SINCE IT WAS FOLLOWING MERCANTILE SYSTEM OF ACCOUNTING AND ENCASHMENT OF THE BANK GUARANTEE BY M/S.TCL HAS GOT NOTHING TO DO WITH THE TREATMENT GIVEN BY THE ASSESSEE TO THE EXPENDITURE IN ITS BOOKS OF ACCOUNT. HE SUBMITTED THAT THE CONTRACT WITH M /S.TCL WAS A TIME - BOUND CONTRACT WHEREIN THE ASSESSEE WAS LIABLE FOR NOT ONLY SETTING UP ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 5 OF 12 OF THE PROJECT BUT ALSO ENSURING PERFORMANCE OF THE PROJECT WITHIN THE STIPULATED PERIOD. HE DREW OUR ATTENTION TO VARIOUS PROVISIONS OF THE PURCHASE ORDER PLACED AT PAGE 65 OF THE PAPER BOOK TO DEMONSTRATE THAT THE PROJECT WAS SUPPOSED TO BE COMPLETED WITHIN A PERIOD OF 16 MONTHS FROM THE DATE OF THE PURCHASE ORDER WHICH IS DATED 07/07/2006. HE HAS ALSO DRAWN OUR ATTENTION TO PAGE 66 OF THE PAPER BOOK AND CLAUSE 2 TH EREOF WHICH RELATES TO PERFORMANCE GUARANTEE TO GENERATE THE TESTIFIED ENERGY AS PER THE AVAILABLE WITH M/S.TCL. HE HAS ALSO DRAWN OUR ATTENTION TO CLAUSE 7 OF THE PURCHASE ORDER WHEREIN IT IS STATED THAT COMMISSIONING OF THE PLANT SHALL BE DEEMED TO BE COMPLETE WHEN THE PLANT OPERATES CONTINUOUSLY FOR A PERIOD OF 48 HOURS AND PRODUCES CLEAN SYNTHESIS GAS, ELECTRICITY AND HOT WATER FOR USE IN M/S.TCL S IC PLANT AS PER THE PERFORMANCE GUARANTEE CLAUSE IN PURCHASE ORDER AND IN CASE PERFORMANCE PARAMETERS A RE NOT MET IN FULL, THEN M/S.TCL WILL HAVE THEIR RIGHT TO ENCASH THE SAID BANK GUARANTEE AND THAT M/S.TCL WILL ISSUE ERECTION AND COMMISSION CERTIFICATE ONLY AFTER SUCCESSFUL COMMISSIONING OF THE PLANT. AS PER CLAUSE 10 OF THE SAID PURCHASE ORDER, THE WHO LE PROJECT SHALL BE COMPLETED WITHIN 16 MONTHS FROM THE DATE OF THE ORDER AND RECEIPT OF ADVANCE AND DELIVERY IS THE ESSENCE OF THIS ORDER AND IN THE EVENT OF DELAY IN SUPPLIES FOR REASONS OTHER THAN FORCE MAJEURE CONDITIONS, PENALTY AT THE RATE OF % PER WEEK SHALL BE APPLICABLE SUBJECT TO A CEILING OF 5% OF THE CONTRACT VALUE. HE HAS ALSO DRAWN OUR ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 6 OF 12 ATTENTION TO THE COMMUNICATION BETWEEN THE ASSESSEE AND M/S.TCL WHICH IS PLACED AT PAGE 96 OF THE PAPER BOOK WHEREIN M/S.TCL HAS RESPONDED TO THE ASSESSEE S CALL FOR EXTENSION OF TIME AND HAD STATED THAT THE ASSESSEE HAS FAILED REPEATEDLY ON THE COMMISSIONING SCHEDULE DESPITE M/S.TCL S PERSISTENT SUPPORT FOR THE LAST THREE YEARS AND THEREFORE IT RESERVES THE RIGHT TO INVOKE THE BANK GUARANTEE WITHOUT ANY FURTH ER REFERENCE TO THE ASSESSEE. THUS, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT SINCE M/S.TCL REFUSED TO EXTEND ANY FURTHER TIME AND HAS ALSO RESERVED ITS RIGHT TO ENCASH THE BANK GUARANTEE, THE LIABILITY HAD ACCRUED TO THE ASSESSEE AND THEREFORE THE ASSESSEE HAD MADE PROVISION IN ACCORDANCE WITH LAW AND IT SHOULD BE ALLOWED IN THE RELEVANT ASSESSMENT YEAR. 4 . 4 MS. PRISCILLA SINGSIT , LEARNED DEPARTMENTAL REPRESENTATIVE, ON THE OTHER HAND SUPPORTED THE ORDERS OF THE AUTHORITIES BELOW AND HAS A LSO FILED WRITTEN SUBMISSIONS REITERATING THE FINDINGS OF THE AUTHORITIES BELOW AND ALSO STATED THAT THE ASSESSEE - COMPANY HAD FAILED TO IMPLEMENT AND EXECUTE THE PROPOSED BIOMASS GASIFICATION PLANT WITHIN THE TIME FRAME FIXED IN THE PURCHASE ORDER AND WHIC H WAS FURTHER EXTENDED FROM TIME TO TIME AND FINALLY UP TO 20/03/2009. SH E FURTHER SUBMITTED THAT THE ASSESSEE COULD NOT COMPLETE THE INSTALLATION AND IMPLEMENTATION OF THE PROJECT ON TIME AND THEREFORE AGREED FOR SETTLEMENT ON 14/05/2009 IN ACCORDANCE W ITH WHICH M/S.TCL ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 7 OF 12 CANCELLED THE CONTRACT VIDE LETTER DATED 28/05/2010 AND HAS ENCASHED THE BANK GUARANTEE. IT WAS FURTHER SUBMITTED THAT THE AMOUNT CLAIMED BY THE ASSESSEE REPRESENTS COST OF REFRACTORIES AND INTERNALS INCLUDING CONSTRUCTING AND ERECTING C HARGES OF RS.4,39,42,352/ - WHEREAS THE BANK GUARANTEE INVOKED BY M/S.TCL IS ONLY A SUM OF RS.2 CRORES WHICH SHOULD ONLY BE ALLOWED AND THAT TOO FOR ASSESSMENT YEAR 2010 - 11 SINCE THE LIABILITY TOWARDS BANK GUARANTEE SETTLED AND ENCASHED DURING THE RELEVANT PREVIOUS YEAR . 4.5 HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE ASSESSEE HAS OBTAINED PURCHASE ORDER FOR ERECTION AND COMMISSIONING OF BIOMASS GASIFICATION PLANT AT THE PREMISES OF M/S.TCL AT THENI, TAMILNA DU. AS SEEN FROM VARIOUS CLAUSES OF THE PURCHASE ORDER, IT IS A TIME - BOUND CONTRACT AND THE ASSESSEE WAS REQUIRED TO COMPLETE THE CONTACT WITHIN THE STIPULATED PERIOD AND ALSO WAS COMMITTED TO EXECUTE THE PROJECT AS PER THE PERFORMANCE REQUIREMENT OF M/S. TCL. IT IS NOT IN DISPUTE THAT THE ASSESSEE FAILED TO COMPLETE THE CONTRACT AS PER THE TERMS AND CONDITIONS OF THE PURCHASE ORDER AND ALSO THAT IT WAS GRANTED EXTENSION OF TIME FOR THE SAME. IT IS ALSO NOT IN DISPUTE THAT FINAL EXTE NSION WAS GIVEN ONLY UP TO 20/03 /2008. THEREAFTER, AFTER NEGOTIATIONS WITH M/S.TCL, A FINAL SETTLEMENT WAS ARRIVED AT AND M/S.TCL HAD ENCASHED THE BANK GU A RANTEE DURING THE PREVIOUS YEAR 2009 - 10 ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 8 OF 12 I.E. ASSESSMENT YEAR 2010 - 11 . AS THE CIT(A) HAS ALREADY HELD IT TO BE REVENUE EXPEN DITURE AND THE REVENUE HAS NOT FILED ANY APPEAL AGAINST THE SAID FINDING OF THE CIT(A), WE FIND THAT TH E ISSUE OF THE NATURE OF EXPENDITURE BEING REVENUE HAS ATTAINED FINALITY. THE ONLY DISPUTE IS THE YEAR OF ALLOWABILITY OF THE PROVISION . WHILE IT IS T HE CASE OF THE ASSESSEE THAT THE LIABILITY HAS ACCRUED TO THE ASSESSEE DURING THE RELEVANT PREVIOUS YEAR I.E. 2008 - 09 DUE TO WHICH THE ASSESSEE HAS CLAIMED TO HAVE MADE PROVISION FOR MEETING THE LIABILITY DURING THE SAID ASSESSMENT YEAR ; IT IS THE CASE OF THE REVENUE THAT IT HAS ACCRUED DURING THE PREVIOUS YEAR 2009 - 10 WHEN IT WAS SETTLED AND ENCASHED. THEREFORE, THE MOOT QUESTION BEFORE US IS WHEN HAS THE LIABILITY ACCRUED TO THE ASSESSEE? ON PERUSAL OF THE VARIOUS CLAUSES OF THE PURCHASE ORDER, WHICH HA VE BEEN REFERRED TO B Y THE LEARNED COUNSEL FOR THE ASSESSEE AND WHICH HAVE BEEN EXPLAINED IN THE EARLIER PART OF OUR ORDER, WE FIND THAT THE ASSESSEE HAS FURNISHED THE BANK GUARANTEE FOR PERFORMANCE OF THE CONTRACT. THEREFORE, THE LIABILITY TO HONOUR THE BANK GUARANTEE WOULD A RISE WHEN EVER THE ASSESSEE FAILED TO PERFORM OR EXECUTE THE CONTRACT AS PER THE TERMS AND CONDITIONS OF THE PURCHASE ORDER. THE DELIVERY PERIOD OF THE CONTRACT WAS 16 MONTHS FROM THE DATE OF PURCHASE ORDER WHICH IS 6 TH OF JULY 2006. THE PERIOD OF 16 MONTHS WOULD THEREFORE END BY OCTOBER 2007. HOWEVER, WE FIND THAT M/S.TCL HAD ITSELF EXTENDED THE TIME FROM TIME TO TIME UPTO 20/03/2009 . THEREFORE, WHENEVER ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 9 OF 12 THE ASSESSEE DEFAULTS IN COMPLETING THE CONTRACT WITHIN THE EXTENDED TIME PERIOD AND M/S.TCL REFUSE D TO EXTEND FURTHER TIME IT CAN BE SAID THAT THE LIABILITY HAS ACCRUED ON THE ASSESSEE. IN THIS CASE, THE FINAL TIME EXTENDED WAS UPTO 20/03/2008 AND FROM THAT DATE M/S.TCL COULD ENCASH THE BANK GUARANTEE ANY TIME IT WANTED. M/S.TCL MI GHT HAVE ENCASH ED THE BANK GUARANTEE IN THE SUBSEQUENT FINANCIAL YEAR, I.E. FINANCIAL YEAR 2009 - 10, BUT IN OUR OPINION, AS FAR AS THE ASSESSEE IS CONCERNED, THE LIABILITY HAS ACCRUED DURING THE PREVIOUS YEAR 2009 - 10. MERELY BECAUSE M/S.TCL HAS CHOSEN TO E NCA S H THE BANK G UARANTEE IN THE SUBSEQUENT FINANCIAL YEAR, IT CANNOT BE HELD THAT THE LIABILITY HAS ACCRUED TO THE ASSESSEE IN THE SAID YEAR . IN VIEW OF THE SAME, WE HOLD THAT THE PROVISION MADE BY THE ASSESSEE FOR THE GUARANTEE ENCASHMENT IS ALLOWABLE DU RING THE RELEVANT ASSESSMENT YEAR ONLY. 4.6 IN THE RESULT, THE ASSESSEE S APPEAL IS ALLOWED. 5. IN THE REVENUE S APPEAL (ITA NO.95/BANG/2013), THE REVENUE HAS RAISED AS MANY AS NINE GROUNDS OF APPEAL BUT ONLY TWO ISSUES ARE INVOLVED. 6. THE FIRST ISSUE IS THE DELETION OF ADDITION OF RS.30,12,658/ - BY THE CIT(A) HOLDING THAT THE EXPENDITURE CLAIMED TOWARDS DRAWING S AND DESIGNS IS ALLOWABLE AS REVENUE ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 10 OF 12 EXPENDITURE. THE AO HAD HELD THIS EXPENDITURE TO BE CAPITAL EXPENDITURE SINCE ACCORDIN G TO HIM, THE DRAWINGS AND DESIGNS GAVE ENDURING BENEFIT TO THE ASSESSEE. BEFORE THE CIT(A), THE ASSESSEE HAS BROUGHT OUT IN DETAIL THAT THE ASSESSEE IS INTO THE MANUFACTUR E OF MACHINES, STEEL TURBINES ETC., ACCORDING TO THE REQUIREMENTS OF THE CUSTOMERS AND THE TECHNICAL DRAWINGS BY THE PRINCIPAL IS CUSTOM - DELIVERED TO SUIT THE REQUIREMENTS OF THE CUSTOMERS AND THEREFORE FOR EACH AND EVERY MACHINE, THE ASSESSEE HA S OBTAINED SPECIFIC TECHNICAL DRAWINGS AND THEREFORE THEY CONSTITUTE REVENUE EXPENDITURE. TH IS ARGUMENT FOUND FAVOUR WITH THE CIT(A) AND HE ACCORDINGLY ALLOWED THE SAME. 6.1 THE LEARNED DEPARTMENTAL REPRESENTATIVE, RELIED UPON THE ORDER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE SUPPORTED THE ORDER OF THE CIT(A). 6.2 HAVING REGARD TO THE RIVAL CONTENTIONS, WE FIND THAT THE FINDING OF THE CIT(A) THAT THE ASSESSEE IS IN THE BUSINESS OF MANUFACTURING, FABRICATION AND SALE OF STEEL TURBINES AS PER THE REQUIREMENTS OF THE BUYERS AND THAT THE DESIGNS AND TECHNICAL DRAWINGS F ROM THE PRINCIPAL ARE CUSTOM - DELIVERED A RE NOT REBUTTED BY THE LEARNED DEPARTMENTAL REPRESENTATIVE WITH ANY EVIDENCE TO THE CONTRARY. IN VIEW OF THE SAME, WE DO NOT FIND ANY REASON TO INTERFERE WITH THE FINDINGS OF THE CIT(A). THE G ROUND S NO.2 TO 4 ARE ACCORDINGLY REJECTED. ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 11 OF 12 7. AS REGARDS GROUND NOS.5 TO 8 RELATING TO THE SECOND ISSUE ARE CONCERNED, THEY ARE AGAINST THE DELETION OF DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO PF AND ESI NOT PAID BEFORE THE DUE DATE SPECIFIED IN THE RESPECTIVE ACTS. T HE CIT(A) HAD RELIED UPON THE ORDER OF THE HON BLE KARNATAKA HIGH COURT IN THE CASE OF CIT VS. SABARI ENTERPRISES REPORTED IN 298 ITR 141. ACCORDING TO THE LEARNED DEPARTMENTAL REPRESENTATIVE, THE SAID DECISION RELATES TO THE DISALLOWANCE OF EMPLOYER S CONTRIBUTION U/S 43B WHEREAS THE DISALLOWANCE BY THE AO IN THIS CASE IS EMPLOYEES CONTRIBUTION WHICH IS DEEMED INCOME U/S 2(24) (X) R.W.S. 36(1)(VA) OF THE ACT. THE LEARNED COUNSEL FOR THE ASSESSEE, ON THE OTHER HAND, SUBMITTED THAT THE EMPLOYE ES CONTRIBUTION TO THE PROVIDENT FUND HAS BEEN REMITTED TO THE GOVERNMENT ACCOUNT BEFORE THE DUE DATE OF FILING OF RETURN AND, THEREFORE, THE SAME IS ALLOWABLE. IN SUPPORT OF HIS CONTENTION, HE PLACED RELIANCE UPON THE DECISION OF THE HON BLE JURISDICTIO NAL HIGH COURT IN THE CASE OF CIT VS. SPECTRUM CONSULTANCY PVT. LTD. REPORTED IN 266 CTR (KAR) 241 WHEREIN IT HAS BEEN HELD THAT EVEN EMPLOYEES CONTRIBUTION TO PF AND ESI MUST BE PAID INTO GOVERNMENT ACCOUNT WITHIN THE DUE DATE PRESCRIBED U/S 139(1) OF TH E ACT TO BE ALLOWED U/S 43B OF TH E ACT . A COPY OF THE SAID ORDER IS PLACED BEFORE US. RESPECTFULLY FOLLOWING THE SAID JUDGMENT OF THE JURISDICTIONAL ITA NO S . 36 & 9 5/BANG/2013 M/S.CICB CHEMICON PVT. LTD. PAGE 12 OF 12 HIGH COURT, WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). 8. IN THE RESULT, T HE ASSESSEE S APPEAL IS ALLOWED AND THE REVENUE S APPEAL IS DISMISSED PRON OUNCED IN THE OPEN COURT ON 5 TH OF DECEMBER , 201 4. SD/ - SD/ - ( ABRAHAM P GEORGE ) ( SMT. P.MADHAV I DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPEL LATE T RIBUNAL BANGALORE