DEPUTY COMMISSIONER OF INCOME TAX, JAIPUR V. M/S RAJASTHAN STATE ELECTRICITY BOARD, JAIPUR

ITA 981/JPR/2017

• Counselvise Citation: [2018] 126 COUNSELVISE.COM (IT) 2107 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-02-2018
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2001-2002
• Appeal Filed On: 11-12-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: L R MEENA
• Assessee Lawyers: P C PARWAL CA DHK
• Keywords: Additional evidence; Capital expenditure
• Section: 43B

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH HKKXPAN] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI BHAGCHAND, A M VK;DJ VIHY LA-@ ITA NO. 981/JP/2017 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2001-02 DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-6, JAIPUR. CUKE VS. M/S RAJASTHAN STATE ELECTRICITY BOARD, VIDYUT BHAWAN, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AAACR 7281 K VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT JKTLO DH VKSJ LS@ REVENUE BY : SHRI L.R. MEENA (CIT) FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI P.C. PARWAL (C.A.) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 19/02/2018 MN?KKS'K.KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 21/02/2018 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE REVENUE EMANATES FRO M THE ORDER OF THE LD. CIT(A), BIKANER DATED 28/08/2017 FOR THE A. Y. 2001-02, WHEREIN THE REVENUE HAS TAKEN FOLLOWING GROUNDS OF APPEAL: (I) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 13,62,84,653/- MADE BY THE A.O. FOR DEPOSITING THE EMPLOYEES CONT RIBUTION TO PF & ESI BEYOND THE PRESCRIBED TIME LIMIT PROVIDED IN RE SPECTIVE ACTS. (II) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF T HE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN HOLDING THAT EMPLOYEES CONTRIBUTION TO PF & ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 2 ESI ARE GOVERNED BY THE PROVISION OF SECTION 43B AN D NOT BY SECTION 36(1)(VA) R.W.S. 2(24)(X) OF THE IT ACT. (III) WHETHER ON THE FACTS IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) WAS JUSTIFIED IN DELETING THE ADDITION O F RS. 22,02,715/- MADE ON ACCOUNT OF DISALLOWANCE OF CONSULTANCY CHAR GES BY CONSIDERING THE ADDITIONAL EVIDENCE WITHOUT PROVIDI NG OPPORTUNITY TO THE A.O. AS PER RULE 46-A. 2. GROUNDS NO. (I) AND (II) OF THE REVENUES APPEAL ARE INTERLINKED AND AGAINST DELETING THE ADDITION OF RS. 13,62,84,6 53/- ON ACCOUNT OF DEPOSITING THE PF & ESI BEYOND THE PRESCRIBED TIME LIMIT. THE LD. CIT(A) HAS DECIDED THE ISSUE AS UNDER: 6.2. I HAVE CONSIDERED THE FACTS OF THE CASE, GON E THROUGH THE ASSESSMENT ORDER AND SUBMISSION OF THE APPELLANT. IT IS SEEN T HAT THE ASSESSEE HAS DEPOSITED THE CONTRIBUTION TOWARDS CPF, GPF AND ESI BEFORE THE DUE DATE OF FILING OF THE INCOME TAX RETURN. THE DECISI ON OF RAJASTHAN HIGH COURT RELIED BY THE LD. AR SUPPORTS THE CASE OF THE ASSESSEE WHEREIN IT IS HELD THAT IF EMPLOYEES CONTRIBUTION TOWARDS PF, IF PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACTS BUT BEFORE FILIN G OF RETURN OF INCOME U/S 139(1), CANNOT BE DISALLOWED U/S 43B OR U/S 36(L)(VA) OF THE ACT. DURING THE COURSE OF APPELLATE PROCEEDINGS , THE APPELLANT SUBMITTED THAT ESI & PF WERE DEPOSITED WITH IN THE FINANCIAL YEAR AND HENCE DEDUCTION COULD NOT BE DENIED IN VIEW OF DECI SIONS OF VARIOUS COURTS, RATIO OF WHICH HAVE HELD THAT PAYMENT OF ES I AND PF BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME IS AN ALLOWA BLE DEDUCTION. ON OVERALL APPRECIATION OF THE FACTS, I TEND TO AGREE WITH THE APPELLANTS CLAIM. THE HON'BLE SUPREME COURT IN CASE OF CIT VS. ALOM EXTRUSIONS LTD. REPORTED IN 319 ITR 306 HELD THAT OMISSION OF SECOND PROVISO TO SEC 43B AND THE AMENDMENT OF FIRST PROVISO BY FINAN CE ACT, 2003, ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 3 BRINGING ABOUT UNIFORMITY IN PAYMENT OF TAX, DUTY, CESS AND FEE ON ONE HAND AND CONTRIBUTION TO EMPLOYEES WELFARE FUNDS O N THE OTHER, ARE CURATIVE IN NATURE, AND THUS, EFFECTIVE RETROSPECTI VELY W.E.F. 1-4-88 I. E. THE DATE OF INSERTION OF FIRST PROVISO. IT WAS FURT HER HELD THAT WHERE PROVIDENT FUND AND EMPLOYEES STATE INSURANCE CONTRI BUTION WERE PAID BY THE ASSESSEE BEFORE FILING OF THE RETURN AND PRO OF OF PAYMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER, THE AMOUNTS WERE DEDUCTIBLE AS DEDUCTION. THE HON'BLE DELHI HIGH COURT IN CASE OF CIT VS. AI MIL LTD & ORS. REPORTED IN 321 ITR 508 HELD AS UNDER:- AS SOON AS EMPLOYEES CONTRIBUTION TOWARDS PF OR E SI IS RECEIVED BY THE ASSESSEE BY WAY OF DEDUCTION OR OTHERWISE FROM THE SALARY/ WAGES OF THE EMPLOYEES, IT WILL BE TREATED AS INCOME AT THE HA NDS OF THE ASSESSEE. IT CLEARLY FOLLOWS THERE FROM THAT IF THE ASSESSEE DOE S NOT DEPOSIT THIS CONTRIBUTION WITH PF/ESI AUTHORITIES, IT WILL BE TA X AS INCOME AT THE HANDS OF THE ASSESSEE. HOWEVER, ON MAKING DEPOSIT WITH TH E CONCERNED AUTHORITIES, THE ASSESSEE BECOMES ENTITLED TO DEDUC TION UNDER THE PROVISIONS OF S. 36(I)(VA). SEC. 43B(B), HOWEVER, S TIPULATES THAT SUCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAYME NTS. THIS IS THE SCHEME OF THE ACT FOR MAKING AN ASSESSEE ENTITLED T O GET DEDUCTION FROM INCOME INSOFAR AS EMPLOYEES CONTRIBUTION IS CONCER NED. DELETION OF THE SECOND PROVISO HAS BEEN TREATED AS RETROSPECTIVE IN NATURE AND WOULD NOT APPLY AT ALL. THE CASE IS TO BE GOVERNED WITH T HE APPLICATION OF THE FIRST PROVISO. IF THE EMPLOYEES CONTRIBUTION IS NO T DEPOSITED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPO SITED LATE, THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO, FOR WHICH SPECIFIC PROVISION ARE MA DE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THEREFORE, THE ACT S PERMIT THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS, SUBJECT TO TH E AFORESAID CONSEQUENCES. INSOFAR AS THE I T ACT IS CONCERNED, THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE TH E RETURN IS FILED. - CIT VS. VINAY CEMENT LTD. (2007) 213 CTR (SC) 268, CIT VS. DHARMENDRA SHARMA (2007) 213 CTR (DEL) 609 : (2008) 297 ITR 32 0 (DEL) AND CIT VS. P. M. ELECTRONICS LTD. (2008) 220 CTR (DEL) 635 : (200 8) 15 DTR (DEL) 258 FOLLOWED. ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 4 APART FROM THE ABOVE DECISIONS, THE FOLLOWING DECIS IONS ARE ALSO APPLICABLE ON THE ISSUE AT HAND:- I. DY CIT VS. ORBIT RESORTS (P) LTD (48 SOT 23 (UR O) II. ACIT VS. RANABAXY LABORATORIES LTD. (2011) 7 I TR (TRIB) 161 (DLH) III. ACIT VS. M/S. ANIL SPECIAL STEEL INDUSTRIES L TD. (DECISION OF JAIPUR BENCH IN ITA NO. 1100/JP/2011) FROM THE ABOVE DECISIONS, IT IS CLEAR THAT PAYMENT OR CONTRIBUTION MADE TO THE PROVIDENT FUND AUTHORITY ANY TIME BEFOR E FILING OF THE RETURN FOR THE YEAR IN WHICH THE LIABILITY TO PAY A CCRUED IS AN ALLOWABLE EXPENDITURE. LIKEWISE, IN THE PRESENT CASE, THE EMP LOYEES CONTRIBUTION WAS DEPOSITED BY THE APPELLANT BEFORE DUE DATE FOR FILING OF RETURN OF INCOME, THEREFORE, IN VIEW OF THE DECI SION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS. ALOM EXTRUSION S LTD (SUPRA) AND DECISION OF THE HONBLE DELHI HIGH COURT IN THE CAS E OF CIT VS. AIMIL LTD. & ORS (SUPRA), THE PAYMENTS MADE BEFORE DUE DA TE FOR FILING OF RETURN OF INCOME ARE ALLOWABLE. THE AO IS DIRECTED TO VERIFY THE DATES OF PAYMENT OF EMPLOYEES CONTRIBUTION TOWARDS PF AN D ESI AND DELETE THE ADDITION MADE ON THIS ACCOUNT IF THE PAYMENTS H AVE BEEN MADE BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME B Y THE APPELLANT. CONSIDERING THE FACTUAL AND LEGAL POSITION AS DISCU SSED ABOVE, THE AO IS DIRECTED TO VERIFY AND ALLOW AS PER LAW. THIS GR OUND OF APPEAL IS ALLOWED. 3. THE LD. CIT DR HAS VEHEMENTLY SUPPORTED THE ORDER OF THE ASSESSING OFFICER. ON THE CONTRARY, THE LD AR OF TH E ASSESSEE HAS ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 5 REITERATED THE ARGUMENTS AS MADE BEFORE THE LD. CIT( A) AND PRAYED TO ALLOW THE APPEAL. 4. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . THE LD. CIT(A) HELD THAT IF EMPLOYEES CONTRIBUTION TOWARDS P F, IF PAID AFTER THE DUE DATE UNDER THE RESPECTIVE ACTS BUT BEFORE FILIN G OF RETURN OF INCOME U/S 139(1), CANNOT BE DISALLOWED U/S 43B OR U/S 36(L )(VA) OF THE ACT. THE ESI & PF WERE DEPOSITED WITHIN THE FINANCIAL YEAR AND HENCE DEDUCTION COULD NOT BE DENIED IN VIEW OF DECISIONS O F VARIOUS COURTS, RATIO OF WHICH HAVE HELD THAT PAYMENT OF ESI AND PF BEFORE THE DUE DATE OF FILING OF RETURN OF INCOME IS AN ALLOWABLE D EDUCTION. THE LD. CIT(A) ALSO HELD THAT WHERE PROVIDENT FUND AND EMPLO YEES STATE INSURANCE CONTRIBUTION WERE PAID BY THE ASSESSEE BEF ORE FILING OF THE RETURN AND PROOF OF PAYMENT WAS SUBMITTED BEFORE THE ASSESSING OFFICER, THE AMOUNTS WERE DEDUCTIBLE AS DEDUCTION. TH E LD. CIT(A) RELIED ON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT VS ALOM EXTRUSIONS LTD. AND HONBLE DELHI HIGH COU RT IN THE CASE OF CIT VS AIMIL LTD. & ORS. (SUPRA) DELETED THE ADDITIO N. IN VIEW OF THE ABOVE FACTS AND CIRCUMSTANCES, THE BENCH FIND NO AN Y CONTRARY MATERIAL IN THE ORDER OF THE LD. CIT(A), THEREFORE, WE UPHOLD THE SAME. ACCORDINGLY, BOTH THE GROUNDS OF THE REVENUES APPE AL STAND DISMISSED. ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 6 5. IN THE GROUND NO. (III) OF THE APPEAL, THE ISSUE INVOLVED IS DELETING THE ADDITION OF RS. 22,02,715 MADE ON ACCO UNT OF DISALLOWANCE OF CONSULTANCY CHARGES BY CONSIDERING THE ADDITIONA L EVIDENCE WITHOUT PROVIDING OPPORTUNITY TO THE ASSESSING OFFICER AS P ER RULE 46A OF THE INCOME TAX RULES. THE LD. CIT(A) ALLOWED THIS GROUND B Y HOLDING THAT THE EXPENDITURE ARE RELATED TO THE BUSINESS OF THE ASSESSEE AND ALSO ARE NOT IN THE NATURE OF THE CAPITAL EXPENDITURE, T HEREFORE, HE DELETED THE DISALLOWANCE MADE BY THE ASSESSING OFFICER. 6. THE LD. CIT DR HAS SUPPORTED THE ORDER OF THE ASSE SSING OFFICER AND SUBMITTED THAT THE LD.CIT(A) HAS ENTERTAINED THE ADDITIONAL EVIDENCE FILED BY THE ASSESSEE WITHOUT PROVIDING REA SONABLE OPPORTUNITY OF HEARING TO THE ASSESSING OFFICER, THEREFORE, HE PRAYED TO RESTORE THE ISSUE BACK TO THE ASSESSING OFFICER. ON THE CONTRAR Y, THE LD AR OF THE ASSESSEE HAS VEHEMENTLY SUPPORTED THE ORDER OF THE LD. CIT(A). 7. THE BENCH HAVE HEARD BOTH THE SIDES ON THIS ISSUE . SINCE THE ADDITIONAL EVIDENCE HAS BEEN ENTERTAINED BY THE LD. CIT(A) WITHOUT PROVIDING ADEQUATE AND EFFECTIVE OPPORTUNITY OF BEI NG HEARD TO THE ASSESSING OFFICER, THEREFORE, IN THE INTEREST OF JU STICE AND EQUITY, WE RESTORE THE ISSUE BACK TO THE FILE OF THE ASSESSING OFFICER TO BE DECIDED DE NOVO. ITA 981/JP/2017_ DCIT VS. RAJASTHAN STATE ELECTRICITY BOARD 7 8. IN THE RESULT, THE APPEAL OF THE REVENUE IS PART LY ALLOWED FOR STATISTICAL PURPOSES. ORDER PRONOUNCED IN THE OPEN COURT ON 21/02/2018. SD/- SD/- FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO FOT; IKY JKO HKKXPAN HKKXPAN HKKXPAN HKKXPAN (VIJAY PAL RAO) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 21 ST FEBRUARY, 2018 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- THE DCIT, CIRCLE-6, JAIPUR. 2. IZR;FKHZ @ THE RESPONDENT- M/S RAJASTHAN STATE ELECTRICITY BOAR D, JAIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 981/JP/2017) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR