Hitech Outsourcing Services, Ahmedabad V. The Income Tax Officer, Ward-7(1), Ahmedabad

MA 63/AHD/2015

• Counselvise Citation: [2016] 124 COUNSELVISE.COM (IT) 3954 (ITAT-AHMEDABAD)
• Duration Of Justice: 5 month(s) 8 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 10-02-2016
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: C
• Next Hearing Date: 05-02-2016
• Assessment Year: 2007-2008
• Appeal Filed On: 01-09-2015
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: KISHOR GOYAL
• Section: 43B; 10B

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD C BENCH (BEFORE SHRI PRAMOD KUMAR, ACCOUNTANT MEMBER & SHRI RAJPAL YADAV, JUDICIAL MEMBER) M.A. NO: 63/AHD/2015 (IN ITA NO: 1815/AHD/2015) (ASSESSMENT YEAR: 2007-08) HITECH OUTSOURING SERVICES HITECH HOUSE BEHIND V MURTI COMPLEX MEMNAGAR, AHMEDABAD V/S INCOME TAX OFFICER, WARD- 7 (1), AHMEDABAD (APPELLANT) (RESPONDENT) PAN: AACFH2562E APPELLANT BY : SHRI KISHOR GOYAL, AR RESPONDENT BY : MS. SONIA KUMAR, SR. D.R. ( )/ ORDER DATE OF HEARING : 05 -02-201 6 DATE OF PRONOUNCEMENT : 10 -02-2016 PER RAJPAL YADAV, JUDICIAL MEMBER: 1. THE PRESENT MISCELLANEOUS APPLICATION IS DIRECTED A T THE INSTANCE OF ASSESSEE POINTING OUT APPARENT ERROR IN THE ORDER O F THE TRIBUNAL DATED 19 TH JUNE, 2015 PASSED IN ITA NO. 1815/AHD/2015. THE TR IBUNAL HAS RECORDED FOLLOWING FINDING ON THE APPEAL OF ASSESSE E. M.A NO 63/AHD/15 (IN ITA NO. 1815/A/15) . A.Y. 2007-0 8 2 THE ASSESSEE AND REVENUE ARE IN CROSS APPEAL AGAINS T THE ORDER OF COMMISSIONER OF INCOME TAX (APPEALS) DATED 17 TH MARCH, 2011 PASSED FOR ASSESSMENT YEAR 2007-08. 2. THE REGISTRY HAS POINTED OUT THAT APPEAL OF THE ASSESSEE IS TIME BARRED BY 42 DAYS. THE ASSESSEE HAS FILED AN APPLICATION FOR CONDONATI ON OF DELAY. ON DUE CONSIDERATION OF THE APPLICATION OF THE ASSESSEE COUPLED WITH THE FA CT THAT ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS) IS UNDER CHALLENGE BEFORE THE TRIBUNAL IN THE APPEAL OF REVENUE ALSO, IT IS OPEN FOR DISCUSSION AND ASSESSEE COULD FILE CROSS OBJECTION ON RECEIPT OF NOTICE IN THE REVENUES APPEAL. WE CONDONE THE DELAY AND PROCEED TO DECIDE BOTH THE APPEALS ON MERIT. 3. THE SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT L D. COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN CONFIRMING THE ADDITION FOR RS. 19,82,993/-. 4. BRIEF FACTS OF THE CASE ARE THAT ASSESSEE IS A C OMPANY ENGAGED IN THE EXPORT OF BACK OFFICE OPERATION AND SOFTWARE DEVELOPMENT. IT HAS REGISTERED AS 100% EOU EXPORT ORIENTED UNIT WITH THE SOFTWARE TECHNOLOGY PARKS OF INDIA ON 18 TH JANUARY, 2002. IT HAS FILED ITS RETURN OF INCOME ON 30 TH OCTOBER, 2007 DECLARING TOTAL INCOME AT RS. 98,361 /- AFTER CLAIMING DEDUCTION U/S. 10B OF RS. 5,12,42,97 0/-. THE ASSESSEE HAD DECLARED TOTAL SOFTWARE TURNOVER OF RS. 17.69 CRORE AND CLAIMED EX EMPTION U/S. 10B OF RS. 5,12,42,970/- . THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY ASSESSMENT AND A NOTICE U/S. 143(2) WAS ISSUED AND SERVED UPON THE ASSESSEE. ON SCRUTI NY OF THE ACCOUNTS, IT REVEALED TO THE ASSESSING OFFICER THAT ASSESSEE HAS RECEIVED CONTRI BUTIONS FROM THE EMPLOYEES FOR THE PROVIDENT FUNDS AND ESI. HOWEVER, IT FAILED TO DEP OSIT THOSE AMOUNTS WITHIN THE DUE DATE PRESCRIBED BY PF AND ESI ACTS. LD. ASSESSING OFFIC ER WAS OF THE VIEW THAT AS PER SUB- CLAUSE 10 OF SECTION 2(24) R.W.S. 36(1)(VA) OF THE INCOME TAX ACT, THESE EMPLOYEES CONTRIBUTION WILL BE DEEMED AS AN INCOME OF THE ASS ESSEE AND IF IT IS NOT PAID WITHIN 20 DAYS FROM THE END OF THE MONTH THEN, IT IS NOT ALLO WABLE TO THE ASSESSEE AS A DEDUCTION. IT WAS ALSO OBSERVED THAT THOUGH SECTION 43B ALLOWS DE DUCTION ON ACTUAL PAYMENTS OF THE AMOUNTS, BUT THE DEDUCTION, OTHERWISE OUGHT TO BE A DMISSIBLE TO THE ASSESSEE. INCOME TAX ACT, SECTION 36(1)(VA) PROVIDES THAT IF PAYMENT S MADE AFTER 20 DAYS FROM THE END OF THE MONTH THEN IT IS NOT, ALLOWABLE. IN OTHER WORD S, THE PAYMENTS OF EMPLOYEES CONTRIBUTION TO THE PF FUND AFTER 20 TH APRIL FOLLOWING THE END OF PREVIOUS YEAR WILL NOT BE M.A NO 63/AHD/15 (IN ITA NO. 1815/A/15) . A.Y. 2007-0 8 3 ALLOWABLE TO THE ASSESSEE. THE LD. ASSESSING OFFIC ER THEREFORE DISALLOWED THE CLAIM OF THE ASSESSEE. 5. APPEAL TO THE COMMISSIONER OF INCOME TAX (APPEAL S) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 6. WITH THE ASSISTANCE OF LD. REPRESENTATIVES, WE H AVE GONE THROUGH THE RECORD CAREFULLY. THE ISSUE IN DISPUTE IS SQUARELY COVERE D AGAINST THE ASSESSEE BY THE DECISION OF HONBLE GUJARAT HIGH COURT RENDERED IN THE CASE OF GUJARAT ROAD TRANSPORT CORPORATION REPORTED IN 366 ITR PAGE 170 WHEREIN HO NBLE HIGH COURT HAS HELD THAT EMPLOYEES CONTRIBUTION IF NOT PAID WITHIN THE DUE DATE PROVIDED IN THE PF AND ESI ACT THEN, DEDUCTION WILL NOT BE ADMISSIBLE TO THE ASSES SEE. THE VIEW OF THE LD. COMMISSIONER OF INCOME TAX (APPEALS) IS IN LINE WITH THE HONBLE HIGH COURTS DECISIONS THEREFORE, WE DO NOT FIND ANY MERIT IN THIS GROUND OF APPEAL. NO OTHER GROUNDS IN THE APPEAL OF ASSESSEE ARE PRESSED. ACCORDINGLY, IT IS DISMISSED . 2. IN ORDER TO EXPLAIN AN APPARENT ERROR IN THE ABOVE ORDER, ASSESSEE HAS FILED A MISCELLANEOUS APPLICATION RUNNING INTO 38 P AGES. IN SUBSTANCE THE GRIEVANCE OF THE ASSESSEE IS THAT EITHER ADDITI ON U/S. 43B(B) OF DELAYED PAYMENT OF EMPLOYEES CONTRIBUTION TO PF AN D ESI ACCOUNT OUGHT NOT TO BE CONFIRMED OR IN CASE IT IS CONFIRME D THAN THAT WILL GO TO THE BUSINESS PROFIT OF THE ASSESSEE AND CONSEQUENCE DEDUCTION U/S 10B SHOULD BE GRANTED. 3. AS FAR AS FIRST PROPOSITION IS CONCERNED. WE HAVE A PPRISED THE LEARNED COUNSEL FOR THE ASSESSEE DURING THE COURSE OF HEARI NG OF THE APPEAL THAT JUDGMENT OF HONBLE JURISDICTIONAL HIGH COURT IS AGAINST THE ASSESSEE. THE TRIBUNAL HAS FOLLOWED THE DECISION OF HONBLE JURISDICTIONAL HIGH COURT AS DISCERNIBLE IN PARAGRA PH 6 OF THE TRIBUNALS FINDING EXTRACTED (SUPRA). THE LEARNED COUNSEL FOR THE ASSESSEE COULD NOT POINT OUT ANY DECISION FROM HONBLE SUPREME COU RT WHICH IS CONTRARY TO THE DECISION OF THE HONBLE JURISDICTIO NAL HIGH COURT. IT WAS M.A NO 63/AHD/15 (IN ITA NO. 1815/A/15) . A.Y. 2007-0 8 4 NOT OPEN FOR THE TRIBUNAL TO TAKE A DIFFERENT VIEW THAN THE ONE LAID DOWN BY THE HONBLE JURISDICTIONAL HIGH COURT THOUG H THEY ARE DECISION OF THE HONBLE DELHI HIGH COURT. CONTRARY TO THE VI EW TAKEN BY THE HONBLE GUJARAT HIGH COURT NAMELY CIT VS. AIMIL LTD . 321 ITR PAGE 508. 4. AS FAR AS, SECOND PROPOSITION RAISED IN THE MISCELL ANEOUS APPLICATION IS CONCERNED. NO SUCH PLEA WAS TAKEN BY THE ASSESSEE I N ITS GROUNDS OF APPEAL. HOWEVER, WHILE DISPOSING OF THE APPEAL OF T HE REVENUE, TRIBUNAL HAS REPRODUCED THE FINDING OF LD. CIT(A) R ECORDED IN PARAGRAPH 3.3 AND WHICH READ AS UNDER:- 3.3 I HAVE CONSIDERED THE FACTS OF THE CASE, ASSESS MENT ORDER AND APPELLANT'S SUBMISSION. IT IS NOT IN DISPUTE THAT THE DISALLOWANCE IS IN RE SPECT OF APPELLANT'S UNIT ELIGIBLE FOR DEDUCTION UNDER SECTION 10B. SINCE BY DISALLOWING E XPENSES ON ACCOUNT OF NON-DEDUCTION OF TDS OR NOT DEPOSITING TDS TO GOVERNMENT ACCOUNT IN TIME, ASSESSING OFFICER ONLY INCREASED BUSINESS PROFIT. SUCH INCREASED BUSINESS PROFIT IS ELIGIBLE FOR DEDUCTION UNDER SECTION 10B, APPELLANT IS ELIGIBLE FOR DEDUCTION UN DER SECTION 10B FOR ADDITION OF EXPENSES DISALLOWED UNDER SECTION 40(A) (IA) OF IT ACT. ACCORDINGLY THE DISALLOWANCE OF EXPENSE ON ACCOUNT OF DEFAULT UNDER TDS PROVISIONS WILL NOT AFFECT APPELLANT'S TAXABLE INCOME. IN VIEW OF THIS, THE APPLICABILITY OF TDS P ROVISIONS AND DISALLOWANCE UNDER SECTION 40 (A) (IA) IS NOT DISCUSSED HERE. HOWEVER THE ADDITION ON ACCOUNT OF DELAYED PAYMENT OF EMPLOYEE'S CONTRIBUTION TO PF/ESI IS NOT MADE IN BUSINESS HEAD. THIS ADDITI ON IS MADE UNDER SECTION 2 (24) (X) OF IT ACT. EXPENSE IN RESPECT OF THIS WOULD HAVE BEEN ALLOWABLE UNDER SECTION 36 (1) (VA) OF IT ACT IF APPELLANT MADE THE PAYMENT OF PF/ESI IN T IME. SINCE THE PAYMENT WAS NOT MADE IN TIME, IT IS TAXED AS INCOME; HOWEVER NO EXPENSE IS ALLOWABLE IN RESPECT OF THIS. THEREFORE NON-ALLOWANCE OF EXPENSE WILL NOT RESULT IN INCREASED BUSINESS PROFIT. ACCORDINGLY APPELLANT WILL NOT BE ENTITLED FOR INCR EASED DEDUCTION ON ACCOUNT OF THIS DISALLOWANCE UNDER SECTION 10 B.' M.A NO 63/AHD/15 (IN ITA NO. 1815/A/15) . A.Y. 2007-0 8 5 11. AFTER GOING THE ABOVE FINDING OF COMMISSIONER O F INCOME TAX (APPEALS), WE DO NOT FIND ANY ERROR IN IT, BECAUSE ONCE THE EXPENSES WHI CH ARE TO BE DISALLOWED WITH THE AID OF SECTION 40(A)(IA) THEN IT WILL ENHANCE THE TAXABLE INCOME OF THE ASSESSEE WHICH WILL FALL IN THE ELIGIBLE PROFIT FOR EXEMPTION U/S. 10B. 5. THE TRIBUNAL HAS CONFIRMED THIS FINDING OF THE LD. CIT(A). IT WAS A CONSCIOUS DECISION. THE POWER OF RECTIFICATION U/S. 254 (2) OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTA KE WHICH IS SOUGHT TO BE RECTIFIED IS AN OBVIOUS AND PATENT MIS TAKE WHICH IS APPARENT FROM THE RECORD, AND NOT A MISTAKE WHICH R EQUIRES TO BE ESTABLISHED BY ARGUMENTS AND A LONG TERM PROCESS OF REASONING ON POINTS ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIO NS. IF WE EXAMINE THE FACTS OF THE PRESENT CASE THEN IT WOULD REVEAL THAT IN THE GARB OF POINTING APPARENT ERROR. LEARNED COUNSEL FO R THE ASSESSEE WANTS TO GET THE ORDER OF THE TRIBUNAL REVIEWED WHI CH IS NOT PERMISSIBLE IN LAW. ACCORDINGLY, APPLICATION OF THE ASSESSEE IS REJECTED. ORDER PRONOUNCED IN OPEN COURT ON 10 - 02 - 201 6. SD/- SD/- (PRAMOD KUMAR) (RAJPAL YADAV) ACCOUNTANT MEMBER JUDICIAL 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,AHME DABAD