N K PROTEINS PVT. LIMITED,AHMEDABAD V. ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE-1(2), AHMEDABAD

ITA 362/AHD/2022

AI Insights

N.K. Proteins Pvt. Ltd. appealed against the order of the Commissioner of Income-tax (Appeals)-11, Ahmedabad, which confirmed several additions and disallowances made by the Assessing Officer under the Income-tax Act, 1961 for the Assessment Year 2020-21. The main issues in the appeal included the disallowance under section 14A r.w.r. 8D, disallowance of donations, and disallowance related to late payment of PF and ESIC contributions. The Tribunal's decision addressed these issues based on the legal provisions and relevant judicial precedents.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 314234 (ITAT-AHMEDABAD)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2020-2021
• Other Referred Cases: Checkmate Services Pvt Ltd. Vs CIT
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: KAVAN LIMBASIYA
• Assessee Lawyers: VARTIKCHOKSHI
• Keywords: Earning of tax free income; Deemed to accrue or arise in india
• Section: 143(3); 139; 14A; 43B; 115JB

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, AHMEDABAD BEFORE DR. B.R.R. KUMAR, VICE-PRESIDENT SHRI T.R. SENTHIL KUMAR, JUDICIAL MEMBER I.T.A. No.362/Ahd/2022 (Assessment Year: 2020-2021) N.K. Proteins Pvt. Ltd., 7th Floor, Popular House, Ashram Road, Ahmedabad PAN : AAACN 9377 N Vs. ACIT, Ahmedabad, Central Circle-1(2) Ahmedabad (Appellant) .. (Respondent) Assessee by : Shri Vartik Chokshi, AR Revenue by: Shri Kavan Limbasiya, Sr DR Date of Hearing 17.03.2025 Date of Pronouncement 06.05.2025 O R D E R PER DR. B.R.R. KUMAR, VICE-PRESIDENT : This appeal has been filed by the assessee against the order of the Ld. Commissioner of Income-tax (Appeals)-11, Ahmedabad (hereinafter referred to as \"CIT(A)\" for short) dated 10.08.2022, passed u/s 250 of the Income-tax Act, 1961, (hereinafter referred to as \"the Act\" for short) for the Assessment Year (AY) 2020-21. 2. The assessee has raised following grounds of appeal:- 1. In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has erred by not appreciating the fact of the case and hence, the order passed is void and bad in law. 2. In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has erred by confirming an addition of Rs. 9,57,533/- u/s 14A r.w.r. 8D of the Act considering amendment made by Finance Act, 2022 retrospective in nature when amendment is prospective. The CIT(A) ought to have appreciated that the Appellant has earned nominal exempt income of Rs. 2,542/- which is already disallowed in return of income filed. ITA No. 362/Ahd/2022 N.K. Proteins Ltd Vs. ACIT Asst. Year : 2020-21 - 2– 3. In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has erred by confirming a disallowance of Donation made amounting to Rs. 1,01,68,057/-. 4. In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has erred by confirming a disallowance of late payment of PF and ESIC Contribution amounting to Rs. 44,99,785/-. 4.1 In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has ought to have appreciated that cheque towards employees contribution of Rs. 22,54,073 was tendered before due date provided in Act but only realization of such cheque is belated. In law, facts and circumstances of the Appellant's case, the learned CIT(Appeals) has erred by confirming an addition of Rs. 9,57,533/- u/s 14A r.w.r. 8D of the Act under the book profit calculated as per the provisions of section 115JB of the Act considering amendment made by Finance Act, 2022 retrospective in nature when amendment is prospective. The CIT(A) ought to have appreciated that the Appellant has earned nominal exempt income of Rs. 2,542/- which is already disallowed in return of income filed.” 3. The brief facts relating to this case are that the assessee is a Company incorporated under Companies Act, 2013 and it had filed its return of income u/s 139 of the Act for the year under consideration on 12.02.2021 declaring total income under normal provisions of the Act at Rs. 32,86,67,060/- and book profit u/s 115JB of the Act as NIL. Subsequently, the case was selected for scrutiny and an assessment order has been passed u/s 143(3) of the Act on 30.03.2022 wherein following additions / disallowances have been made:- (i) Disallowance u/s 14A r.w.r 8D - Rs. 9,57,533/- (ii) Disallowance of Donation - Rs.1,01,68,057/- (iii) Late payment of PF and ESIC - Rs. 44,99,785/- Late payment of PF and ESIC - Rs. 22,54,073/- (iv) Disallowance u/s 14A r.w. 8D - Rs. 9,57,533/- as per clause (f) to Expl. 1 to Section 115JB 4. On appeal before the First Appellate Authority, the Ld. CIT(A) confirmed all the aforesaid additions/disallowances made by the Assessing Officer. Aggrieved by the ITA No. 362/Ahd/2022 N.K. Proteins Ltd Vs. ACIT Asst. Year : 2020-21 - 3– order of the Ld. CIT(A) confirming the additions/disallowances, the assessee has filed the present appeal. Disallowance u/s 14A: 5. The assessee has earned exempt income of Rs.2,542/- only as dividend from domestic company. Since the assessment year involved is 2020-21, the disallowance cannot exceed the exempt income earned. Hence the disallowance is restricted to Rs.2,542/-. Appeal of the assessee on this ground is allowed. Donation amount of Rs.1,01,68,057/- 6. Not pressed, hence dismissed. Appeal of the assessee on this ground is dismissed. PF and ESIC Contribution amounting to Rs. 44,99,785/- & Rs.22,54,070/- 7. In view of the judgment of Hon’ble Apex Court in the case of Checkmate Services Pvt Ltd. Vs CIT, in C.A. No. 2830/2016, dated 13.10.2022, wherein it was observed that the essential character of an employees’ contribution, i.e., that it is part of the employees’ income, held in trust by the employer is underlined by the condition that it has to be deposited on or before the due date. The Hon’ble Court pointed out to the finer distinction between Section 43B and the non-obstante clause in that section by observing that the said clause could not be applied to the deemed income u/s 36(1)(va) which was basically a money held in trust. 7.1 This judgement thus sets at rest, the entire issue. Hence, respectfully following the judgment of Hon’ble Apex Court in the case of Checkmate Services Pvt Ltd (supra), the appeal of the assessee on this ground is hereby dismissed. ITA No. 362/Ahd/2022 N.K. Proteins Ltd Vs. ACIT Asst. Year : 2020-21 - 4– Computation u/s 115JB - Disallowance u/s 14A : 8. In view of the deletion of disallowance u/s 14A made by the Assessing Officer, this ground need not be adjudicated being infructuous. 9. In the result, the appeal of the assessee is partly allowed. The order is pronounced in the open Court on 06.05.2025 Sd/- Sd/- (T.R. SENTHIL KUMAR) (DR. B.R.R. KUMAR) JUDICIAL MEMBER VICE-PRESIDENT Ahmedabad; Dated 06/05/2025 **btk आदेश की \u0007ितिलिप अ ेिषत/Copy of the Order forwarded to : 1. अपीलाथ\u0007 / The Appellant 2. \b थ\u0007 / The Respondent. 3. संबंिधत आयकर आयु\u0015 / Concerned CIT 4. आयकर आयु\u0015(अपील) / The CIT(A)- 5. िवभागीय \bितिनिध, आयकर अपीलीय अिधकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड फाईल / Guard file. आदेशानुसार/ BY ORDER, True Copy उप/सहायक पंजीकार (Dy./Asstt. Registrar) आयकर अपीलीय अिधकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation …05.05.2025….. 2. Date on which the typed draft is placed before the Dictating Member …05.05.2025.. 3. Other Member……05.05.2025…………… 4. Date on which the approved draft comes to the Sr.P.S./P.S ……05.05.2025….………. 5. Date on which the fair order is placed before the Dictating Member for pronouncement …06.05.2025…. 6. Date on which the fair order comes back to the Sr.P.S./P.S …….06.05.2025………………. 7. Date on which the file goes to the Bench Clerk …06.05.2025…. 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order 10. Date of Dispatch of the Order…………………………………… "