PRAMOD LAKRA DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE -11(1), KOLKATA, KOLKATA V. NIS MANAGEMENT LIMITED, KOLKATA

ITA 189/KOL/2025

AI Insights

The case involves appeals by the Revenue against the orders of the Commissioner of Income Tax (Appeals) which had deleted certain additions made by the Assessing Officer under the head 'other allowances' for the assessment years 2012-13 and 2013-14. The main contention of the Revenue was that the CIT(A) had erred in deleting the additions without any verification and merely relied on an earlier appellate order which was not applicable to the current cases. The Tribunal, after considering the submissions and evidence presented, decided to uphold the CIT(A)'s decision, finding no justification for the disallowance made by the AO.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 708395 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-07-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Assessment Year: 2013-2014
• Other Referred Cases: Checkmate Services Pvt. Ltd.
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Condonation of delay
• Section: 143(3); 115JB

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'सी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘C’ BENCH, KOLKATA श्री प्रदीप क ुमार चौबे, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SHRI PRADIP KUMAR CHOUBEY, JUDICIAL MEMBER & SHRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. Nos.: 188 & 189/KOL/2025 Assessment Years: 2012-13 & 2013-14 Deputy Commissioner of Income Tax, Circle-11(1), Kolkata Vs. NIS Management Limited (Appellant) (Respondent) PAN: AACCN2982P Appearances: Department represented by : Praveen Kishore, CIT (DR) and S.B. Chakraborty, Sr. DR. Assessee represented by : Miraj D Shah, AR. Date of concluding the hearing : 11-June-2025 Date of pronouncing the order : 16-July-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: Both these appeals filed by the Revenue are against the separate orders of the Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as Ld. 'CIT(A)'] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) for AYs 2012-13 and 2013- 14 dated 04.10.2023 and 27.10.2023 respectively, which have been passed against the assessment orders u/s 143(3) of the Act, dated Page | 2 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. 24.02.2015 and 28.03.2016, respectively. Both the appeals were heard together and are being decided vide this common order for the sake of convenience and brevity. 1.1. The Registry has informed that both the appeals filed by the Revenue are barred by limitation by 387 days. An affidavit, which is in effect an application, seeking condonation of delay has been filed by the Revenue stating as under: ITA No. 188/KOL/2025: “Dates Events/Reasons 04.10.2023 Order of CIT(A) was received in the O/o Pr. CIT-2, Kol. 03.12.2023 Due date for filing of 2nd Appeal. 29.01.2024 ASR is submitted to the O/o PCIT-2, Kolkata through proper channel. 27.12.2024 Certificate of filing 2nd appeal was received from the O/o Pr. CIT-2, Kolkata. 17.01.2025 Necessary hardcopies of documents/paper/details required for filing 2nd Appeal before Hon’ble ITAT, Kolkata were collected and prepared. 21.01.2025 2nd Appeal was filed. It is respectfully submitted that the appeal could not be filed on or before due date due to an immense work load relating to assessment, penalties and writ petition filed by the various assessee in the Calcutta High Court against the order U/s 148A(d) and notice U/S148, as well as collecting and arranging the required documents/files for the 2nd appeal. Therefore, it is requested to kindly condone the delay of 415 days in filing appeal before the Hon’ble ITAT, Kolkata for the sake of substantial justice.” 1.2. Considering the application for condonation of delay and the reasons stated therein, we are satisfied that the Revenue had a reasonable and sufficient cause and was prevented from filing the instant appeals within the statutory time limit. We, therefore, condone the delay and admit both the appeals for adjudication. Page | 3 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. 2. The Revenue is in appeal before the Tribunal raising the following grounds of appeal: I. ITA No. 188/KOL/2025, A.Y. 2012-13: “1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was erred in deleting the additions of Rs. 1,93,81,485/- without any verification on the issue and mere relied on earlier appellate order in the case of the assessee for AY 2010-11 which is not squarely applicable in the instant case? 2. The appellant craves leave to make any amend, addition, alternation, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” II. ITA No. 189/KOL/2025; A.Y. 2013-14: “1. Whether on the facts and circumstances of the case and in law the Ld. CIT(A) was erred in deleting the additions of Rs. 2,16,16,187/- without any verification on the issue and mere relied on earlier appellate order in the case of the assessee for AY 2010-11 which is not squarely applicable in the instant case? 2. The appellant craves leave to make any amend, addition, alternation, modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings.” 3. We shall first take up the appeal for the AY 2012-13. Brief facts of the case are that the assessee had e-filed the return of income showing total income of ₹3,75,96,580/- which was selected for scrutiny. The Assessing Officer (hereinafter referred to as Ld. 'AO') noted that the assessee had debited a sum of ₹61,86,72,133/- on account of ‘cost to contract labour’, the breakup of which is mentioned at page 2 of the assessment order. The assessee was required to provide further breakup of wages & salary of ₹53,40,46,838/- included in the expenditure of ₹61,86,72,133/- and justification for allowability of the expenses of ₹9,69,07,425/- on account of ‘other allowances’ being part of ‘cost to contract labour’. The assessee responded as under: Page | 4 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. “We have considered wages/salary and other pay-out of our contractual employees in this head of expenses. They are regulated by Contract Labour Regulation & Abolition Act, 1970. As per the Act M/s NIS Management Private Limited is contractor and our client is their Principal employer. We have recruited them to engage in our client premises to provide service to our client as per service level agreement. We have raised bill to our client to reimburse their employment expenses e.g., salary & wages, bonus, leave, PF, ESIC etc. with our service charge as per agreement with the client.” 4. The Ld. AO did not find the explanation satisfactory and, therefore, disallowed a sum of ₹1,93,81,485/- being 20% of other allowances claimed at ₹9,69,07,425/-. Further, addition was made on account of employees' contribution to ESI & PF at ₹27,65,360/- and the total income was assessed at ₹5,97,43,420/- under the normal provision and ₹3,93,67,295/- u/s 115JB of the Act. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who deleted the disallowance of 20% made under the head ‘other allowances’ and upheld the addition of ₹19,32,477/- on account of delayed deposit of employees’ contribution to ESI & PF by relying upon the decision of Hon'ble Supreme Court in the case of Checkmate Services Pvt. Ltd. dated 12.10.2022 and the appeal was party allowed. 5. Aggrieved with the order of the Ld. CIT(A), the Revenue has filed the appeal before this Tribunal. 6. The only ground of appeal of the Revenue is regarding the deletion of addition of ₹1,93,81,485/- without any verification on the issue and relying upon the earlier appellate order in the case of the assessee for AY 2010-11. 7. The Ld. AR drew our attention to the sample pay slips showing breakup of salary/wages from pages 1 to 9 of the paper book filed, which details were also filed before the Ld. AO as well as before the Ld. CIT(A). Page | 5 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. It was stated before the Ld. CIT(A) that the assessee is a domestic company and had provided security services, manpower supply services and cleaning services to its customers/clients all over India, especially in the eastern part of the country. The business was established in 1985 as a sole proprietorship by Mr. Debajit Choudhury, which expanded and was converted into a closely held Private Limited Company in 2006 with Mr. Debajit Choudhury and his wife Mrs. Rina Choudhury as shareholders. During the relevant assessment year, the appellant Company had above 12,000 employees. As per the agreement he was required to follow the corporate pay structure in which breakup of minimum wages, basis allowances, special allowances etc. are given. Our attention was drawn to the paper book being a letter for renewal of contract for providing Monitor Operator at Birla Building Ltd. in which salary details are mentioned at page 1 of the paper book for 8 hrs./26 days and on page 2 Other Allowances for 4 hours are mentioned at ₹2,252/- being 19.52% of the total and the service charges @ 7% are mentioned at ₹734/-, being 6.36% of the total with the monthly bill of ₹11,540/-. Similar renewal of contract/agreement for Bhagirathi Neotia Woman & Child Care Centre, Amalgamated Ben Coffee Trading Co. Ltd., Kolkata and Cox & King Ltd., Kolkata have been filed. it was submitted that since the assessee was following the corporate pay structure, there was no justification for making 20% disallowance out of the expenses claimed as has been done by the Ld. AO which has been rightly deleted by the Ld. CIT(A) by following the decision for AY 2010-11. The Ld. DR relied upon the order of the Ld. THE LD. AO and requested that the order of the Ld. CIT(A) may be upheld. 8. We have considered the submissions made and the evidences produced before us. The Ld. DR vehemently relied upon the order of the Page | 6 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. Ld. Assessing Officer. However, it could not be established as to why 20% of the disallowance on account of revenue leakage should be upheld; therefore, the disallowance being made without any basis is hereby deleted and the appeal of the Revenue is dismissed. 9. As regards the appeal for AY 2013-14, since the facts and issues are similar, the finding for AY 2012-13 shall mutatis mutandis also apply to the appeal for AY 2013-14 and the appeal filed by the Revenue for A.Y. 2013-14 is also dismissed. 10. In the result, both the appeals for AY 2012-13 and AY 2013-14 filed by the Revenue are dismissed. Order pronounced in the open Court on 16th July, 2025. Sd/- Sd/- [Pradip Kumar Choubey] [Rakesh Mishra] Judicial Member Accountant Member Dated: 16.07.2025 Bidhan (Sr. P.S.) Page | 7 I.T.A. Nos.: 188 & 189/KOL/2025 AYs: 2012-13 & 2013-14 NIS Management Limited. Copy of the order forwarded to: 1. Deputy Commissioner of Income Tax, Circle-11(1), Kolkata. 2. NIS Management Limited, 58/99, Prince Anwar Shah Road, Lake Gardens, Kolkata, West Bengal, 700045. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "