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Income Tax Appellate Tribunal, AHMEDABAD “SMC” BENCH
Before: Shri Sudhanshu Srivastava & Shri Amarjit Singh
Revenue by: Shri Santosh Karnani, Sr. D.R. Assessee by: Shri C.N. Shah, A.R. Date of hearing : 28-06-2019 Date of pronouncement : 31-07-2019 आदेश/ORDER PER : AMARJIT SINGH, ACCOUNTANT MEMBER:-
This assessee’s appeal for A.Y. 2014-15, arises from order of the CIT(A)-1, Ahmedabad dated 23-10-2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
The assessee has raised following grounds of appeal:-
Page No 2 Chipco Bonding Systems India Pvt. Ltd. vs. ITO “1. The order of the Commissioner of income tax (Appeal) - I referred to as Commissioner Appeals) for Assessment Year 2014-2015 dated 24-12-2016 is bad in law and erroneous as to facts in as much as he has wrongly taken the figures of different months in respect of Provident Fund and Employees State Insurance Contribution in respect of contribution received from employees other than figures of different months given by the assessee.
2. Without prejudice to the above even according to details mentioned in the appellate order, the appellant has credited the amount received from the employees in respect of Provident Fund and Employees State Insurance under the respective Acts before "due date under the Provident Fund Act and Employees State insurance Act, Rules, order or notifications issued there under.
3. The Commissioner Appeals ought to have considered the grace period of 5 days for payment of Provident Fund Contribution of Employees that is due date of payment under section 36 (1) (va) is 15 days after the end of month plus 5 days of grace period i.e. 20 days after the end of month. However dates of payments mentioned by Commissioner Appeals is before the end of month itself for each month.
The Commissioner Appeals has wrongly given the dates of payments in respect of Employees State Insurance Contribution.
5. The Commissioner Appeals ought to have followed the ratio of Hon'ble Supreme Court in the case CITV. ALOM EXTRUSIONS LTD (SC) 319 ITR 306 (SC) and allowed the claim of deduction of Provident Fund and Employees State insurance received from Employees under section 43 B since the second proviso to section 43 B as amended by Finance Act 2003 is curative in nature as the Payment being made before due date of Furnishing the return of income under section 139 (1) of the Act.
The appellant prays for relief of deduction in respect of payment of Provident Fund and Employees State Insurance Contribution received from employees and deposited before due date of filing return of income under section 139 (1) of the Act, under section 43 B in view of the ratio of Apex Court in CIT v/s ALOM EXTRUSIONS LTD 319 STR 12 306(SL)”
2. In all the grounds of appeal, the common issue involved is against the decision ld. CIT(A) in confirming the disallowance made by the assessing officer u/s. 36(1)(va) of Rs. 5,71,684/-.
The fact in brief is that return of income declaring income of Rs. 36,79,321/- was filed on 21st October, 2014. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the act on 15th Sep, 2015. During the course of assessment proceedings, the assessee was called upon to furnish detail of Employees Contribution to Provident Fund and Employees State Insurance Corporation, the detail of the same is reproduced as under:- PF Page No 3 Chipco Bonding Systems India Pvt. Ltd. vs. ITO
No Month Nature Amount Due Date Date of payment
1 May'2013 PF 33216 15/05/2013 20/05/2013 2 Jun'2013 PF 33638 15/06/2013 20/06/2013 3 July'2013 PF 32679 15/07/2013 20/07/2013 4 Aug'2013 PF 32782 15/08/2013 23/08/2013 5 Sep'2013 PF 31453 15/09/2013 24/09/2013 6 Oct' 2013 PF 34088 15/10/2013 24/10/2013 7 Nov' 2013 PF 37724 15/11/2013 22/11/2013 8 Dec'2013 PF 35374 15/12/2013 23/12/2013 9 Jan' 2014 PF 37680 15/01/2014 24/01/2014 10 Feb' 2014 PF 38030 15/02/2014 28/02/2014 11 Mar' 2014 PF 35265 15/03/2014 21/03/2014 12 Apr' 2014 PF 38807 15/04/2014 22/04/2014 TOTAL 420736 ESIC 1 Aug'2013 ESIC 20068 21/08/2013 23/08/2013 2 Sep'2013 ESIC 19253 21/09/2013 24/09/2013 3 Oct' 20 13 ESIC 20889 21/10/2013 24/10/2013 4 Nov' 20 13 ESIC 23003 21/11/2013 22/11/2013 5 Dec'2013 ESIC 21566 21/12/2013 24/12/2013 6 Jan'2014 ESIC 22972 21/01/2014 24/01/2014 7 Feb' 20 14 ESIC 23197 21/02/2014 01/03/2014 TOTAL 150948 P.F. + ESIC = 420736 + 150948 = 57 1684 Page No 4 Chipco Bonding Systems India Pvt. Ltd. vs. ITO The assessing officer after taking into consideration the detail filed by the assessee asked the assessee to show cause why not the late payment of PF and ESIC from employees contribution should not be disallowed and added back to the total income as per provision section 2(24)(x) r.w.s. 36(1)(va) of the act. The assessee responded that copies of challans were furnished and disallowance may be made according to law if found late. The assessing officer has referred the decision of Hon’ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation IT Appeal No. 637 of 2013 and disallowed the amount of Rs. 5,71,684/- on default in depositing the employee’s contribution as referred above within the due date as prescribed in the relevant act.
4. Aggrieved asessee has filed appeal before the ld. CIT(A). The ld. CIT(A) has dismissed the appeal of the assessee after referring the decision of Hon’ble Jurisdictional High Court in the case of Gujarat State Road Transport Corporation (366 ITR 170).
We have heard both the sides and perused the material on record carefully. The assessee has not deposited the contribution received from the employees under the provident fund act and the ESI Act within the due dates as prescribed under the provident Fund Act and the ESI Act amounting to Rs. 5,71,684/-. We consider that Hon’ble jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation 265 CTR 64 has held that when the employer has not credited the sum received by it as employees contribution to employee’s account in relevant fund on or before due date as prescribed in explanation to section 36(i)(va) the assessee shall Page No 5 Chipco Bonding Systems India Pvt. Ltd. vs. ITO not be entitled to deduction. In view of the above facts and the judicial findings, we uphold the decision of Ld. CIT(A). Accordingly, the appeal of the assessee is dismissed. During the course of appellate proceedings before us, the ld. counsel has referred the decision of the Hon’ble Jurisdictional High Court of Gujarat in the case of Saladar Laminates Ltd. vs. DCIT Circle 4(1)(1) vide R/Tax Appeal No. 1186 of 2018 wherein the assessee has stated the appeal against the decision of Hon’ble Court of Gujarat in the case of the CIT vs. GSRTC is pending before the Hon’ble Supreme Court and the benefit of the judgment of the Supreme court may be made available to the assesse as and when rendered and in case judgment of the Hon’ble court in the case of GSRTC is reversed. The jurisdictional High court has dismissed the appeal of the assesse with the remark that if the Supreme Court reverses the judgment in the case of CIT vs. GSRTC , it would be open for the asssessee to revive the appeal by filing an application for such purpose within three month from the date of the judgment. On the strength of Hon’ble Gujarat High Court decision rendered in the case of Saladar Laminates Ltd. vs. DCIT Circle 4(1)(1) vide R/Tax Appeal No. 1186 of 2018 ld. counsel for the assessee submitted that though Hon’ble High Court has upheld the disallowances made u/s. 36(1)(iv) of the Income Tax Act in case if assessee failed to deposit the employee’s contribution within the time limit provided in PF and ESIC Act but in the concluding paragraphs Hon’ble High Court has given liberty to the assessee to file application within three months from the decision of Hon’ble High Court rendered on the appeal of GSRTC if Hon’ble Supreme Court reversed the order of Hon’ble High Court. The ld. counsel for the assessee submitted that identical direction be given in the Page No 6 Chipco Bonding Systems India Pvt. Ltd. vs. ITO