THE COMMISSIONER OF INCOMETAX vs. M/S.Q SOURCE GLOBAL CONSULTI

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TCA/489/2018HC Madras16 July 2019Bench: Hon`ble Mr Justice T. S. SIVAGNANAM4 pages
AI SummaryWithdrawn

What did the High Court hold?

The High Court dismissed the appeal as withdrawn. The Revenue, through a letter from the Income Tax Officer (Judicial), informed the Court that the tax effect involved (Rs. 28.45 lakhs) was below the monetary limit stipulated by CBDT Circular No. 3 of 2018, and therefore, they were instructed to withdraw the appeal. Consequently, the appeal was dismissed as withdrawn. The substantial questions of law were expressly left undecided by the Court. No costs were awarded.

What were the facts?

The Revenue, represented by the Commissioner of Income Tax, Chennai, filed an appeal under Section 260A of the Income Tax Act, 1961, against an order dated 23.11.2016 passed by the Income Tax Appellate Tribunal (ITAT), Madras 'B' Bench. The appeal pertains to the assessment year 2012-13 and concerns the assessee, M/s. Q Source Global Consulting (P) Limited, Chennai. The dispute revolves around additions made by the Assessing Officer regarding employee's contribution to provident fund/ESI paid belatedly. The tax effect involved in the appeal was Rs. 28.45 lakhs, which was below the monetary limit prescribed by CBDT Circular No. 3 of 2018.

What were the issues?

1. Whether the Tribunal was correct in deleting additions made by the Assessing Officer under Section 2(24)(x) read with Section 36(1)(va) of the Income Tax Act, 1961, holding that belated employee's contribution towards provident fund/ESI was eligible for deduction in computing business income, despite the section prohibiting such allowance? 2. Whether deduction is permissible for belated payments of employee's contribution towards ESI/pension funds, particularly when Section 2(24)(x) read with Section 36(1)(va) refers to sums received as employee's contribution and not employer's contribution, and such sums become income in the hands of the assessee if credited to the fund beyond the specified due dates? Revenue's Contention: The Revenue argued that belated payments of employee's contribution to provident fund/ESI are not eligible for deduction as per Section 36(1)(va) read with Section 2(24)(x) of the Act, as these sections prohibit such allowance if the payment is made beyond the due dates specified under the respective Acts. The Revenue relied on the interpretation that these sections treat such belatedly paid sums as income in the hands of the assessee. Assessee's Contention: The judgment does not record any specific contentions made by the assessee.

Which sections of the Income-tax Act were involved?

Section 260A,Section 2(24)(x),Section 36(1)(va)

AI-generated summary — verify with the full judgment below

1 In the High Court of Judicature at Madras Dated : 16.7.2019 Coram : The Honourable Mr.Justice T.S.SIVAGNANAM and The Honourable Mrs.Justice V.BHAVANI SUBBAROYAN Tax Case Appeal No.489 of 2018 The Commissioner of Income Tax, Chennai ...Appellant Vs M/s.Q Source Global Consulting (P) Limited, Chennai-32 ...Respondent APPEAL under Section 260A of the Income Tax Act, 1961 against the order dated 23.11.2016 made in ITA.No.2282/Mds/2016 on the file of the Income Tax Appellate Tribunal, Madras 'B' Bench for the assessment year 2012-13. For Appellant : Mr.T.Ravikumar For Respondent : Mr.A.S.Sriraman Judgment of the Court was delivered by

T.S.Sivagnanam,J

We have heard the learned counsel on either side. 2. This appeal is filed by the Revenue under Section 260A of the Income Tax Act, 1961 against the order dated 23.11.2016 made in ITA.No.2282/ Mds/2016 on the file of the Income Tax Appellate Tribunal, Madras 'B' Bench for the assessment year 2012-13. http://www.judis.nic.in 2 3. The Revenue has filed this appeal by raising the following substantial questions of law : “i. Whether the Tribunal was right in deleting the additions made by the Assessing Officer under Section 2(24)(x) read with Section 36(1)(va) holding that the employee's contribution paid towards provident fund/ESI belatedly was eligible for deduction while computing the business income even if the Section prohibits such allowance to be granted ? And ii. Whether the deduction is to be allowed even in cases of belated payment of contribution towards ESI/pension funds especially when Section 2(24)(x) read with Section 36(1)(va) refers to sums received as employee's contribution and not employer contribution and would become income in the hands of the assessee as the same was credited to the relevant fund beyond due dates specified under those Acts ?” 4. The learned Senior Standing Counsel appearing for the Revenue has produced a letter dated 15.7.2019 issued by the Income Tax Officer (Judicial), Office of the Principal Commissioner of Income Tax, Chennai-5, Chennai-34 stating that the tax effect involved in this case is Rs.28.45 lakhs, which is far below the monetary limit fixed as per Circular No.3 of 2018 dated 11.7.2018 issued by the Central Board of Direct Taxes and that he has been instructed him to withdraw the above appeal. http://www.judis.nic.in 3 5. The letter dated 15.7.2019 issued by the Income Tax Officer (Judicial), Office of the Principal Commissioner of Income Tax, Chennai-5, Chennai-34 is placed on record and the above tax case appeal is dismissed as withdrawn. The substantial questions of law are left open. No costs. 16.7.2019 Internet: Yes To The Income Tax Appellate Tribunal, Chennai 'B' Bench. RS http://www.judis.nic.in 4 T.S.SIVAGNANAM,J AND V.BHAVANI SUBBAROYAN,J RS TCA.No.489 of 2018 16.7.2019 http://www.judis.nic.in

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