PR COMMISSIONER OF INCOME TAX JAIPUR-II vs. M/S RAJASTHAN EX SERVICEMEN CO LTD

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ITA/7/2018HC RajasthanRJHC02041800201815 February 20182 pages
AI SummaryDismissed

What did the High Court hold?

The Tribunal dismissed the appeal filed by the Revenue, thereby confirming the order of the CIT(A) which had deleted the disallowance made by the Assessing Officer. The Tribunal noted that the controversy regarding both issues relating to PF & ESI contributions is pending before the Supreme Court in SLP No. 16249/2014 (The State of Rajasthan CIT, Jaipur vs. M/s. State Bank of Bikaner and Jaipur). Consequently, the Tribunal decided the issues subject to the outcome of the aforementioned SLP. The Tribunal concluded that no substantial question of law arose in the present appeal. The operative direction was the dismissal of the appeal.

What were the facts?

The assessee, M/s. Rajasthan Ex Servicemen Corporation Ltd., was subjected to scrutiny assessment under Section 143(3) of the Income Tax Act, 1961. The Assessing Officer (AO) disallowed a sum of Rs. 6,60,27,182/- for depositing the employees' contribution to Provident Fund (PF) and Employees' State Insurance (ESI) after the prescribed due dates. The assessee appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who deleted the disallowance, relying on the Rajasthan High Court's decision in CIT Vs. State Bank of Bikaner & Jaipur. The Revenue, represented by the Pr. Commissioner of Income Tax, Jaipur-II, appealed this order to the Income Tax Appellate Tribunal (ITAT). The ITAT dismissed the department's appeal, confirming the CIT(A)'s order.

What were the issues?

The Tribunal had to decide two substantial questions of law framed by the appellant (Revenue): 1. Whether, in the facts and circumstances of the case and in law, the ITAT was justified in deleting the addition of Rs. 6,60,27,182/- made for depositing the employees’ contribution to PF & ESI beyond the prescribed time limit provided in the respective Acts. 2. Whether, in the facts and circumstances of the case and in law, the ITAT was justified in holding that employees’ contribution to PF & ESI is governed by the provision of Section 43B and not by Section 36(1)(va) r.w.s. 2(24)(x) of the IT Act. Contentions: Assessee: The judgment does not record specific contentions made by the assessee before the ITAT. However, the CIT(A)'s deletion was based on the Rajasthan High Court's judgment in CIT Vs. State Bank of Bikaner & Jaipur. Revenue: The Revenue contended that the disallowance of Rs. 6,60,27,182/- was justified as the employees' contribution to PF & ESI was deposited after the due dates prescribed by the respective Acts. The Revenue argued that such contributions should be disallowed under the relevant provisions of the Income Tax Act.

Which sections of the Income-tax Act were involved?

Section 143(3),Section 43B,Section 36(1)(va),Section 2(24)(x)

AI-generated summary — verify with the full judgment below

HIGH COURT OF JUDICATURE FOR RAJASTHAN BENCH AT JAIPUR D.B. Income Tax Appeal No. 7 / 2018 Pr. Commissioner of Income Tax, Jaipur-II, Jaipur ----Appellant Versus M/s. Rajasthan EX Servicemen Corporation Ltd., P-8, Sector-2, Vidhadhar Nagar, Jaipur ----Respondent _____________________________________________________ For Appellant(s) : Mr. Prabhansh Sharma for Mr. R.B. Mathur _____________________________________________________ HON'BLE MR. JUSTICE K.S.JHAVERI HON'BLE MR. JUSTICE VIJAY KUMAR VYAS Judgment 15/02/2018 1. By way of this appeal, the appellant has assailed the judgment and order of the tribunal whereby the tribunal has dismissed the appeal of the department and confirmed the order of CIT(A). 2. Counsel for the appellant has framed following substantial questions of law:- “i) Whether in the facts and circumstances of the case and in law the ITAT was justified in deleting the addition of Rs.66027182/- made for depositing the employees’ contribution to PF & ESI beyond the prescribed time limit provided in the respective Acts. ii) Whether in the facts and circumstances of the case and in law the ITAT was justified in holding that employees’ contribution to PF & ESI governed by the provision of section 43B and not by section 36(1)(va) r.w.s. 2(24) (x) of the IT Act.”

(2 of 2) [ITA-7/2018] 3. The facts of the case are that the case of the assessee was picked up for scrutiny assessment and the assessment u/s 143(3) of the Income Tax Act, 1961 (hereinafter referred to as the Act) was framed vide order dated 22/11/2016. While framing the assessment the Assessing Officer noticed that the assessee has deposited employees contribution towards PF and ESI after due date of payment. Therefore, he made disallowance of Rs.6,60,27,182/-. Aggrieved by this, the assessee preferred an appeal before Ld. CIT(A), who after considering the submissions and relying upon the judgment of the Rajasthan High Court in the case of CIT Vs. State Bank of Bikaner & Jaipur (2014) 99 DTR 131 (Raj.) deleted the disallowance. 4. Regarding both the issues relating to PF & ESI, the controversy is pending before the Supreme Court in SLP No.16249/2014 (The State of Rajasthan CIT, Jaipur vs. M/s. State Bank of Bikaner and Jaipur), hence, the issues are decided subject to SLP. 5. In that view of the matter, no substantial question of law arises. 6. The appeal stands dismissed. (VIJAY KUMAR VYAS)J. (K.S.JHAVERI)J. Brijesh 12.

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