DIGICALL TELESERVICES PVT. LTD.,NEW DELHI vs. ACIT, NEW DELHI

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI “C” BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING) BEFORE SHRI G.S.PANNU, PRESIDENT & SHRI KUL BHARAT, JUDICIAL MEMBER

ITA No.6267/Del/2015 [Assessment Year : 2006-07] Digicall Teleservices Pvt. Ltd. vs ACIT (Formerly Page Point Services India Central Circle-25 Pvt. Ltd.) D-7, Dhawandeep New Delhi Apartment, 6, Jantar Mantar Road, New Delhi PAN-AABCP794Q APPELLANT RESPONDENT Appellant by None Respondent by Shri Umesh Takyar, Sr. DR Date of Hearing 03.11.2021 Date of Pronouncement 09.12.2021

ORDER PER KUL BHARAT, JM :

This appeal filed by the assessee for the assessment year

2006-07 is directed against the order of Ld. CIT(A)-29, New Delhi

dated 21.09.2015. The assessee has raised following grounds of

appeal:-

“A. That the appellant company was engaged in the business of providing

radio paging services, macro fax in seven cities in India, call centre services

and trading in pagers and pager accessories during the year under

consideration. The assessment proceedings were initiated against the

appellant company under section 143(3) of the I.T. Act and die AO

completed the assessment on 3 1.12.2008- after addition of Rs.

33,01,928/-. Out of 33,01,928/- sum of Rs. 24,78,976/- was

added as income of the assessee by stating that the same is not

allowable as deduction under section 36(1)(Va) of the I.T. Act’ as the

appellant tailed to deposit the said amount within the due date as mentioned

in the Employee provident fund Act , a sum of Rs. 5,58,688/- is added as

income of the assessee by stating that the same is not allowable as

deduction under section 36(1 )(Va) of the I.T. Act as the assessee failed to

deposit the said amount within due date as mention in the ESI Act arid a

sum of Rs. 2,64,264/- was added as income on account of interest income on

the receipt of Income tax refund for A.Y.-2005-06.

B. That the Ld. Commissioner erred in observing that despite numerous

opportunities given to the appellant, the appellant did not availed the

opportunity to present or defend its case before the Ld. Commissioner and

due to which the Ld. Commissioner wrongly held that the appellant has no

evidence /submission to make with regard to the grounds of appeal raised, it

is submitted that when the matter before the Ld. Commissioner was fixed for

17.09.2015, the authorized representative of the Company could not appear

before the Ld. Commissioner on 17.09.2015 as he was suffering from

viral fever, due to which the matter was fixed for orders. It is submitted that

the non-appearance of the authorized representative of the appellant

company was neither intentional nor deliberate J due to unavoidable

circumstances as mention e above. Even otherwise also the submissions mad

by the appellant company in grounds of appeal file before Ld. Commissioner

were sufficient to decide the matter in issue in favour of the appellant

company. Therefore, the impugned order passed by the Ld. Commissioner is

without any basis and liable to be set-aside.

C. That having regard to the facts and the circumstances of the case the Ld.

Commission erred in law and on facts for taking the amount Rs.24,78,976/-

as income of the assessee und Section 2 (24) (X) of the I.T. Act and not

allowing the same as deduction under Section 36 (1) (va) of t Act. The Ld.

Commissioner has not construed the provisions of Section 2(24) (X) and 36 (1)

(va) of the I.T. Act in the spirit of the enactment arid by taking a narrow view

of the statute has dismissed the appeal of the appellant by confirming the

addition of an income of Rs.24,78,976/- on account of delay in payment of

provident fund as per the Employee Provident Fund Act and failed to consider

that the appellant company deposited the same before the due date for filing

his return under Section 139 (1) of the Act as mentioned in the assessment

order.

(D) That having regard to the facts and the circumstances of the case

the Ld. Commissioner erred in law arid on facts for taking the amount of

Rs.5,58,688/- as income of the assessee under Section 2 (24) (X) of the I.T.

Act and not allowing the same as deduction under Section 36 (1) (va) of the

Act. The Ld. Commissioner has not construed the provisions of Section 2(24)

(X) and 36 (1) (va) of the I.T. Act in the spirit of the enactment and by taking a

narrow view of the statute has dismissed the appeal of the appellant by

confirming the addition of an income of Rs.5,58,688/- on account of delay in

payment of ESI as per the ESI Act and failed to consider that the appellant

company deposit same before the due date for filing his return . Section 139

(1) of the Act as mentioned in the assessment order.

(E.) It is submitted that if the payment of PF and ESI has been made on

or before due date of filing of the return of the income under Section 139 (1) of

the Act, then the same is allowable expenditure and the same cannot be

added as an income of the appellant company, even if the PF and ESI has

been deposited after statutory period as specified in the PF and ESI

legislation. The same issue has been settled by the Delhi High Court in the

case titled as “CIT Vs. AIMIL Ltd.” by following the principles enunciated by

the Hon’ble Supreme Court of India in CIT Vs. Vinay Cement Ltd. (2007) 213

CTR (SC) 268.

(F). That the identical issue was also considered in the appellant’s

own eases by the CIT (Appeal')-III, New Delhi for the assessment year 2002-

2003 to 2005-06 and assessment year 2007-08, whereby the CIT (Appeal)-III

deleted the addition order of the A.O as payment towards Provident Fund

and ESI which were deposited before the dale of filing of return of income

under Section 139(1). Therefore, the impugned order passed by the Ld.

Commissioner is liable to be set-aside.

(G). That having regard to the facts and circumstances of the case the

LD. Commissioner has erred in law and on facts for taking the amount of

Rs.2,64,464/- as income of the appellant on account of interest income which

is bad in law, without any basis and as such liable to be set-aside.”

return of income was filed through e-filing on 29/11/2006

declaring income at ‘NIL’ after adjusting the brought forward losses

of Rs. 3,09,15,997/-. Subsequently, the case of the assessee was

selected for scrutiny assessment and the assessment u/s 143 (3) of

the Act was framed vide order dated 31/12/2008. While framing

the assessment the Assessing Officer noticed that the assessee was

required to deposit Employees Contribution to provident fund by

15th of the succeeding months even if grace period of 5 days was

considered. The Assessing Officer observed that the assessee failed

to deposit the amount within due date. Therefore, the amount of

Rs. 24,78,976/- was taken as income of the assessee u/s 2 (24) (x).

The Assessing Officer further noticed that the assessee also

deposited the contribution to ESI amounting to Rs.5,58,688/-

belatedly. This amount was also added into the income of the

assessee. Further, the Assessing Officer noticed and observed

that on perusal of the assessment record for the Assessment Year

2005-06, it was seen that the assessee was in receipt of income tax

refund for the Assessment Year 2005-06 including interest of Rs.,

2,64,264/-, he noticed that the assessee had not offered this

interest from refund in its return of income. Therefore, he added

this amount as income of the assessee. Thus, the Assessing Officer

assessed and computed income of the assessee at the ‘NIL’ after

giving set off of business loss of Rs. 3,42,17,925/-. Aggrieved

against this, the assessee preferred appeal before the Ld.CIT (A). No

one appeared on behalf of the assessee despite giving various

opportunities. Therefore, in the absence of the assessee additions

made by the Assessing Officer were sustained.

appeal before this Tribunal.

of notices. Therefore, the appeal was taken up for hearing in the

absence of the assessee.

respect of belated deposit of Employees Contribution.

of the authorities below. We have heard the Ld. Sr. Departmental

Representative and perused the material available on record.

the are identical facts had allowed the claim of the assessee by

observing as under:-

“5. I have gone through the above submissions of the appellant and have considered the facts and evidences on record. It is seen, that since in this case the payments towards Provident Fund and ESI have been deposited well before the date of filing of return of income under Section 139(1), therefore relying on the decision of jurisdictional High Court in the case of CIT vs AIMIL Limited (321 ITR 508) and the principles laid down by Hon'ble Supreme Court in the case of CIT vs Vinay Cements Ltd. (213 CTR 268), the addition made by the AO deserves to be deleted.” 9. The Ld.CIT(A) has not given any reason as to how the facts are

different the present year for taking different view on the issue.

Moreover, the issue is squarely covered in favour of the assessee by

the judgment of the Hon’ble Delhi High Court rendered in the case

of PCIT vs Pro Interactive Service (India) Pvt. Ltd. in ITA No.983/2018

[Del.] order dated 10.09.2018 held as under:-

“In view of the judgement of the Division Bench of Delhi High Court in Commissioner of Income Tax versus AIMIL Limited, (2010) 321 ITR 508 (Del.) the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actually made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under section 2(23)(x) of the Act.”

Therefore, respectfully following the judgment of the Hon’ble Delhi

High Court in the case of Pro Active Services we hereby directed the

Assessing Officer to delete the addition. Ground No. A, B & C are

allowed.

deleted deposit of contribution towards the ESI, we find that the

Ld.CIT(A) in the Assessment Year 2008-09 had allowed the claim of

the assessee by observing as under:-

“5. I have gone through the above submissions of the appellant and have considered the facts and evidences on record. It is seen, that since in this case the payments towards Provident Fund and ESI have been deposited well before the date of filing of return of income under Section

139(1), therefore relying on the decision of jurisdictional High Court in the case of CIT vs AIMIL Limited (321 ITR 508) and the principles laid down by Hon'ble Supreme Court in the case of CIT vs Vinay Cements Ltd. (213 CTR 268), the addition made by the AO deserves to be deleted. The Ld.CIT (A) has not given any reason as to why he was taking a

different view in this year. Therefore, we direct the Assessing

Officer to delete this disallowance. Ground No. E & F are in

support of the ground numbers A, B C & D and since we have

decided those grounds in favour of the assessee. These grounds

need no separate adjudication.

income received on refund on income tax.

interest received on refund of income tax in its return of income.

Therefore, the Assessing Officer was justified to make addition.

demonstrated that it had offered the interest in return of income.

Therefore, we do not see any reason to interfere in the finding of the

Ld.CIT(A), the same is hereby affirmed. This ground of the

assessee’s appeal is dismissed.

6267/Del/2015 is partly allowed.

Above decision was pronounced on conclusion of Virtual

Hearing in the presence of both the parties on 09th December,

2021.

Sd/- Sd/-

(G.S.PANNU) (KUL BHARAT) PRESIDENT JUDICIAL MEMBER

09/12/2021 *R. N*