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Income Tax Appellate Tribunal, PUNE BENCH “B”, PUNE
आदेश / ORDER
PER ANIL CHATURVEDI, AM :
These cross-appeals filed by assessee and Revenue emanate out of the order of Commissioner of Income-Tax (A) – 1, Aurangabad dated 31.08.2016 for A.Y. 2012-13.
The relevant facts as culled out from the material on record are
as under :-
Assessee is a Co-operative Society stated to be engaged in the
business of banking. Assessee electronically filed its return of income
for A.Y. 2012-13 on 18.05.2013 declaring total income of
Rs.15,82,95,334/-. The case was selected for scrutiny and thereafter
assessment was framed u/s 143(3) of the Act vide order dt.05.03.2015
and the total income was determined at Rs.16,95,48,030/-. Aggrieved
by the order of AO, assessee carried the matter before Ld.CIT(A), who
vide order dt.31.08.2016 (in appeal No.ABD/CIT(A)-1/72/2015-2016)
granted substantial relief to the assessee. Aggrieved by the order of
Ld.CIT(A), assessee and Revenue are now in appeal before us.
The sole ground raised by the assessee in ITA
No.2499/PUN/2016 for A.Y. 2012-13 reads as under :
“ The learned Commissioner of Income Tax (Appeals) -1, Aurangabad has erred in facts and on law by confirming the addition of Rs.13,45,843/- u/s 36(1)(va). Hence, the said addition of Rs.13,45,843/- needs to be deleted.”
On the other hand, the grounds raised by the Revenue in ITA
No.2567/PUN/2016 read as under :
“1. Whether on facts and circumstances of the case, the Ld.CIT(A)-1, was right in holding that the interest paid by the assessee bank did not partake the nature and character of interest, as contemplated in section 194A, r.w.s. 2(28) of the Act.
Whether the expenses claimed by the assessee bank at Rs.65,42,033/- on account of “interest on delayed gratuity payment” is a revenue receipt eligible to income tax in the hands of recipients. If yes ? then the same is subject to TDS as per section 194A or not ?
We first proceed with the appeal of assessee in ITA
No.2499/PUN/2016 for A.Y. 2012-13.
During the course of assessment proceedings, AO noticed that
assessee had failed to deposit the Employees contribution of Provident
Fund within the due date prescribed by the Act. He noticed that
amount of Rs.13,45,843/- was deposited on 27.04.2012 which was
after the due date prescribed under the P.F. Act. He was of the view
that the delayed payment of Employees contribution of P.F. was not
allowable u/s 43B of the Act and he accordingly made its addition.
Aggrieved by the order of AO, assessee carried the matter before
Ld.CIT(A), who following the order of Hon’ble Gujarat High Court in the
case of Gujarat State Road Transport Corporation reported in (41
taxmann.com 100) and the decision of Hon’ble Kerala High Court in the
case of CIT Vs. Merchem Ltd. reported in (378 ITR 443) upheld the
order of AO by holding that the amount is allowable only if the amount
is deposited before the due date prescribed under the P.F. Act.
Aggrieved by the order of Ld.CIT(A), assessee is now before us.
Before us, Ld.A.R. reiterated the submissions made before AO
and Ld.CIT(A) and further submitted that though there was delay in
depositing employees share of P.F. Contribution but the same was
deposited on 27.04.2012 much before the date of filing of return of
income which was filed on 18.05.2013. He therefore relying on the
decision of Hon’ble Bombay High Court in the case of CIT Vs. Ghatge
Patil Transports Ltd. reported in (2014) 368 ITR 749 submitted that the
addition made by the AO and upheld by the Ld.CIT(A) be deleted. Ld.
D.R. on the other hand, supported the order of lower authorities.
We have heard the rival submissions and perused the material on
record. The issue in the present ground is with respect to delayed
deposit of Employee contribution of Provident Fund. It is an
undisputed fact that the amount of Employee contribution of P.F. was
deposited after the due date as prescribed under the P.F. Act but
however it was deposited before the due date of filing of return. We find
that Hon’ble Bombay High Court in the case of CIT Vs. Ghatge Patil
Transports Ltd. (supra) after relying on the decision of Hon’ble Apex
Court in the case of Alom Extrusions Ltd., reported in (2009) 319 ITR
306 (SC) has held that no disallowance is called for when the assessee
has deposited the Employee PF contribution before the due date of
filing of return of income. In view of the aforesaid facts and relying on
the decision of Hon’ble Bombay High Court in the case of CIT Vs.
Ghatge Patil Transports Ltd., (supra), we hold that in the present case
since the Employee contribution of PF has been deposited before the
due date of filing of return of income, no addition is called for and
therefore direct its deletion. Thus, the ground of the assessee is
allowed.
In the result, the appeal of assessee in ITA
No.2499/PUN/2016 for A.Y. 2012-13 is allowed.
Now we take up Revenue’s appeal in ITA No.2567/PUN/2016 for
A.Y. 2012-13.
Both the grounds being inter-connected are considered together.
During the course of assessment proceedings and on perusing
the Profit & Loss account, AO noticed that assessee had claimed
interest expenses of Rs.65,42,033/- on account of “interest on gratuity
payment”. The assessee was asked to explain its allowability and
whether the TDS was deducted on such payments. To the query of the
AO, assessee inter-alia submitted that due to the financial position of
the Bank, 50% of the gratuity was paid in earlier year and as per the
Court’s order, the payment of gratuity was made along with interest. It
was further submitted that no TDS was deducted as the payment of
gratuity was not covered u/s 194A of the Act. The submissions of the
assessee were not found acceptable to the AO as the AO was of the view
that assessee was required to deduct TDS on the delayed payment of
interest. He therefore held that since the assessee has failed to deduct
the TDS, the interest of Rs.65,42,033/- claimed by the assessee is not
allowable as deduction. He accordingly made its addition. Aggrieved
by the order of AO, assessee carried the matter before Ld.CIT(A), who
decided the issue in favour of the assessee.
Aggrieved by the order of Ld.CIT(A), Revenue is now in appeal
before us.
Before us, Ld. D.R. supported the order of AO. Ld.A.R. on the
other hand reiterated the submissions made before AO and Ld.CIT(A)
and supported the order of Ld.CIT(A).
We have heard the rival submissions and perused the material on
record. We find that Ld.CIT(A) while deciding the issue in favour of
assessee has given a finding that the payment of interest to employees
for delayed payment contribution was in the nature of compensation /
damages and the interest would not partake the nature and character
of interest as contemplated u/s 194A r.w. Sec.2(28A) of the Act and
accordingly assessee was not required to deduct TDS on such interest
on delayed payment of gratuity. While arriving at the aforesaid
conclusion, Ld.CIT(A) has also relied on various decisions rendered by
the Hon’ble High Courts in the order. He thereafter deleted the addition made by the AO. Before us, Revenue has not pointed out any
fallacy in the findings of Ld.CIT(A). We therefore find no reason to
interfere with the order of Ld.CIT(A). Thus, the grounds of Revenue are
dismissed.
In the result, the appeal of Revenue in ITA
No.2567/PUN/2016 for A.Y. 2012-13 is dismissed.
To sum up, the appeal of assessee is allowed and the appeal
of Revenue is dismissed.
Order pronounced on 17th day of July, 2019.
Sd/- Sd/- (SUSHMA CHOWLA) (ANIL CHATURVEDI) �या�यक सद�य / JUDICIAL MEMBER लेखा सद�य / ACCOUNTANT MEMBER
पुणे Pune; �दनांक Dated : 17th July, 2019. Yamini
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent 3. CIT(A)-1, Aurangabad. 4. PCIT – 1, Aurangabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, “बी” / DR, 5. ITAT, “B” Pune; 6. गाड� फाईल / Guard file.
आदेशानुसार/ BY ORDER,स
�या // True Copy // व�र�ठ �नजी स�चव / Sr. Private Secretary आयकर अपील�य अ�धकरण ,पुणे / ITAT, Pune