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Income Tax Appellate Tribunal, INDORE BENCH, INDORE
Before: SHRI KUL BHARAT & SHRI MANISH BORAD
आदेश / O R D E R
PER KUL BHARAT, J.M: These two cross appeals by the assessee and Revenue pertaining to the A.Y. 2008-09 directed against order of Ld.
Bajrang Agro Industries Pvt. Ltd.
Commissioner of Income Tax-(Appeals)-I, dated 26.09.2016 respectively. First, we take up assessee’s appeal in ITA No.1346/Ind/2016, the assessee has raised following grounds of appeal: “1. That, the Ld. CIT(A) grossly erred in confirming the addition of Rs.2,86,991/- made by the AO in the appellant’s income, on account of delay in deposits of employees’ Contribution to Provident Fund, by involving the provisions of section 36(1)(va) of the Income Tax Act, 1961 without considering the material fact that the entire amount of employees contribution was duly deposited by the appellant company before furnishing its return of income u/s. 139(1) of the Act.”
Briefly states facts are that in pursuance to the order passed u/s 263. The Assessing Officer framed assessment u/s 263 r.w.s 143(3) thereby. He made addition on account of disallowance of freight charges and late payment of Employees Contribution to Provident Fund of Rs.47,66,567/- and Rs.2,86,991/- respectively. 3. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who after considering the submissions partly allowed the appeal thereby the Ld. CIT(A) deleted the addition in respect of disallowance of freight charges, however, sustained the addition made on account of non-deposit of employees contribution. Against this order both revenue and the assessee are in appeal. In the present appeal, the assessee has challenged the confirmation of addition made on account of disallowance of late payment of employees’ contribution to provident fund. Thus, the only effective ground in the confirming the addition of Rs.2,86,991/- made on
Bajrang Agro Industries Pvt. Ltd.
account of delay in deposits of employees’ contribution to Provident Fund. The ld. counsel for the assessee submitted that the claim is disallowed purely on the basis that the amount so deducted was deposited late as per concerned act however it is stated that the amount was deposited prior to furnishing of return of income. 4. The Ld. counsel for the assessee reiterated the submissions as were made before the Ld. CIT(A). On the contrary Ld. DR supported the order of the authorities below. 5. We have heard the rival contentions and perused material available on record and gone through the orders of the authorities below. The Ld. CIT(A) confirmed the disallowance by relying upon the judgment of Hon'ble Kerala High Court in the case of CIT vs. Merchem Ltd. (2015) 9 TMI 560 (Ker.). It is contention of the Ld. counsel for the assessee that other High Courts have decided in favour of the assessee and the Hon'ble Supreme Court in the case of CIT vs. Vinay Cement Ltd. (2007) 213 CTR (Hon'ble Supreme Court) 268. The Ld. counsel for the assessee has relied upon the judgment of Hon'ble Rajasthan High Court rendered in the case of Central Office Mewar Palace Organization Pvt. Ltd. vs. JCIT, (2017)(1) TMI 677. The Hon'ble Court decided the question against the revenue and in favour of the assessee. The Hon'ble Court has examined the judgment of Hon'ble Kerala High Court. The Hon'ble High court held as under: “28. In Merchem Ltd.'s case (supra), heavily relied upon by the (18 of 20 ) [ITA-55/2009 & ONE CONNECTED MATTER] Revenue, the Kerala High Court while disagreeing with the view 3
Bajrang Agro Industries Pvt. Ltd.
taken by the various High Courts and explaining the decision of the Hon'ble Supreme Court in Alom Extrusion's case (supra), held: "26. Therefore, in our view, when Sec.43B as it stood prior to the amendment and Sec.36(1)(va) Explanation 1 thereto r/w Sec.2(24)(x) are considered together, it is clear that they operate in different fields. So far as the employee's contribution received is concerned, it should have been paid on or before the due date prescribed under the relevant statutes. Then again the learned counsel contended that on a reading of Sec.43B(b), any sum "payable by the assessee as an employer" by way of contribution to any provident fund meant payment of both employees contribution and employer's contribution, by the employer and therefore the assessee was entitled to pay both contributions together on or before the filing of the return under Sec.139(1) of the Act. We are unable to accept the said contention advanced by the learned counsel. If such a contention is accepted, that would make Sec.36 (1)(va) and the Explanation thereto otiose. According to us, there was no indication in Sec.43B as it stood prior to the amendment and thereafter also to deface Sec.36(1)(va) and the Explanation thereto from the Income Tax Act. Thus, it means that both provisions are operative and the contributions have to be paid in accordance with the mandate contained under Sec.36(1) (va) and Explanation thereto and under Sec.43B, respectively." 29. In George Williamson (Assam) Ltd.'s case (supra), while considering the question of law raised regarding interpretation of clause (b) of Section 43B of the Act, read with second proviso to said section and clause (va) of sub-section (1) of Section 36 of the Act, the Gauhati High Court while relying upon its earlier decisions in the matter of "CIT vs. Bharat Bamboo and Timber Suppliers" (1996) 219 ITR 212 and "CIT (19 of 20 ) [ITA- 55/2009 & ONE CONNECTED MATTER] vs. Assam Tribune", (2002) 253 ITR 93, held that contributions towards provident fund etc. paid before the filing of the return by the assessee are entitled for deduction. 30. The Hon'ble Supreme Court in Vinay Cement's case (supra), while rejecting the Special Leave Petition preferred against the
Bajrang Agro Industries Pvt. Ltd.
judgment of Gauhati High Court in George Williamson (Assam) Ltd. and other connected appeals, observed: "In the present case we are concerned with the law as it stood prior to the amendment of Section 43B. In these circumstances the assessee was entitled to claim benefit in Section 43B for that period particularly in view of the fact that he has contributed to the provident fund before filing the return." 31. The decision of the Hon'ble Supreme Court in Vinay Cement's case (supra), upholding the decision of Gauhati High Court in George Williamson (Assam) Ltd.'s case (supra), as concluded by the Madras High Court in Nexus Computer Private Limited's case (supra) and the Delhi High Court in AIMIL Ltd.'s case (supra) and "The commissioner of Income Tax-V vs. P.M. Electronics Ltd.", (ITA No.475/07, decided on 3.11.08), is binding precedent under Article 141 of the Constitution of India, which is required to be followed by this court. 32. In view of the discussion above, the substantial question of law framed as aforesaid is answered in favour of the assessee and against the Revenue.”
Respectfully following the same we hereby direct the AO to delete the addition. Ground No.1 of the assessee’s appeal is allowed and ground No.2 is general in nature does not require separate adjudication. 7. As a result, the appeal of the assessee is allowed.
Now we take up Revenue’s appeal in ITA.No.1538/Ind/2016 8. While dictating the order it was noticed that there was a figure of Rs. 3,41,55,992/- in Ground No.2. The appeal was re-fixed for clarification and the Ld. DR was confronted with that figure, Ld. DR contended that it has been wrongly mentioned and it is inadvertent clerical mistake, he therefore filed modified grounds. The modified grounds are as under: 5
Bajrang Agro Industries Pvt. Ltd.
“1. Whether on the facts and circumstances of the case Ld. CIT(A)-I, Indore has erred in law in deleting the addition of Rs.47,66,567/- made by the AO on account of alleged difference in job work receipts as shown in the books of account of the appellant company. 2. Whether on the facts and circumstances of the case ld. CIT(A)-I, Indore has erred in deleting the addition of Rs.47,66,567/- made by the AO on account of the appellant company whereas no ledger, bills/vouchers was produced by assessee during the assessment proceedings after giving proper opportunity and the conclusion of Ld. CIT(A) is based on the test check of material produced before him. 3. Whether on the facts and circumstances of the case Ld. CIT(A)-I, Indore has ignored the fact that addition was made after having given proper opportunity to assessee. 4. Whether on the facts and circumstances of the case Ld. CIT(A)-I, Indore has ignored the fact that during course of assessment proceedings, the assessee furnished incorrect submission.”
Ground Nos. 1 & 4 are interconnected, in fact the only effective ground is against the deletion of addition of Rs.47,66,567/-. 10. Briefly stated facts giving rise to these grounds are that the Assessing Officer while framing assessment u/s 263 r.w.s. 143 of the Income Tax Act made addition of Rs.47,66,567/- on account of difference in the TDS certificate and the receipts declared by the assessee. 11. Aggrieved by this the assessee preferred an appeal before the Ld. CIT(A) who after considering the addition evidences allowed the claim of the assessee and deleted the addition. Now the Revenue is in appeal. The Ld. DR supported the order of the AO and submitted that Ld. CIT(A) was not justified in deleting
Bajrang Agro Industries Pvt. Ltd.
the addition. He submitted that the Ld. CIT(A) has observed that the assessee has broadly reconciled. On the contrary Ld. counsel for the assessee supported the order. Ld. CIT(A) and drew our attention to page no.9 of the impugned order, he submitted that differences were reconciled. 12. We have herd rival contentions and perused material on record and gone through the orders of the authorities below. We find that the Ld. CIT(A) in para 7.2 observed as under: “On perusal of the material placed on record it is seen that the appellant has reconciled the difference and has filed all supporting documents to establish its claim. The broad reconciliation submitted by the appellant has already been reproduced at para No.3 above as Annexure-A. The various documents filed by the appellant have been duly test checked and the reconciliation submitted by the appellant is found to be duly supported by the above documents. Thus, after considering the above reconciliation there remains no discrepancy in the receipts the addition of Rs.47,66,567/- is therefore directed to be deleted. This ground of the appellant is therefore allowed.”
Ld. CIT(A) has mentioned Annexure A. The Annexure A is reproduced by the Ld. CIT(A) at page 9 of his order which is as under: S.No. Name of Amount of Total Job work Freight Earlier the Party TDS as per payments charges Reimbursement year job TDS as per TDS (Recorded work certificate Certificate in the charges books) 1 M/s. 13,523 6,56,553 Ushodaya Enterprises Pvt.
Bajrang Agro Industries Pvt. Ltd.
2 --do-- 28,796 13,97,846 3 --do-- 59,687 28,97,247 Sub- 1,02,006 49,51,646 28,88,390 20,63,256 - total(A)
4 M/s. 18,099 7,96,223 7,96,223 Nilons Enterprises Pvt. Ltd. 5 --do-- 4,037 1,77,847 1,77,847 6 --do-- 44,009 19,40,349 19,40,349 7 --do-- 858 37,800 37,800 8 --do-- 18,773 8,56,924 8,56,924 Sub- 85,776 38,09,143 38,09,143 total(B) 9 M/s. 39,955 15,86,702 9,80,100 6,06,602 Holista Transworld Ltd. 10 M/s. 30,537 13,45,242 12,42,549 -- 1,02,693 Aachhi Masala Foods P. L. 11 M/s. 28,127 12,39,131 -- 12,39,131 Britannia Industries Ltd. 12 --do-- 17,819 7,84,988 -- 7,84,988 -- Total 3,00,220 1,37,16,852 89,20,182 46,93,977 1,02,693
From this Annexure, it is clear that the assessee had reconciled the entries, therefore, we do not see any reason to interfere in the finding of the Ld. CIT(A), same is hereby affirm, the ground raised by the Revenue is rejected.
Bajrang Agro Industries Pvt. Ltd.
As a result, the appeal of the Revenue is dismissed. 14. In the result, Appeal of the assessee is allowed and appeal of the Revenue is dismissed.
Order was pronounced in the open court on 31 .01.2018.
Sd/- Sd/- (MANISH BORAD) (KUL BHARAT) CCOUNTANT MEMBER JUDICIALMEMBER Indore; �दनांक Dated : 31 / 01/2018 ctàxÄ? P.S/.�न.स.
Copy to: Assessee/AO/Pr. CIT/ CIT (A)/ITAT (DR)/Guard file. By order Private Secretary/DDO, Indore