RISHABH SOFTWARE PVT. LTD,VADODARA vs. DCIT, CIRCLE-2(1)(2), BARODA

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ITA 848/AHD/2018Status: DisposedITAT Ahmedabad06 July 2018AY 2014-152 pages
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What did the Tribunal hold?

The Tribunal, following the jurisdictional High Court's decision, held that delayed deposit of employees' PF/ESI contributions are not deductible. However, it directed the AO to decide the issue of delay based on the actual date of payment of wages/salaries, as per a co-ordinate bench's observation.

What were the facts?

The assessee challenged the CIT(A)'s confirmation of an addition of Rs. 13,97,905/- made by the AO for the late payment of employees' contribution to PF/ESI. The AO disallowed the deduction under Section 36(1)(va) read with Section 2(24)(x) of the Income-tax Act.

What were the issues?

Whether late payment of employees' contribution to PF/ESI is deductible. Whether the due date for payment should be considered from the salary month or the actual payment date.

Which sections of the Income-tax Act were involved?

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

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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH, AHMEDABAD

ITA No. 848Ahd/2018 Rishabh Software Pvt Ltd Vs. DCIT Assessment year: 2014-15 Page 1 of 2 IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD “A” BENCH, AHMEDABAD [Coram: Pramod Kumar, AM and Ms. Madhumita Roy, JM] ITA No. 848/Ahd/2018 Assessment Year: 2014-15 Rishabh Software Pvt Ltd ............…………......Appellant Plot No. 66, Beside Sigil India, Padra Road, Atladara Vadodara 390 012 [PAN : AAACR 9028 G] Vs. Dy. Commissioner of Income-tax ...........................Respondent Circle 2(1)(2), Baroda

Appearances by: None for the Appellant Saurabh Singh for the Respondent Date of concluding the hearing : 22.06.2018 Date of pronouncing the order : 09.07.2018 O R D E R Per Pramod Kumar, AM: 1. By way of this appeal, the assessee-appellant has challenged correctness of the order dated 24th January, 2018 passed by the by the CIT(A)-2, Ahmedabad in the matter of assessment under section 143(3) of the Income-tax Act, 1961, for the assessment year 2014-15.

2.

The solitary grievance of the assessee is that the learned CIT(A) has erred in confirming the addition of Rs.13,97,905/-, which was added by the Assessing Officer with the aid of Section 36(1)(va) r.w.s. 2(24)(x) of the Income-tax Act, 1961, for the late payment of Employees Contribution to PF/ESI. 3. At the time of hearing, none appeared on behalf of the assessee; however, we find that the issue in question is squarely covered against the assessee by Hon’ble jurisdictional High Court’s judgment in the case of CIT vs. Gujarat State Road Transport Corporation, 366 ITR 170 (Guj.), wherein it is categorically held that in the case of delayed deposit of employees contribution to PF, the same will not be deductable in computing income under section 28 of the Act. The law so laid down by the Hon’ble jurisdictional High Court is binding on us. The mere fact that an appeal against the said decision is pending before the Hon’ble Supreme Court does not dilute binding nature of this judicial precedent. As regard dismissal of SLP in the case of Rajasthan State Beverages Corporation Ltd, (2017) 84 taxmann.com 185 (SC), it is only elementary that when a SLP is dismissed by a non-speaking order, it does not constitute a law declared by Hon’ble Supreme court, and as such, it is not binding under Article 141 of the Constitution of India. The authority, for this proposition, is contained in a series of judgments of Hon’ble Supreme Court, including, inter alia, in the cases of State of Manipur vs. Thingujam Brojen Meetai,

ITA No. 848Ahd/2018 Rishabh Software Pvt Ltd Vs. DCIT Assessment year: 2014-15 Page 2 of 2 (1996) 9 SCC 29; Om Prakash Gargi v. State of Punjab, (1996) 11 SCC 399 and Sun Export Corpn v. Collector of Customs, AIR 1997 SC 2658. We, therefore, see no legally sustainable merit in the case of the assessee and, respectfully following the judgment of Hon’ble jurisdictional High Court in the case of Gujarat State Road Transport Corporation (supra), dismiss the grievance of the assessee in principle. We may, however, add that a co-ordinate bench of this Tribunal, in the case of Rajjratna Metal Industries Ltd Vs. ACIT (ITA No.940/Ahd/2015; order dated 22.09.2017), has observed as follows:- “3. Assessee's latter substantive ground challenges correctness of both the lower authorities' action disallowing/adding a sum of Rs.3,85,810/- u/s. 36(1)(va) r.w.s. 2(24) of the Act on account late payment of employees' contribution to PF & ESI in question. There is no dispute that hon'ble jurisdictional high court's decision in CIT vs. Gujarat State Road Transport Corporation (2014) 366 ITR 170 (Guj) upholds such a disallowance in principle. The assessee's case however is that relevant due date has to be seen not from the relevant month of salary but the one pertaining to its payment. He then files a computation chart indicating it to have paid above employees' PF/ESI contributions on 22.05.2009 and 28.05.2009 as against the due dates thereof following on 20.06.2009. The Revenue fails to dispute this factual position. We therefore quote this tribunal's co-ordinate bench decision in Kanoi paper & Industries Ltd. vs. ACIT 75 TTJ 448 that the relevant date in such case is that of month of the actual payment of wages/salaries. We therefore rely on the above co-ordinate bench decision and direct the Assessing Officer to delete the impugned disallowance as well.” 4. In effect thus while any delayed deposit of PF/ESI is to be disallowed, in terms of Hon’ble Gujarat High Court’s judgment in the case of Gujarat State Road Transport Corporation (supra), the question as to whether there is a delay or not may be decided by the Assessing Officer in the light of above observations by the co- ordinate bench. The assessee will get relief, if found admissible, on that basis. 5. In the result, appeal of the assessee is allowed for statistical purposes. Pronounced in the open court today on the 9th July, 2018 Sd/- Sd/-

Ms. Madhumita Roy Pramod Kumar (Judicial Member) (Accountant Member) Ahmedabad, the 9th day of July, 2018 **bt Copies to: (1) The appellant (2) The respondent (3) Commissioner (4) CIT(A) (5) Departmental Representative (6) Guard File By order TRUE COPY Assistant Registrar Income Tax Appellate Tribunal Ahmedabad benches, Ahmedabad

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