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Income Tax Appellate Tribunal, AHMEDABAD “A” BENCH
Before: Shri Rajpal Yadav & Shri Amarjit Singh
आदेश/ORDER PER BENCH:-
These nine appeals filed by different assessees for A.Y. 2013-14 to 2014- 15, arise from order of the CIT(A), in proceedings under section 143(3) of the Income Tax Act, 1961; in short “the Act”.
As the facts in all the nine appeals pertaining to ground of disallowance of employees contributions to PF/ESIC are same therefore for the sake of convenience this common ground of appeal is adjudicated after taking into consideration the facts of ITA 2250/Ahd/2017 and its findings will be applicable to nine appeals filed by different assessees as cited above in this order.
The assessee raised following ground of appeal:- ITA No. 2250/Ahd/2017 “1. The Ld. Commissioner of income Tax (Appeals)-3, Vadodara has erred in law and in facts in confirming the action of the Ld. A.O. in disallowance of Rs. 2,92,825/- being employees contribution to PF and ES1C u/s. 36(1)(va) r.w.s. 2(24)(x), on the ground that the employees' contribution towards PF collected has not been credited in the relevant fund on or before the due date even though the same has been paid within the grace period or before the due date of filing the Return of Income. The impugned disallowance of Rs. 2,92,825/- being bad in law and in facts is prayed to be allowed.”
The brief fact of the case is that during the course of appellate proceedings, it was discerned to the assessing officer that assessee has not deposited the contribution received from the employee’s contribution towards provident fund and employees state Insurance before the due date in the government account. Consequently, the assessing officer has disallowed such contribution of Rs. 2,92,825/- (PF: Rs. 2,77,435/- + ESI: 15,390/-) of the act.
Aggrieved assessee filed appeal before the ld. CIT (A). The ld. CIT A) has confirmed the disallowance made by the assessing officer after placing reliance on the judicial pronouncement of jurisdictional Hon’ble high court in the case of
I.T.A Nos. 2250,2052,1763,2219,2265,1653,2348, 2479 & 2051/Ahd/2017 A.Y. 2013-14 to 2014-15 Page No 3 Nine different assessees vs. ACIT/DCIT
Gujarat State Road Transport Corporation 366 ITR 170. During the course of penalty proceedings before us, nobody has attended from the side of the assessee. On other hand, ld. departmental representative has supported the order of lower authorities.
We have heard the rival contentions and perused the material on record carefully. The assessee has not deposited the contribution received from the employees within the due dates as stipulated under the provident Fund Act and the ESI Act amounting to Rs. 2,92,825/-. We consider that that Hon’ble jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation 265 CTR 64 has held that when the employer has not credited the sum received by it as employees contribution to employees account in relevant fund on or before due date as prescribed in explanation to section 36(i)(va) the assessee shall not be entitled to deduction. In view of the above facts and the judicial findings, we uphold the decision of Ld. CIT (A). Accordingly, the appeal of the assessee is dismissed.
ITA Nos. 1653 & 2348/Ahd/2017
Assessee’s ground of appeal regarding levy of interest u/s. 234A/B/C is of general nature which is to be charged mandatory as per provision of the act. Therefore, the same is dismissed. The other ground of appeal against initiation of penalty proceedings u/s. 271C is premature which and not required any adjudication at this stage therefore the same is also dismissed.
ITA No. 2479/Ahd/2017
The second ground of appeal of the assessee is against the addition of Rs. 26,076/- being expenditure incurred on earning exempt income to the book profit as the assessee was having nil income. The assessing officer has added
I.T.A Nos. 2250,2052,1763,2219,2265,1653,2348, 2479 & 2051/Ahd/2017 A.Y. 2013-14 to 2014-15 Page No 4 Nine different assessees vs. ACIT/DCIT
an amount of Rs. 7,86,579/- computed u/s 14 A r.w.rule 8D of the IT Rule to the book profit. Subsequently, the ld. CIT(A) has restricted the disallowance to the extent of Rs. 26,076/- as the assessee itself accepted that such amount of expenditure is related to earning of exempt income. During the course of penalty proceedings before us, the ld. counsel has contended that jurisdictional Hon’ble high court of Gujarat vide its decision in the case of CIT vs. Gujarat State Fertilizers Chemicals Ltd. (2013) 358 ITR 323 (Guj) held that such amount could not be added while computing book profit u/s. 115JB of the act. We observe that assessee has not reported the full facts of the above judicial pronouncement adjudicated at para 6.2 to para 6.5 of above cited judgment wherein it is elaborated that total amount of addition to the book profit u/s 115 JB was restricted to Rs 5 lac from Rs.1,14,43,040/ on the ground that the assessee had not incurred any interest expenditure on investment made because of having its own surplus funds. In the case of the assessee, the aforesaid addition was restricted to Rs.26,076/ from the addition of Rs.7,86,579/- as the assessee itself had claimed that such expenses to the extent of Rs.26,076 only is incurred for earning exempt income. Therefore, we do not find any merit in this ground of appeal of the assessee. The same is dismissed.
ITA No. 2051/Ahd/2017
The second ground of appeal of the assessee is regarding confirming disallowance of Rs. 8,45,836/- u/s. 14A r.w. Rule 8D of the act. The ld. CIT(A) has dismissed the appeal of the assessee on the ground that there was delay of two months in filing the appeal by the assessee.
9.1 During the course of penalty proceedings before us, the ld. counsel contended that assessment order was misplaced as the same was inadvertently filed in some another file. We consider it appear to be bona fide cause for delay in filing of the appeal by two months, therefore, we are of the view that it will be
I.T.A Nos. 2250,2052,1763,2219,2265,1653,2348, 2479 & 2051/Ahd/2017 A.Y. 2013-14 to 2014-15 Page No 5 Nine different assessees vs. ACIT/DCIT
appropriate to decide this issue on merit. Accordingly, we restore this issue to the file of ld. CIT(A) for deciding afresh after affording adequate opportunity to the assessee. In the result, this ground of appeal is allowed for statistical purposes.
In the combined result, ITAs 2250, 2052, 2219, 2265, 1763, 1653, 2348, and 2479/Ahd/2017 are dismissed and ITA 2051/Ahd/2017 is partly allowed for statistical purposes.
Order pronounced in the open court on 11-05-2018
Sd/- Sd/- (RAJPAL YADAV) (AMARJIT SINGH) JUDICIAL MEMBER ACCOUNTANT MEMBER Ahmedabad : Dated 11/05/2018 आदेश क� ��त�ल�प अ�े�षत / Copy of Order Forwarded to:- 1. Assessee 2. Revenue 3. Concerned CIT 4. CIT (A) 5. DR, ITAT, Ahmedabad 6. Guard file. By order/आदेश से, उप/सहायक पंजीकार आयकर अपील�य अ�धकरण, अहमदाबाद