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Income Tax Appellate Tribunal, HYDERABAD BENCHES “A”, HYDERABAD
Before: SHRI D. MANMOHAN & SHRI B. RAMAKOTAIAH
PER D. MANMOHAN, Vice-President:
This appeal is filed at the instance of the assessee-company and is directed against the order passed by the Commissioner of Income Tax (Appeals)-6, Hyderabad and it pertains to AY. 2013-14. Disallowance of a sum of Rs. 1,54,527/-, comprising of employees share of PF and employees share of ESI u/s. 36(1)(va) of the Income Tax Act [Act] is subject matter of dispute before us. It is not in dispute that the amounts, though paid beyond the due dates under the respective Acts, were paid with slight delay within the financial year.
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Ld. Counsel for the assessee relied upon the decisions of the ITAT, Hyderabad Bench and also the decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Limited [319 ITR 306] (SC) to submit that disallowance is not called for if the payment is made before filing of return of income. The AO rejected the contention of the assessee on the ground that the provisions of Section 36(1)(va) get automatically attracted when the payment is not made within the due dates prescribed there under.
Aggrieved, assessee contended before the CIT(A) that under identical circumstances, the Hon'ble Apex Court in the case of CIT Vs. Vinay Cements Ltd., [213 CTR 268] (SC) and CIT Vs. Alom Extrusions Limited (supra) held that Section 36(1)(va) is not applicable in the event of payment made before the due date for filing the return of income. Ld.CIT(A) rejected the contentions of assessee on the ground that Hon'ble Kerala High Court in the case of CIT Vs. Merchem Ltd., [378 ITR 443] has dealt with the provisions of Section 36(1)(va) and observed that contributions received by the assessee from employees should be treated as income for the purpose of Section 36(1)(va) in the event of non- payment before the statutory due date and also observed that Section 36(1)(va) and Section 43B operate in different fields. Ld.CIT(A) accordingly observed that the decision of the Hon'ble Supreme Court has no application in the facts of the case and by following the decision of the Hon'ble Kerala High Court (supra), he confirmed the order of the Ld.AO. Further aggrieved, the assessee is in appeal before the Tribunal.
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Ld. Counsel placed before us a copy of the order of the ITAT, Hyderabad Bench, passed in the year 2015 in ITA Nos. 143/Hyd/2013, 144/Hyd/2013, 61/Hyd/2014, 120/Hyd/2013, 121/Hyd/2013 & 18/Hyd/2014 in the case of VBC Industries Ltd., and also a latest decision of the ITAT ‘A’ Bench in the case of Smt. Aruna Jyothi Vedire Vs. Addl.CIT in ITA No. 91/Hyd/2017, dt. 03-05-2017 to submit that even after considering the Hon'ble Kerala High Court, the Tribunal was of the consistent view that the Hon'ble Himachal High Court having decided identical issue in favour of the assessee it can at best be stated to be two possible views of the matter in which event, the one which is in favour of the assessee deserves to be adopted in the light of the Hon'ble Apex Court judgement in the case of CIT Vs. Vegetable Products Ltd., [88 ITR 192] (SC).
On the other hand, the Ld.DR relied upon the Circular No. 22/2015, dt. 17-12-2015, issued by the Board to contend that the decision of the Hon'ble Supreme Court in the case of CIT Vs. Alom Extrusions Limited (supra), is limited to the point that the provisions of Section 43B should not be invoked in the case of a payment made before the due dates, whereas on the employee contribution, it has to be considered independently u/s. 36(1)(va) of the Act.
We have carefully considered the rival contentions and perused the record. In the case of Smt. Aruna Jyothi Vedire Vs. Addl. CIT, the Tribunal noticed the conclusion arrived at by the Hon'ble Karnataka High Court in the case of Spectrum Consultants India (P.) Ltd., Vs. CIT [34 Taxman.com 20]
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(Karnataka) as well as the decision in the case of CIT Vs. Sabari Enterprises [298 ITR 141] to hold that even though payments were made beyond the stipulated period as contemplated under the mandatory provisions of Section 36(1)(va) r.w.s. 2(24) of the Act, no disallowance can be made. In the case of VBC Industries Ltd., (supra) also the Tribunal has considered the decision of the Hon'ble Gujarat High Court as well as the decision of the Hon'ble Himachal Pradesh High Court decision in the case of CIT Vs. Nipso Polyfabriks Ltd., [350 ITR 327] and held that the decision rendered in the case of CIT Vs. Nipso Polyfabriks Ltd., (supra) is one possible view of the matter and hence, no disallowance is called for in the circumstances of the case. In consonance with the view taken, we are of the view that the addition made by the AO u/s. 36(1)(va) deserves to be deleted and we direct accordingly.
In the result, as pronounced in the open court, the appeal of assessee is allowed.
Order pronounced in the open court on 9th May, 2018
Sd/- Sd/- (B. RAMAKOTAIAH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT Hyderabad, Dated 9th May, 2018 TNMM
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Copy to : 1. Annapurna Studios Private Limited, # 8-2-293/82/A, Road No. 2, Banjara Hills, Hyderabad. 2. The Income Tax Officer, Ward-14(5), Hyderabad.
CIT (Appeals)-6, Hyderabad.
Pr.CIT-6, Hyderabad.
D.R. ITAT, Hyderabad.
Guard File.