DY. COMMISSIONER OF INCOME TAX, CIRCLE-2(2), HYDERABAD vs. GVK TECHNICAL & CONSULTANCY PRIVATE LIMITED, SECUNDERABAD

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ITA 1378/HYD/2017Status: DisposedITAT Hyderabad24 January 2018AY 2013-144 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that employee's contribution to PF is allowable as a deduction if paid before the due date of filing the income tax return, following the decision of the Supreme Court in Alom Extrusions and various High Court rulings.

What were the facts?

The assessee company paid employees' contribution to PF after the due date under the PF Act but before the due date for filing the income tax return. The AO disallowed this payment, but the CIT(A) deleted the disallowance following previous ITAT decisions.

What were the issues?

Whether employee's contribution to PF, paid after the PF Act due date but before the income tax return filing due date, is allowable as a deduction.

Which sections of the Income-tax Act were involved?

Section 43B,Section 36(1)(va)

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(6)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, HYDERABAD BENCH ‘B, HYDERABAD

Before: SMT. P. MADHAVI DEVI & SHRI S. RIFAUR RAHMAN

For Appellant: Shri V. Siva Kumar
For Respondent: Smt. Komali Krishna, Shri V. Siva Kumar
Hearing: 17/01/2018Pronounced: 24/01/2018

PER S. RIFAUR RAHMAN, AM:

This appeal is filed by the revenue against the order of CIT(A) - 2, Hyderabad, dated 26/5/2017 relates to the AY 2013-14

2.

Briefly the facts of the case are, the assessee M/s GVK Technical and Consultancy Pvt. Ltd., a company engaged in the business of Engineering and project consultancy, filed its return of income on 30/09/2013 declaring a total income of Rs. 6,26,72,440/-. The assessment was completed by the AO by disallowing an amount of Rs. 34,53,244/- paid towards employees contribution to the PF as the same was paid beyond the due date under the PF Act.

2 I.T.A. No. 1378/Hyd/2017 GVK Technical and Consultancy Pvt. Ltd., Hyd 3. Aggrieved by the order of AO, the assessee preferred an appeal before the CIT(A) and the CIT(A) following the decision of ITAT, Hyderabad in assessee’s own case for AY 2012-13 in ITA No. 1248/Hyd/2015, order dated 24/03/2016, deleted the disallowance made by the AO on account of payment towards employees contribution to the PF.

4.

Aggrieved by the order of the CIT(A), the revenue is in appeal before us raising the following grounds of appeal: “1. In the facts and circumstances of the case, whether the CIT(A) is correct in law in holding that the payments of the employees contribution towards PF by the employer assessee as allowable u/s 438 if paid before the due date for filing return of income, without appreciating the fact that the same is not in keeping with the explanation to section 36(1)(va).

2.

In the facts and circumstances of the case, whether the CIT(A) is correct in law holding that the payments of the employees contribution towards PF by the employer assessee as allowable u/s 438 if paid before the due date of filing of return of income, without appreciating the fact that the amendment made in section 438 of the act by the Finance Act 2003 is not applicable to section 36(1)(va) since the amended section 43 applies only to employers contribution and not to employees contribution.

3.

Any other ground that may be urged at the time of hearing.”

5.

Considered the rival submissions and perused the material on record. We find that the issue in dispute is squarely covered by the decision of the coordinate bench of this Tribunal in assessee’s own case for AY 2012-13 (supra), wherein the Bench has held as under: 4. Having regard to the rival contentions and the material on record, we find that the Hon'ble Supreme Court in the case of Alom Extrusions 319 ITR 306 has held that the contributions to P.F. and ESI are allowable under section 43B of the Act if they are paid before the due date of filing of the return of income. Thereafter, the issue arose as to whether the decision of Alom

3 I.T.A. No. 1378/Hyd/2017 GVK Technical and Consultancy Pvt. Ltd., Hyd Extrusions (cited supra) was applicable only to the employer's contribution and not to the employees contribution. Various High Courts have held that the decision of Hon 'ble Supreme Court, in the case of Alom Extrusions (cited supra) is applicable to both the employer's as well as employees' contribution to P.F. and ESI. The respective High Courts, in the following cases, have held that the employees contribution is also an allowable deduction, provided, it is paid before the due date of filing of the return.

(i) CIT vs. Sabari Enterprises (2007) 298 ITR 141 (Kar.). (ii) Magus Customers Dialog P. Ltd., (2015) 371 ITR 242 (Kar.) (iii) Yum Restaurant India P. Ltd., (2015) 371 ITR 139 (Del.) (iv) CIT vs. Nipso Poly Fabriks Ltd., (2013)350 ITR 327 (HP) (v) CIT vs. Nuchem Ltd., (2015) 371 ITR 164(P&H).

4.1. We find that the Coordinate Bench of this Tribunal in the case of VBC Industries Limited, Hyderabad vs. DCIT, Circle-3(3), Hyderabad in ITA.Nos.143 & 144/H/2013 etc., dated 08.05.2015 and also in the case of M/s. Veljan Denison Limited, Hyderabad vs. Addl. CIT, Range-3, Hyderabad in ITA. No. 1251/Hyd/2015 dated 16.12.2015, has followed the Hon'ble Karnataka, Rajasthan and Himachal Pradesh High Courts to hold that the contribution of the employees contribution to P.F. and ESI is also allowable if it is paid before the due date of filing of the income tax return. In the case before us, we find that the assessee has filed its return of income on 28.09.2012 i.e., before the due date of filing of the return of income while the payments were made by 05.01.2012. Therefore, the above judgments are applicable to the facts of the case before us and we do not see any reason to interfere with the order of the Ld. CIT(A). Accordingly, Revenue's appeal is dismissed.

5.

In the result, appeal of the Revenue is dismissed."

As the issue under consideration is materially identical to that of AY 2012-13, following the decision of coordinate bench in that AY, we uphold the order of CIT(A) in deleting the disallowance made by the AO on account of employee contribution to the PF as the decision of the CIT(A) is in

4 I.T.A. No. 1378/Hyd/2017 GVK Technical and Consultancy Pvt. Ltd., Hyd consonance with the decision of ITAT and dismiss the grounds raised by the revenue in this regard.

6.

In the result, appeal of the revenue is dismissed.

Pronounced in the open court on 24th January, 2018.

Sd/- Sd/- (P. MADHAVI DEVI) (S. RIFAUR RAHMAN) JUDICIAL MEMBER ACCOUNTANT MEMBER

Hyderabad, dated 24th January, 2018

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