Loading judgment…
No AI summary yet for this case.
Before: Shri Duvvuru RL Reddy & Shri G. Manjunatha
आयकर अपीलीय अिधकरण, ’सी’ �ायपीठ, चे�ई IN THE INCOME-TAX APPELLATE TRIBUNAL ‘C’ BENCH, CHENNAI �ी धु�ु� आर.एल रे�ी, �ाियक सद� एवं �ी जी. मऺजुनाथा, लेखा सद� के सम� Before Shri Duvvuru RL Reddy, Judicial Member & Shri G. Manjunatha, Accountant Member आयकर अपील सं./I.T.A. No. 200/Chny/2020 िनधा�रण वष�/Assessment Year: 2013-14 Shri B. Purushothaman, The Deputy Commissioner of No. 12, Redhills Road, Kolathur, Vs. Income Tax, Chennai 600 099. Non Corporate Circle 10(1), Chennai 600 034. [PAN:AHIPP9984F] (अपीलाथ�/Appellant) (��थ�/Respondent) अपीलाथ� की ओर से / Appellant by : Shri Vikram Vijayaraghavan, Advocate ��थ� की ओर से/Respondent by : Shri G. Johnson, Addl. CIT सुनवाई की तारीख/ Date of hearing : 12.08.2021 घोषणा की तारीख /Date of Pronouncement : 31.08.2021 आदेश /O R D E R PER DUVVURU RL REDDY, JUDICIAL MEMBER: This appeal filed by the assessee is directed against the order of the ld. Commissioner of Income Tax (Appeals) 12, Chennai dated 28.11.2019 relevant to the assessment year 2013-14.
The first effective ground raised in the appeal of the assessee relates to confirmation of disallowance of employee’s contribution amount to ₹.21,77,123/- towards EPF.
During the course of assessment proceedings, the Assessing Officer noticed that the assessee has made remittance of ₹.21,77,123/- pertaining
2 I.T.A. No. 200/Chny/20
to employee’s contribution to EPF beyond the due dates. Accordingly, the above amount was disallowed under section 36(1)(va) r.w.s. 2(24)(x) of the Act and brought to tax. On appeal, after considering the submissions of the assessee and by following the decisions of other High Courts as well as the Hon’ble Jurisdictional High Court in the case of M/s. Unifac Management Services (India) Pvt. Ltd. vs. DCIT (WP No.5264 of 2018 and WMP No.6461 of 2018) dated 23.10.2018 (Mad), the ld. CIT(A) confirmed the disallowance made under section 36(1)(va) r.w.s. 2(24)(x) of the Act.
On being aggrieved, the assessee is in appeal before Tribunal. The ld. Counsel for the assessee has submitted that the above amounts were remitted within the due date of filing the return and the same should be allowed as deduction. Further, the ld. Counsel for the assessee strongly relied on the Division Bench decision of Hon'ble High Court of Madras in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. in TCA Nos. 585 and 586 of 2015 vide order dated 24.07.2015 and also submitted that the decision followed by the ld. CIT(A) is Single Judge Bench against the writ application, should not have been applied since the same was dismissed subsequently by the Division Bench of the Hon’ble High Court and prayed for deleting the disallowance by following the Division Bench decision in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. (supra).
3 I.T.A. No. 200/Chny/20
On the other hand, the ld. DR dutifully supported the orders of authorities below.
We have heard both the sides, perused the materials available on record and gone through the orders of authorities below. In the assessment order, the Assessing Officer has disallowed an amount of ₹.21,77,123/- being belated remittance of the employee’s contribution to EPF as it is the income of the assessee in view of the provisions of section 2(24)(x) of the Act read with section 36(1)(va) of the Act. Before the ld. CIT(A), the assessee has submitted that since the entire amount has been remitted before the due date for filing of return of income, the same should be allowed as deduction under section 43B of the Act. It was the submission that the issue is covered in favour of the assessee by the Hon’ble Jurisdictional High Court in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. (supra), whereas, by following the Single Judge Bench against the writ petition in the case of Unifac Management Services India Pvt. Ltd. v. DCIT in W.P. No. 5264 of 2018 & WMP No. 6461 of 2018 dated 23.10.2018, the ld. CIT(A) confirmed the disallowance. However, we find that vide order dated 09.01.2019, both the appeal filed in Writ Appeal No. 2854 of 2018 against the W.P No. 5264 of 2018, as well as order dated 23.10.2018 in W.P No. 5264 of 2018, which was followed by the ld. CIT(A),
4 I.T.A. No. 200/Chny/20
were dismissed as withdrawn by the Division Bench of the Hon’ble Madras High Court. Therefore, the findings of the ld. CIT(A) cannot be held as valid.
5.1 We have perused the above decision in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. (supra), wherein, the Hon’ble Jurisdictional High Court has upheld the decision of the ITAT, in which the assessee was allowed to claim as a deduction the deposit of employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of Return of Income under the Income Tax Act.
5.2 Further, section 43B overrides section 36(1)(va) of the Act because the provisions states "Notwithstanding anything contained in any other provisions contained in this Act, a deduction otherwise allowable in this Act in respect of any sum payable by the assessee as an employer by way of contribution to any fund such Provident Fund shall be allowed, if it is paid on or before the due date as contemplated under section 139(1) of the I.T. Act". This law has been reiterated by several High Courts viz. the Karnataka High Court in the case of M/s Essae Teraoka Pvt Ltd. vs. DCIT [246 CTR 286], Rajasthan High Court on CIT vs. State Bank of Bikaner and Jaipur [2014] 363 ITR 70, CIT vs. Jaipur Vidhyut Vitaran Nigam Ltd. [(2014) (5) TMI 222], Bombay High Court in CIT vs Nipso Fabriks Ltd. [350 ITR 327] etc.
5 I.T.A. No. 200/Chny/20
5.3 Moreover, in a recent decision in the case of PCIT, Jaipur vs. Rajasthan State Beverages Corporation Ltd. Reported in [2017] 250 Taxman 16/84 taxmann.com 185(SC), the Hon'ble Supreme Court has held as under: “Amount claimed on payment of PF and ESI having been deposited on or before due date of filing of returns, same could not be disallowed under Section 43B or under Section 36(1)(va); SLP dismissed" 5.4 The ld. DR could not controvert the above findings of the Hon’ble Jurisdictional High Court as well as other case law referred hereinabove. Therefore, respectfully following the above decision of the Hon’ble Jurisdictional High Court in the case of CIT v. Industrial Security & Intelligence India Pvt. Ltd. (supra), we direct the Assessing Officer to delete the disallowance of EPF contribution of ₹.21,77,123/- and accordingly, the ground raised by the assessee is allowed.
The next ground raised in the grounds of appeal (3 & 3.1) of the assessee relates to confirmation of disallowance of expenses claimed by the assessee towards lease rent [₹.13,56,505/-] and interest paid to NBFC [₹.24,09,046/-] aggregating to ₹.37,65,551/- on the ground that the tax has not been deducted at source in respect of these payments.
6.1 Since the assessee has not deducted the lease rent for ₹.13,56,505/-, the Assessing Officer disallowed the expenses and brought to tax. On appeal, the ld. CIT(A) confirmed the disallowance on the ground that no
6 I.T.A. No. 200/Chny/20
evidence of payee obtaining certificate under section 197 for non-deduction has been produced.
6.2 Before us, the ld. Counsel for the assessee has submitted that the land lease rent of ₹.13,56,505/- was paid to Arulmigu Somanathaswamy Temple, the administration of which is supervised by the Government of the Tamil Nadu under the Hindu Religious and Charitable Endowments Act, 1959. It was further submission that the income of the temple is used wholly for charitable purpose and not taxable in the hands of the temple. Hence the assessee is not required to deduct tax at source from the payment. Moreover, it would also absolve the assessee from TDS provisions and the action of disallowance and thereby addition as income is not warranted. On the other hand, the ld. DR supported the orders of authorities below.
6.3 We have heard the rival contentions and perused the materials available on record. The assessee has produced the letter of Executive Officer of the Arulmigu Somanathaswamy Temple, wherein, it was stated that the assessee has paid monthly rent of ₹.81,906/- land lease rent in respect of Survey No. 67/4 for the financial 2012-13. Before us, the ld. Counsel for the assessee has submitted that the income of the temple is used wholly for charitable purpose and not taxable in the hands of the temple in view of the provisions of section 10(23BBA) of the Act and filed
7 I.T.A. No. 200/Chny/20
copy of Circular No. 18/2017 dated 29.05.2017. However, no order of granting exemption under section 10(23BBA) of the Act was brought on record. In view of the above, we direct the Assessing Officer to examine and decide the issue afresh as to whether the recipient is having exemption under section 10(23BBA) of the Act or if the recipient has offered the rental receipt to tax so that the assessee is entitled to claim deduction after affording one more opportunity of being heard to the assessee.
6.4 With regard to non-deduction of TDS on interest paid to NBFC loans, the Assessing Officer found that the assessee has paid interest of ₹.1,03,86,583/- on loans to Cholamandalam Finance and HDFC Bank. The assessee claimed that TDS on interest paid to NBFC need not be deducted as per the amendment in the Finance Act, 2012. Since the amendment takes effect on 01.07.2012 and no TDS was deducted for the interest paid for three months from April, 2012 to June, 2012 of ₹.24,09,046/-, the Assessing Officer disallowed the same and brought to tax under section 40a(ia) of the Act. On appeal before the ld. CIT(A), it was the submission of the assessee that the payees have declared the income and paid tax. Since the assessee has not produced any evidence that the payees have declared the income and paid tax, the ld. CIT(A) confirmed the disallowance.
8 I.T.A. No. 200/Chny/20
6.5 We have considered the rival submissions. By filing certificates from Karvy Financial Service and Cholamandalam Investment & Finance Co. Ltd., the ld. Counsel for the assessee has submitted that the recipients have declared the income and paid tax. Since the above certificates were not produced before the authorities below, we direct the assessee to produce the same before the Assessing Officer for verification and allow the deduction in view of the decision in the case of CIT v. Ansal Land Mark Township P. Ltd. 377 ITR 635 (Del). Thus, the ground raised by the assessee is allowed for statistical purposes.
In the result, the appeal filed by the assessee is partly allowed for statistical purposes. Order pronounced on the 31st August, 2021 in Chennai. Sd/- Sd/- [जी. मऺजुनाथा,लेखा सद�] [धु�ु� आर.एल रे�ी, �ाियक सद�] (G. MANJUNATHA) (DUVVURU RL REDDY) ACCOUNTANT MEMBER JUDICIAL MEMBER Chennai, Dated, 31.08.2021 Vm/- आदेश की �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant, 2.��थ�/ Respondent, 3. आयकर आयु� (अपील)/CIT(A), 4. आयकर आयु�/CIT, 5. िवभागीय �ितिनिध/DR & 6. गाड� फाईल/GF.