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Income Tax Appellate Tribunal, “A” BENCH : BANGALORE
Before: SHRI N.V. VASUDEVAN & SHRI B.R. BASKARAN
Date of hearing : 10.06.2019 Date of Pronouncement : 14.06.2019 O R D E R
Per N.V. Vasudevan, Vice President
This appeal by the revenue is against the order dated 10.1.2018 of the CIT(Appeals)-V, Bengaluru relating to assessment year 2014-15 on the following grounds of appeal:-
“1. Whether on the facts and circumstances of the cases and in law, CIT (A) was right in deleting the disallowance/addition made on account delayed payment of employees contribution to Provident Funds and ESI beyond due dates prescribed under PF Act and ESI Act respectively ?
Whether on the facts and circumstances of the cases and in law, CIT (A) was right in allowing the asseesse's claim in full for deduction U/s 115JJAA without appreciating the purport and meaning of the section, which does not allow deduction for wages paid for earlier previous years other than the one relevant to the assessment year ? 3. The Appellant craves leave to alter, amend or delete the above grounds of appeal
or add any other grounds of appeal on or before the hearing of the appeal?”
2. As far as ground No.1 raised by the revenue in this appeal is concerned, the facts are that the assessee which is a company engaged in the business of manufacture and distribution of Jockey brand inner garments claimed deduction of Rs.46,97,203 which was employees contribution to ESI & PF, which was paid beyond the due date as per the relevant governing contribution to PF & ESI, but was nevertheless paid on or before the due date for filing of return of income u/s. 139(1) of the Income-Tax Act, 1961 [“the Act”]. There is no dispute that if the employees contribution to PF & ESI is paid on or before due date u/s. 139(1) of the Act, then there can be no disallowance u/s. 43B of the Act and it was so held by the Hon’ble High Court of Karnataka in the case of CIT v. Sabari Industries [2008] 298 ITR 141 (Kar).
The ld. DR, however, placed reliance on a contrary decision rendered by the Hon’ble Gujarat High Court in the case of CIT v. Gujarat State Road Transport Corporation, 366 ITR 170 (Guj).
The decision of the Hon’ble High Court of Karnataka which is the jurisdictional High Court is to be followed by the Tribunal. Consequently, we find no merit in the relevant ground No.1 of appeal of the revenue.
As far as ground No. 2 is concerned, it pertains to deduction u/s. 80JJAA of the Act which has been wrongly referred to as 115JJAA of the Act in ground No.2 raised by the revenue. As far as this ground is concerned, the facts are that the assessee company had claimed deduction at 30% u/s.80JJAA amounting to Rs.8,81,46,102/- in respect of additional wages paid for employment of new workmen during the previous year 2013- 14 relevant to AY 2014-15 and had also claimed deduction @ 30% in respect of additional wages paid for earlier previous years 2012-2013 of Rs.1,63,67,148/- and 2013-2014 of Rs.1,56,86,134/- totaling to Rs.3,20,53,282/-. The AO referred to the provisions of the section 80JJAA and observed that the deduction is available on the additional wages paid to the new regular workmen employed in the previous year for the three assessment years including the assessment year relevant to the previous year in which such employment is provided and found that the deduction claimed in respect of the additional wages paid for the earlier previous years, if allowed, would amount to allowing weighted deduction which is not suggestive in the provisions and therefore, disallowed the excess deduction claimed of Rs.3,20,53,282/-.
The assessee before the CIT(Appeals) submitted that the deduction for the wages were paid to the new employees for assessment year 2012- 13 and 2013-14 also. However, the same has been disallowed by the AO on the ground that the assessee having claimed the deduction u/s.80JJAA in the respective years, the claim made thereof in subsequent years would amount to weighted deduction. It was submitted that the relevant portion of the section which needs to be understood is "be allowed the deduction of an amount equal to 30% of additional wages paid to new regular workmen employed by the assessee in the previous year for 3 assessment years including the assessment year relevant to the previous year in which such employment is provided”. The words used are an amount equivalent to 30% of the wages paid in the previous year which can be claimed for 3 years including the first previous year. Further it was submitted that there was no weighted deduction and the claim was made rightly u/s 80JJAA. Reliance was placed on the order of the Tribunal in the assessee’s own case for the AY 2004-05 wherein the orders of Tribunal in assessee’s own case for AY 2010-11 and 2007-08 to 2009-10 was followed.
The CIT(Appeals) allowed the appeal of assessee holding as follows:-
“Further the jurisdictional Hon’ble Tribunal in the appellant’s own case for the assessment year 2004-05 has held that ‘when the matter was taken up for hearing and order of the tribunal in & 274/Bang/2005 dated 21/12/06 for the assessment years 2001-02 and 2002-03 in ACIT vs. Texas Instruments (India) Pvt. Ltd was produced before us in which the Tribunal on exactly identical issue had decided in assessee's favour. Following the same we allow the appeal by the assessee". Further, during the appellate proceedings, the appellant furnished copies of Form 10DA giving the details of number of workmen on the roles. On perusal of the same it was found that the report u/s.80JJAA is in order. Further, in my earlier order passed for assessment years 2006-07 and 2011-12 in the appellant’s own case I have allowed the deduction claimed u/s.80JJAA and in the year under consideration the facts are similar to that of assessment years 2006- 07 and 2011-12 and following the Hon'ble jurisdictional Tribunal's decision given in favour of the appellant, the claim made u/s.80JJAA in this year also is hereby allowed.”
Before us, copies of Tribunal orders referred to by the CIT(A) were filed. We find that in AY 2007-08 identical issue came up for consideration before the Tribunal in and the Tribunal in its order dated 24.7.2015 allowed similar claim of the Assessee. The tribunal vide Paragraph-8 of the aforesaid order held that once a new workmen is employed in a previous year and works for 300 days in that year the additional wages paid to him is to be allowed as deduction at 30% of the additional wages paid to him in that year should be allowed as deduction for three Assessment years and that he need not be in employment for the subsequent period for claiming deduction u/s.80JJAA of the Act. It was held that once the deduction is allowed in the first year then, 30% of such additional wages is allowable as deduction in each of the subsequent two years. However in Assessee’s own case for AY 2005-06 & 2006-07, in ITA No.151 & 152/Bang/2016 order dated 16.12.2016 the Tribunal remanded identical issue to the AO for fresh consideration. Similar order was passed in AY 2010-11 in IT(TP) A.No.163/Bang/2015 order dated 24.6.2016. Since in the later orders on identical issue, the Tribunal has remanded to the AO for fresh consideration of the issue, we deem it fit to restore this issue to the AO for fresh consideration in accordance with law. Consequently, Gr.No.2 is treated as allowed for statistical purpose.
In the result, the appeal by the revenue is partly allowed for statistical purpose.
Pronounced in the open court on this 14th day of June, 2019.