INCOME TAX OFFICER WARD-1(1)(3), BANGALORE vs. M/S BANGALORE AIRPORT TERMINAL SERVICES PRIVATE LIMITED , BANGALORE

The present appeal is filed by the Revenue against the order of the CIT (A)-1, Bengaluru, dt.nil, for the assessment year 2014- 15, on the following effective ground : 2. The Ld. CIT (A) erred in deleting the addition of Rs.87,76,028/- made by the Assessing Officer on account of delayed payment of employees contribution to PF and ESI under Section 43B and 2 (24) read with Section 36(1)(va).

The assessee company is engaged in providing terminal services at Kempegowda International Airport, Bengaluru and other airports. The assessee filed the return of income for AY 2014-15, declaring loss of Rs.53,48,452/-. The case was selected for scrutiny and notice u/s.143(2) was issued. During the course of assessment, the AO noticed that the remittances in respect of EPF, ESI and other welfare funds were paid beyond the due date. Therefore these payments were treated as income and brought to tax. Being aggrieved, the assessee went in appeal before the CIT (A).

Before the CIT (A), the assessee submitted that out of the total amount of Rs.87,76,028/- disallowed by the AO, an amount of Rs.82,81,910/- had been paid before the due date for filing the return of income and hence the disallowance may be deleted. However the CIT (A) by relying on the judicial precedents of the Hon’ble jurisdictional High Court in the matter of Essae Teraoka Ltd v. DCIT [366 ITR 408] and CIT v. Sabari Enterprises [298 ITR 141], allowed the said expenditure to the extent it was deposited before the due date for filing the return of income. Now the Revenue is aggrieved and is in appeal before this Tribunal.

We have heard the rival submissions and perused the material on record. From a perusal of the judgment of the Hon’ble jurisdictional High Court in Essae Teraoka Ltd (supra), which followed the judgment of the Hon’ble Supreme Court, we do not find any merit in the appeal filed by the Revenue. We may point out that the judgment relied upon by the Revenue of the Hon’ble Kerala High Court in Popular Vehicles & Services P. Ltd v. CIT ITA.1587/Bang/2018 Page - 3 [(2018) 96 taxmann.com 13], is only having the persuasive value, for the Tribunal situated within the jurisdiction of the Hon’ble Karnataka High Court as tribunal is bound to follow the judgment of the jurisdictional High Court, as per the judicial discipline . Hence, following the judgment of the jurisdictional High Court in Essae Teraoka Ltd (supra), we uphold the order of the CIT (A).

In the result, appeal of the Revenue is dismissed.