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Income Tax Appellate Tribunal, “F” BENCH, MUMBAI
Before: SHRI R. C. SHARMA, AM & SHRI AMARJIT SINGH, JM
Assessee by: Shri A. K. Ghosh (AR) Department by: Ms. S. Padmaja (DR) Date of Hearing: 22.11.2017 Date of Pronouncement: 09.02.2018 O R D E R
PER AMARJIT SINGH, JM:
The revenue has filed the present appeal against the order dated 01.09.2016 passed by the Commissioner of Income Tax (Appeals)-12, Mumbai [hereinafter referred to as the “CIT(A)”] relevant to the assessment year2012-13.
The revenue has raised the following grounds: - "
On the facts and circumstances of case and in law. the Ld, Mumbai was not justified in allowing the claim of the assesses on account of delayed payment of employee's contribution towards PP & ESIC, which wets paid after the due date as specified in explanation .0 section 36(1 )(va) of the 1. T. Act, 1961".
ITA. No.7107/M/2016 A.Y. 2012-13 "On the facts and circumstances of case and in law, the delayed payment of employees contribution towards PF & ESIC is not allowable u/s 43B, as section 43B comes into play only when a deduction is otherwiseallowable under the I. T. Act, J 961", "On the facts and circumstances of case and in law, the Ld. C1T(A) erred in relying on the order of the Hon'ble Jurisdictional High Court in the CIT of M/s Hindustan Organics Chemical Lid , which, has not been accepted by the department on merit and appeal has been filed before the Hon'ble Supreme Court"- "On the facts and circumstances of case and in Jaw. the Ld. CIT(A) erred in deleting the disallowance of Rs.3,41,970/- made u/s 14A r.w.r 8D of the I. T. Rules ignoring the finding given by the A O. disallowance u/s 14A not only includes interest expenses but also administrative expenses. The Appellant prays that the order of the CIT(Appeals) on the above grounds be set aside and that of the AQ be restored. The Appellant craves leave to amend or alter any ground or to submit additional new ground, which may be necessary."
The brief facts of the case are that the assessee filed its return of income on 30.09.2012 declaring total income to the tune of Rs.9,41,12,452/-. The return was processed u/s 143(1) of the I.T. Act, 1961. The case was selected for scrutiny under CASS and accordingly notice u/s 143(2) of the Act was issued on 06.08.2013 and served upon the assessee. Thereafter, the notices u/s 142(1) of the I.T. Act, 1961 dated 14.07.2014 and 08.09.2014 along with questionnaire/annexure were issued and served upon the assessee. The assessee company is engaged in the business of Providing Security Services, Labour Contractor, BPO and Operating Prepaid Taxi booth (Counters). On perusal of Tax Audit Report, it was found that the assessee has defaulted on payment of Employee Contribution towards A.Y. 2012-13 Provident Fund and ESIC on or before due date. The both amount of late payment PPF and ESIC was found to the tune of Rs.10,43,77,885/-. Therefore, the same was not allowed and added to the income of the assessee. The assessee also earned the dividend income on equity-shares to the tune of Rs.5,000/-. Therefore, the Assessing Officer applied the provision of u/s 14A r.w. Rule 8D of the Act and assessed the expenditure to earn the exempt income to the tune of Rs.3,41,972/-. The total income of the assessee was assessed to the tune of Rs.19,88,37,310/-. Feeling aggrieved, the assessee filed an appeal before the CIT(A) who allowed the claim of the assessee, therefore, the revenue has filed the present appeal before us. ISSUE NOs.1 to 3:- 5. Under these issues the revenue has challenged the deletion of the disallowance of Rs.9,45,49,826/- u/s 36(1)(va) of the I.T. Act, 1961 for late payment of employer and employee contribution towards PF & ESIC. The CIT(A) has allowed the claim of the assessee on account of this fact that the amount was paid before the due date of filing its return. The CIT(A) while allowing the claim of the assessee has also placed reliance upon the law settled in CIT Vs. Hindustan Organics Chemical Ltd. (2014) 48 taxmann.com 421 Bombay, CIT Vs. Ghatge Patil Transports Ltd. (2015) 53 taxmann.com 141 (Bombay), CIT Vs. Alom Extrusions Ltd. (2009) 185 taxmann.com 416 (SC) and CIT Vs. Vinay Cement A.Y. 2012-13 Ltd. (2007) 213 CTR 268 (SC). The finding of the CIT(A) is hereby mentioned below for ready reference: - “7. It is seen that the AO has erred in disallowing Rs.9,45,49,826/- u/s 36(1)(va) for late payment of employer and employees contribution to provident fund. However, it is seen that the amount is actually an allow able deduction u/s 43B(b) of the I.T. Act. It is seen that the amount has been paid before the due date of filing of its return. Reliance is placed on Hon’ble Jurisdictional High Court decisions in the cases of CIT Vs. Hindustan Organics Chemical Ltd. and CIT Vs. Ghatge Patil Transports Ltd. and Hon’ble Apex court decisions in the cases of CIT Vs. Alom Extrusions Ltd. and CIT Vs. Vinay Cement Ltd. in allowing these grounds of appeal
s.”
6. The main argument of the Ld. Representative of the revenue is that the decision of the Bombay High Court title as CIT Vs. Hindustan Organics Chemical Ltd. (2014) 48 taxmann.com 421 Bombay is under challenged before Supreme Court, therefore, the same is not applicable to the facts of the present case and placed reliance upon the law settled by Gujarat High Court in the case of CIT Vs. Gujarat State Transport Corporation (366 ITR 170). But the contention raised by the Ld. Representative of the Department is not tenable because the law relied by the CIT(A) discussed above is based upon the decision of the Hon’ble Supreme Court in the case of CIT Vs. Alom Extrusions Ltd. (319 ITR 306). When the decision of Apex court is applicable then the decision of any other court has to no use. Therefore, in the said circumstances, we are of the view that the CIT(A) has passed the order on this issue judiciously and correctly which is not liable to be interfere with at this appellate stage. A.Y. 2012-13 Accordingly, this issue is decided in favour of the assessee against the revenue.
ISSUE NO. 4:- 7. Under this issue the revenue has challenged the deletion of disallowance of Rs.3,41,970/- u/s 14A r.w. Rule 8D of the I.T. Rules. The assessee received the dividend income to the tune of Rs.5000/- from the investment made in the earlier years. The assessee acquired shares worth of Rs.25,200/- whereas the expenditure to incur the exempt income has been assessed to the tune of Rs.25,200/-. Before going further, we deemed it necessary to advert the finding of the CIT(A) on record:
8. It is seen that the AO has erred in disallowing Rs.3,41,970/- u/s 14A. The dividend of Rs.5,000/- is received from investments made in earlier years and not in this assessment year. The appellant has also not incurred any expenses in relation to earning of such dividend. It is seen that there is no proximate cause for disallowance as held by Hon’ble Supreme Court in the case of Walfort share and Stock Broker. It is also seen that the disallowance made by the AO is more than the appellant investment in equity shares which is just Rs.25,200/-. It is obvious that the expenses incurred to purchase and acquire any asset will not exceed the cost of purchase or acquisition at any given time. Thus the A.O’s contention that the appellant has incurred expenses of Rs.3,41,972/- to acquire shares worth Rs. 25,200/- IS NOT TENABLE. It is also seen that the AO has not given opportunity of hearing to the appellant before making this addition which is against theprinciple laid down by Hon’ble Supreme Court in the case of Tin Box Co. Vs. CIT 249 ITR 216 (SC). Thus in the light of the discussion here Ground of Appeal No. 3 is allowed.
ITA. No.7107/M/2016 A.Y. 2012-13