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Income Tax Appellate Tribunal, B/“SMC” BENCH, CHENNAI
Before: SHRI CHANDRA POOJARI
आदेश / O R D E R PER CHANDRA POOJARI, ACCOUNTANT MEMBER: These two appeals are filed by the Revenue, aggrieved by the common order of the Learned Commissioner of Income Tax(A)-8, Chennai dated 27.06.2017 pertaining to assessment years 2013-14 & 2014-15.
The Revenue has raised the following common grounds in the above appeals cited above.
The order of the CIT(A) is contrary to law and facts of the case.
2. The CIT(A) erred in deleting the addition of `9,62,231/- (for A.Y 2013-14) & `33,32,886/-(for A.Y.2014-15) made u/s 36(i)(va) r.w.s 2(24)(x) of the Income tax Act, 1961. 2.1 As per the provisions of section 36(1)(va) deduction in respect of any sum received by the tax payer as contribution from his employees towards any welfare fund of such employees is allowed only if such sum is credited by the tax payer to the employees’ account in the relevant fund on or before the due date. Due date means the date by which the assessee is required as an employer to credit such contribution to the employee’s account in the relevant fund under the provisions of any law or term of contract of service or otherwise. 2.2 It is pertinent to mention that the provisions of section 43B of the Income- tax Act 1961 is not applicable in the case of employees’ contribution towards PF/ESI. 2.3 It is submitted that the CBDT in Circular No. 22/2015 dated 17.12.2015 has clarified that deduction relating to employees’ contribution to welfare
funds are governed by section 36(1)(va) of the Income-tax Act. This circular was issued by the CBDT in the light of the judicial decision in the case of CIT vs Alom Extrusions Ltd (2009) 185 TAXMAN 416 (SC) 2.4 Decision of the jurisdictional High Court in the case of M/s Industrial Security & Intelligence India Pvt Ltd is not accepted and Review Petition filed before the Hon’ble High Court of Madras.
The brief facts of the case are that the assessee is engaged in the business of Manpower Services and Recruitment Services and filed its return of income for assessment year 2013-14 on 15.09.2013 and for assessment year 2014-15 on 31.10.2014 admitting total income of `22,56,384/- and `12,90,970/- respectively. Subsequently, the assessments for both the assessment years were completed u/s.143(3) of the Act with certain additions made by ld. Assessing Officer.
For A.Y. 2013-14 ` i) Car Hire charges paid u/s.40A2(b) 1,32,915/- ii) Disallowance u/s.36(1)(va) rws 2(24)(x) 9,62,231/- iii) Interest u/s.2444A 52,114/- For A.Y. 2014-15 i) Disallowance u/s.36(1)(va) rws 2(24)(x) 33,32,886/- 3.1 Aggrieved by the orders of ld. Assessing Officer, the assessee carried the appeals before the Ld.CIT(A). On appeal, Ld.CIT(A) deleted the additions made by the ld. Assessing Officer u/s.36(1)(va) of the Act for assessment years under consideration, following the judgement of jurisdictional High Court in the case of CIT Vs. Industrial Security & Intelligence India Pvt. Ltd., in TCA No.585 & 586 of 2015 dated 24.07.2015 wherein held that:-
“5. We find that the Tribunal has rightly relied on the decision of the Supreme Court in the case of CIT Vs. Alom Extrusions Limited reported in 391 ITR 306, whereby, the Supreme Court held that omission of section proviso to sec.43B and amendment to the first proviso by Finance Act, 2003 are curative in nature and are effective retrospectiel i.e. w.e.f 01.04.1988 i.e the date of insertion of first proviso. The Delhi High Court in the case of CIT Vs. AIMIL Ltd., reported in 321 ITR 508 held that if the assessee had deposited 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 under the Income Tax Act, no disallowance could be made in view of provisions 43B as amended by Finance Act, 2003.
In the present case, the assessee had remitted the employee’s contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the aforesaid
decisions, we find no reason to differ with the findings of the Tribunal.”
Against the common order of Ld.CIT(A), now the Revenue carried these two appeal before us.
I have heard both the parties and perused the material on record. Admittedly, in this case, the tax effect is below the monetary limit fixed by the Department Circular No.21/2005 dated 10.12.2015 wherein it is instructed its officers to withdraw all the appeals pending before the ITAT where the tax effect is less than `10 lakhs. As such, the AO is precluded in filing this appeal before the Tribunal. Further, it is also noted that as per Circular No.21/2015 cited above, in case of a composite order of appellate authority, which involves more than one assessment year and common issues in more than one assessment year, appeal shall be filed in respect of all such assessment years, even if the “Tax Effect” is less than the prescribed monetary limits in any of the year(s), if it is decided to file appeal in respect of the year(s) in which ‘Tax Effect” exceeds the monetary limit prescribed. In case, where a composite order involves more than one assessee, each assessee shall be dealt with separately.
4.1 Since in the present cases as pointed out by the ld.A.R, which was duly confirmed by the ld.D.R that the tax effect involved in these two appeals is as follows:-
Tax Effect in (`) Assessment Year
2013-14 2,88,669/-
2014-15 9,99,865/- Thus, the tax effect being less than `10/- lakhs in each assessment year in respect of the appeal filed by the Revenue, which are not maintainable. Therefore, the appeals filed by the Revenue stand dismissed.
4.2 Without prejudice to the above, I have noticed that the issue in dispute is with regard to addition made u/s.36(1)(va) of the Act which is squarely covered by the judgement of jurisdictional High Court in the case of CIT Vs. Industrial Security & Intelligence India Pvt. Ltd., (supra).Accordingly, these two appeals dismissed on merit also. 5. In the result, both the appeals of the Revenue are dismissed. Order pronounced on 29th November, 2017.