DCIT, CIRCLE- 10(2), NEW DELHI vs. CRESCENT EPC PROJECTS AND TECHNICAL SERVICES LTD. (EARLIER KNOWN AS GVK PROJECTS AND TECHNICAL SERVICES LTD.), SECUNDERABAD

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ITA 399/DEL/2019Status: DisposedITAT Delhi27 September 2021AY 2015-166 pages

In favour of the assessee: the Revenue's appeal was dismissed. From the AI summary of this appeal.

AI SummaryDismissed

What did the Tribunal hold?

The Tribunal upheld the deletion of disallowance under Section 14A as no exempt income was earned. It also upheld the deletion of addition for delayed PF/ESI payments, relying on High Court judgments and noting the amendment to Section 36(1)(va) was prospective.

What were the facts?

The Revenue appealed against the deletion of disallowance under Section 14A and the deletion of addition for delayed employee contribution to PF/ESI. The assessee argued no dividend income was earned, making Section 14A inapplicable, and that delayed PF/ESI payments were made before the return filing due date.

What were the issues?

Whether disallowance under Section 14A is permissible without exempt income, and whether delayed employee PF/ESI contributions paid before the return filing due date are allowable as deductions.

Which sections of the Income-tax Act were involved?

Section 14A,Section 36(1)(va),Section 43B

AI-generated summary — verify with the full judgment below

Cases cited in this judgment(5)Show list

Detected automatically from the text. Citations are also linked where they appear in the judgment. The count shows how many other judgments on BharatTax rely on the same authority.

Income Tax Appellate Tribunal, DELHI BENCH “B” NEW DELHI

Before: SHRI AMIT SHUKLA & SHRI PRASHANT MAHARISHI

For Appellant: Ms. Chandani Shah, CA
For Respondent: Dr. Maninder Kaur, Sr.D.R

O R D E R PER AMIT SHUKLA, JM

The aforesaid appeal has been filed by the Revenue against the impugned order dated 15.10.2018, passed by Ld. Commissioner of Income Tax (Appeals)-IV, New Delhi for the quantum of assessment passed u/s.143(3) for the Assessment Year 2015-16. In various grounds of appeal, the Revenue has challenged the deletion of disallowance of 14A of Rs.4,43,31,582/- and deletion of addition of Rs.3,51,066/- made u/s.36(1)(va) on account of delayed payment of employees contribution to the provident fund and ESI.

2. At the threshold, ld. counsel for the assessee submitted that in so far as disallowance u/s.14A is concerned, it is an admitted fact that there is no dividend income has been received by the assessee during the year, and therefore, no disallowance u/s. 14A can be made. This he pointed out, is evident from paragraph 5.8 of the appellate order. Apart from that, this Tribunal in assessee’s own case for the Assessment Years 2011-12 and 2013-14 in ITAs No.4216 and 4217/Del/2016 has decided the issue in favour of the assessee.

3. In so far as the deletion of amount of Rs.3,51,006/- towards PF (employee contribution) after the due date under PF regulation but before the due date of filing of return of income, i.e., 30th November, 2015, he submitted that the same also stands covered by the catena of judgments including that of Hon’ble Jurisdictional High Court in the case of CIT vs. Aimil Ltd. as reported in (2010) 321 ITR 508 and PCIT vs. Pro Interactive Service (India) Pvt. Ltd. in of 2018 (Delhi). Further, in support, she also relied upon the following judgments, the copy of which has been placed in the paper book.

Page No. Sr. Case-law Citation No.

1.

Indian Geotechnical Services vs ACIT. (Del. Trib.) 1-18

2.

Crescent Roadways Private Limited vs DCIT (Hyd. Trib.) 19-21

3- Harendra Nath Biswas vs DCIT (Kol. Trib.) 22-25 26-27 [2021] 128 taxmann.com 192 (Hyd. 4- Salzgitter Hydraulics Pvt. Ltd. vs ITO Trib.)

Value Momentum Software Services Pvt. 5- (Hyd. Trib.) 28-31 Ltd. vs DCIT

6.

CIT vs Vinay Cement Ltd. [2007] 213 CTR 268 (SC) 32

7. CIT vs AIMIL Ltd. [2010] 321ITR 508 (Del. HC) 33-38 39 8. PCIT vs Pro Interactive Service (India) Pvt of 2018 (Del. HC) Ltd.

9. Pawan Kumar vs ACIT (Del. Trib.) 40-44

10.

PPIT vs Planman HR Pvt Ltd (Del. Trib.) 45-53 11. DCIT vs. Dee Development Engineers ITA No. 4959/Del/2016 (Del. Trib.) 54-61 Ltd. Azamgarh Steel & Power Pvt. Ltd. vs CPC ITA No. 1626/Del/2020 (Del. Trib.) 62-67 12. [2021] 129 taxmann.com 313 (Del. 13. Yogi Ji Technoequip Pvt. Ltd. vs DCIT 68-70 Trib.)

14.

Extract of Finance Bill, 2021 and 71-74 Anorandum to the Finance Bill, 2021 DCIT vs. Bharat Pumps & Compressors 15. (Alld. Trib.) 75-152 Ltd.

4.

On the other hand, ld. DR strongly relied upon the order of the Assessing Officer.

5.

After considering the aforesaid submissions and on perusal of the impugned orders, we find that in so far as disallowance u/s.14A is concerned, it is an admitted fact that assessee has not earned any exempt income during the year under consideration, and therefore, there was no question of making any disallowance u/s.14A. This proposition is squarely covered by the decision of Hon’ble Delhi High Court in the case of Cheminvest Ltd. vs. CIT, (2015) 378 ITR 33 (Del) which has also been followed by the Hon’ble Delhi High Court in the case of GVK Project Ltd. in ITA No.646/2018. Thus, the order of the CIT (A) deleting the disallowance is upheld and the grounds raised by the Revenue on this score from 1 to 5 are dismissed.

6. Now coming to the issue of disallowance of payment made to employee’s contribution to PF and ESI, it is not in dispute that the assessee had made the payment after due date under the PF Regulation but before the due date of filing of return, i.e., 30th November, 2015. The details of contribution made by the company are as under:

Sl Month Due date of Date of No. of days Amount of N depositing deposit of delay employee o contribution (INR) 1. May 2014 15 June 2014 26 June 2014 6 days 151,098 2. August 201 15 Sept. 17 Sept 2014 2 days 122,564 2014 3. Feb. 2015 15 March 16 March 1 day 77,404 2015 2015 Total 3,51,066

7.

First of all, most of these payments have been made within the grace period allowed under the PF Regulation provision. Apart from that, there are catena of judgments in favour of the assessee as listed above including those of Hon’ble Jurisdictional High Court. In the judgment of PCIT vs. Pro Interactive Service (India) Pvt. Ltd. in of 2018 (Delhi), the Hon’ble High Court vide judgment and order dated 10th September, 2018 following the earlier judgment of CIT vs. AIMIL Ltd. (supra) had decided this issue in the following manner:

“In view of the judgment of the Division Bench of Delhi High Court in Commissioner of Income Tax versus Aimil Limited, (2010) 321

ITR 508 (Del) the issue is covered against the Revenue and, therefore, no substantial question of law arises for consideration in this appeal. The legislative intent was/is to ensure that the amount paid is allowed as an expenditure only when payment is actuall made. We do not think that the legislative intent and objective is to treat belated payment of Employee’s Provident Fund (EPD) and Employee’s State Insurance Scheme (ESI) as deemed income of the employer under Section 2(24)(x) of the Act. Appeal is dismissed.”

8.

Though, it was brought to our notice that an amendment has been brought in the statute by the Finance Bill, 2021 by bringing amendment in Section 36(1)(va) by way of insertion of Explanation 2 wherein it has been provided that Section 43B shall not apply for the purpose of determining the due date under this clause. However, the said amendment has been brought w.e.f. Assessment Year 2021-22 as explained in clauses (8) and (9) of the memorandum explaining the Finance Bill, 2021. Once the amendment has been brought from prospective dates and also explained in the said memorandum of the Finance Bill, then the decision of Hon’ble Jurisdictional High Court would be applicable. Accordingly, this issue is decided in favour of the assessee. Hence, the order of the ld. CIT(A) on this issue is also upheld.

9.

In the result, the appeal of the Revenue is dismissed. Above decision was announced on conclusion of Virtual Hearing in the presence of both the parties on 27th September, 2021

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