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Income Tax Appellate Tribunal, BENCH ‘D’ KOLKATA
Before: Hon’ble Shri S.S.Viswanethra Ravi, JM & Dr.Arjun Lal Saini, AM ]
The captioned appeal filed by the assessee pertaining to A.Y.2010-11, is directed against the order passed by the Commissioner of Income Tax –(Appeals) -7, Kolkata, in Appeal No.414/CIT(A)-7/Wd-27(1)/14-15/Kol, dated 22.02.2016, which in turn arises out of an order passed by the Ld. Assessing Officer u/s 143(3) of Income Tax Act, 1961 (in short, ‘the Act’), dated 07.02.2013.
The facts of the case are stated in brief. The assessee filed its return of income electronically on 25.02.2011 declaring a total income of Rs.10,71,630/-. The return of income of the assessee was processed u/s 143(1) of the Act. Subsequently the assessee’s case was selected for scrutiny u/s 143(3) of the Act and the AO has completed the assessment by making various additions. Aggrieved from the order of the ld. AO, the assessee filed an appeal before the ld. CIT(A), who has also confirmed the addition made by the AO by observing the followings :- “3.0. I have considered the submissions made by the appellant and I do not find force in the submissions made by the appellant. The appellant has filed the return of income disclosing total income of Rs.10,71,630/- and the Assessing Officer assessed the income at Rs.10,71,630/-. No other additions were made by the Assessing Officer in the assessment order. The case was selected for scrutiny and notice under section 143(2) was issued by the Assessing Officer to verify whether the income has been understated or not. The Assessing Officer has no power under section 143(3) to reduce the income
2 M/s. The Dream Development Company A..Y.2010-11 returned. The appellant claimed deduction of PF amounting to Rs.5,66,271/- and ESI amounting to Rs.1,45,257/- during the assessment proceedings by way of statement of computation of income. Now it is a settled law that the assessee cannot claim any reduction of income by statement of computation of income. This view is supported by Hon’ble Supreme Court judgment in the case of Goetz India ltd. Vs CIT reported in [2006] 157 Taxman 1 (SC). The alternative remedy for the assessee to claim the deductions or reduction of income is by way of filing revised return of income or making a revision petition before the Ld. Pr. Commissioner of Income tax. The appellant did not appear before me and made any argument to controvert the above legal position. Though Hon’ble Calcutta High Court in the decision relied upon by the authorized representative of the appellant held that deduction of PF and ESI is allowable before filing the return of income, since there was no claim in the return of income of the appellant, the decision of Hon’ble High Court of Calcutta is not applicable in the case of the appellant. Therefore, I do not find any infirmity in the order of the Assessing Officer and accordingly, assessment order is upheld. The appeal is therefore dismissed.”
Not being satisfied with the order of ld. CIT(A), the assessee is in further appeal before us and has taken the following grounds of appeal :- “1. For that the Ld. CIT (Appeals) as well as Ld. Assessing Officer should not have added the amount of Employees Contribution to Provident Fund and ESI deposited after due date specified in the relevant statues.
2. For that the claim made during the course of assessment with regards to Employees Contribution to P.F. and ESI was just and proper and was a legal claim supported by the jurisdictional High Court and rejection of same by Ld. Assessing Officer as well as CIT (Appeals) is highly arbitrary, unjustified and unwarranted to the facts of the case.
3. For that drawings of reference of Goetz India Ltd's case for disallowing the claim made is not proper and appellant be allowed the relief allowable as per law.”
The ld. AR for the assessee has submitted that the assessee made a claim with respect to employees contribution to PF and ESI. However, the assessee did not make this claim in the original return and he did not file the revised return also. Therefore, the AO has disallowed the claim by following the decision of Goetz India Ltd. Vs. CIT [2006] 157 Taxmann 1 (SC). As per this judgment, no doubt, the AO can entertain only those claims which have been claimed by the assessee by filing the return of income/revised return. If any deduction or any exemption has not been claimed by the assessee in the return of income filed by him, then normally the AO does not allow the claim because he is not authorized to entertain a fresh deduction or exemption which was not claimed by the assessee while filing the return of income/revised return. Therefore the AO may be right to that extent that he is not supposed to entertain a fresh claim which is not claimed by the assessee in the return
3 M/s. The Dream Development Company A..Y.2010-11 of income or revised return of income filed by the assessee. The ld. AR for the assessee further argued that the Tribunal has enough power to admit the claim and admit the new grounds of appeal
. The ld. AR submitted that it is the object of the Inocme tax Act to assess the true income of the assessee and to collect true tax from the assessee. In the assessee`s case under consideration the assessee has paid the PF contribution and ESI contribution before filing of return of income, therefore he is entitled to claim the deduction. The ld. AR for the assessee drew our attention towards the judgment of the Hon’ble ITAT, Kolkata wherein the Tribunal has observed the followings :- “5. It was the submission that the Assessing Officer had held that the assessee had not made the claim of deduction u/s. 80GGB of the Act in the original return filed by the assessee. It was the submissions that the learned Commissioner of Income-tax (Appeals) had upheld the order of the Assessing Officer by following the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd Vs.CIT reported in 284 ITR 323(SC). It was the submission that the factum of donation having been given was not disputed. It was submitted that only because the assessee had not made the claim in the original return, the benefit of deduction had not been granted to the assessee. In view of the decision of the Hon'ble Supreme Court in the case of Goetze (India) Ltd (refer to supra), the Tribunal was empowered to grant deduction to the assessee.
7. We have considered the rival submissions. It is noticed that the Hon'ble Supreme Court in the case of Goetze (India) Ltd (refer to supra) has held that the appellate authority being the tribunal did have the powers to direct the Assessing Officer to accept the claim of assessee, though the same has not been made in the original return nor has been claimed in the revised return. In the circumstances, respectfully following the ratio laid down by the Hon'ble Supreme Court in the case of Goetze (India) Ltd (refer to supra), the Assessing Officer is directed to grant the assessee's claim of deduction u/s. 80GGB of the donations made by the assessee to political parties in respect of Rs.45 lakhs given to Congress party and Rs. 80 lakhs given to BJP.”
The ld. AR for the assessee has also explained that the disallowance u/s 36(1)(va) could not be made even if the payments of the employees contribution to PF and ESI was after the due date under the relevant statutes, but before the due date for filing the return under the Income tax Act, 1961.
On the other hand, the ld. Departmental Representative for the revenue has explained that the claim of the assessee is not covered u/s 43B of the Act. The ld. DR has also submitted before us the CBDT Circular No.22/2015 dated 17.12.2015. The ld. DR for the revenue has also primarily relied on the stand taken by the ld. AO.
4 M/s. The Dream Development Company A..Y.2010-11 6. Having heard the rival submissions, perused the material available on record, we are of the view that there is merit in the submissions of the ld. AR for the assessee , as the propositions canvassed by the ld. AR for the assessee are supported by the judgment of the Hon’ble ITAT, Kolkata in ITA No.1410/Kol/.2011 and CIT vs AIMIL Ltd. (2010) 321 ITR 508 (Del). Therefore we are of the view that the Hon’ble Supreme Court in the case of Goetze India Ltd. (referred to supra) has held that the appellate authority being the Tribunal have the power to direct the AO to accept the claim of the assessee though the same has not been made in the original return nor has been done in the revised return. In this circumstances, respectfully following, the ratio laid down by the Hon’ble Supreme Court in the case of Goetz India Ltd., the AO is directed to grant the assessee’s claim of deduction on account of contribution to PF and ESI.
In the result, appeal filed by the assessee is allowed Order pronounced in the court on 30.09.2016.