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Income Tax Appellate Tribunal, “ SMC ” BENCH, AHMEDABAD
Before: SHRI MAHAVIR PRASAD & SHRI AMARJIT SINGH
आदेश / O R D E R
PER SHRI MAHAVIR PRASAD, JUDICIAL MEMBER :
This is an appeal by the assessee against the order of the Commissioner of Income Tax(Appeals)-2, Ahmedabad, dated 12/06/2015 for the Assessment Year (AY) 2012-13, on the following Grounds: i. The learned CIT(A) has erred law and on facts in confirming an addition of Rs.1,75,742/- being payment of contribution of Employees for P.F. on the ground that the same have been paid
ITA No.2138/Ahd/2015 M/s. Multivision Pvt. Ltd. vs. ITO Asst.Year – 2012-13 - 2 - late. It is submitted that the learned CIT(A) has erred in incorrectly invoking provisions of Section 36(1)(va) and has wrongly interpreted provisions of Section 43B of the I.T. Act. It is submitted that on facts and circumstances of the case there is no justification both on facts and on law for such disallowance as the same has been paid before filing of Return u/s.139(1). It is submitted that the addition of Rs.1,75,742/- be deleted.
The relevant facts as culled out from the materials on record are as under:- In this case, assessee is engaged in the business of Construction contracts. During the year the assessee has disclosed operating revenue of Rs.11,78,43,873/- on construction and project related activity and other income of Rs.11,59,653/- consisting of dividend and interest income.
2.2 Going through the details of payments made by the Assessee towards Provident Fund/Superannuation Fund of the employees, it is noticed that there is delay in payments as under: Month of Employee’s Due date of Actual date deduction Constructio payment of payment n May, 2011 17,588/- 20/06/2011 29/06/2011 June 15,516/- 20/07/2011 23/07/2011 July 15,732/- 20/08/2011 09/09/2011 August 15,732/- 20/09/2011 07/12/2011 September 15,732/- 20/10/2011 07/12/2011 October 12,018/- 20/11/2011 07/12/2011 December 20,856/- 20/01/2011 27/01/2012 January, 2012 20,856/- 20/02/2011 02/03/2012 February, 2012 20,856/- 20/03/2011 23/03/2012 March, 2012 20,856/- 20/04/2011 02/05/2012 Total 1,75,742/-
ITA No.2138/Ahd/2015 M/s. Multivision Pvt. Ltd. vs. ITO Asst.Year – 2012-13 - 3 - This was brought to be notice of the learned AR during the hearing before the AO and he has asked to show-cause and added to the total income. In this connection explanation have been submitted by the assessee as follows: “As asked to submit explanation regarding why should late payment of Employees contribution to PF/ESIC of Rs.1,91,474/- should not be added to income under section 2(24)(x) read with section 36(1)(va) of Income Tax Act. In this connection, we have to state that as section 2(24)(x) provides that amounts received by an assessee from employees towards PF contributions etc. shall be "income". Further, Section 36(1)(va) provides that if such sums are contributed to the employees account in the relevant fund on or before the date specified in the PF etc. legislation, the assessee shall be entitled to a deduction. The second Proviso to section 43B (b) provided that any sum paid by the assessee as an employer by way of contribution to any provident fund etc. shall be allowed as a deduction only if paid on or before the due date specified in 36(1)(va). But after the omission of the second Proviso to section 43B of the Act by the Finance Act, 2003 w.e.f. 1/4/2004, the deduction is allowable under the first Proviso if the payment is made on or before the date of furnishing the return of income under sub section 1 of section 139 of the Act, are allowable under section 36(1)(va) read with section 2(24)(x) and section 43B of the Act. The High Court had to consider whether the benefit of section 43B can be extended to employees' contribution as well which are paid after the due date under the PF law but before the due date for filing the return, HELD deciding in favour of the assessee in case of CIT vs. Vinay Cement Lgtd, 213 CTR 268 (SC) besides decisions in CIT Vs. Dharmendra Sharma, 297 ITR 320 (Del), CIT vs. P M Electronics Ltd., 313 ITR 161 (Delhi).'
However employer's contribution (not employee's contribution) towards such fund is allowed as deduction subject to section 43B i.e. such contribution is paid on or before the due date of furnishing return — Section 36(1)(va) of the Income Tax Act, 1961 - Employee's contribution - Assessment Year 2002-03 - Whether employees' contribution towards provident fund and ESI would quality for
ITA No.2138/Ahd/2015 M/s. Multivision Pvt. Ltd. vs. ITO Asst.Year – 2012-13 - 4 - Deduction even if paid after due date prescribed under Provident Fund Act / ESI Act but before due date of filing of return - Held, yes The assessee has further relied on the following judgments:- (i) [CIT Vs. AIMIL Ltd. [2010] 188 Taxman 265 (Delhi H.C.)] (ii) CIT Vs. M/s. Kichha Sugar Company Ltd. (ITA No.50 of 2009) (Uttrakhand H.C.)(2013).
The contention of the assessee was considered but the same was not acceptable to the learned AO and an amount of Rs.1,75,742/- is treated as assessee’s income u/s.2(24)(x) of the I.T. Act and same is added to the total income.
Therefore, the learned assessee preferred first statutory appeal before the learned CIT(A) who dismissed the appeal of the assessee.
Now appeal is before us.
We have gone through the relevant record. We have heard both the parties. This issue is covered against the appellant by the judgment of Hon’ble Gujarat High Court in the case of Gujarat State Road Transport Corporation, 41 Taxman.com 100, relevant extract from the judgment is quoted as under:- “Section 43B, read with section 36(1)(va) of the Income-tax Act, 1961 – Business disallowance – Certain deductions to be allowed on actual payment (Employees contribution) – Whether where an employer has not credited sum received by it as employees’ contribution to employees’ account in relevant fund on or before due date as prescribed
ITA No.2138/Ahd/2015 M/s. Multivision Pvt. Ltd. vs. ITO Asst.Year – 2012-13 - 5 - in Explanation to section 36(1)(va), assessee shall not be entitled to deduction of such amount though he deposits same before due date prescribed under section 43B i.e., prior to filing of return under section 139(1) – Held, yes – Assessee state transport corporation collected a sum being provident fund contribution from its employees – However, it had deposited lesser sum in provident fund account – Assessing Officer disallowed same under section 43B – However, commissioner (Appeals) deleted disallowance on ground that employees contribution was deposited before filing return – Whether since assessee had not deposited said contribution in respective fund account on date as prescribed in Explanation to section 36(1)(va), disallowance made by Assessing Officer was just and proper – Held, yes [Para 8] [In favour of revenue]” 6. Respectfully following the judgment of the Jurisdictional High Court the disallowance made by the AO is upheld and we do not find any infirmity in the order passed by the learned CIT(A). Therefore, we dismiss the appeal.
In the result, appeal filed by the assessee is dismissed. This Order pronounced in Open Court on 21/09/2017
Sd/- Sd/- vejthr flag vejthr flag महावीर �साद vejthr flag vejthr flag (लेखा सद�य) (�या�यक सद�य) ( AMARJIT SINGH ) ( MAHAVIR PRASAD ) ACCOUNTANT MEMBER JUDICIAL MEMBER Ahmedabad; Dated 21/09/2017 Priti Yadav, sr.PS
ITA No.2138/Ahd/2015 M/s. Multivision Pvt. Ltd. vs. ITO Asst.Year – 2012-13 - 6 -
आदेश क� ��त�ल�प अ�े�षत/Copy of the Order forwarded to : 1. अपीलाथ� / The Appellant 2. ��यथ� / The Respondent. 3. संबं�धत आयकर आयु�त / Concerned CIT 4. आयकर आयु�त(अपील) / The CIT(A)-2, Ahmedabad. �वभागीय ��त�न�ध, आयकर अपील�य अ�धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 5. 6. गाड� फाईल / Guard file. आदेशानुसार/ BY ORDER, स�या�पत ��त //True Copy//
उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील�य अ�धकरण, अहमदाबाद / ITAT, Ahmedabad True Copy 1. Date of dictation 19/09/2017 (dictation-pad 1 pages attached at the end of this appeal- file) 2. Date on which the typed draft is placed before the Dictating Member …20/09/2017 3. Other Member… 4. Date on which the approved draft comes to the Sr.P.S./P.S…………….. 5. Date on which the fair order is placed before the Dictating Member for pronouncement…… 6. Date on which the fair order comes back to the Sr.P.S./P.S……. 7. Date on which the file goes to the Bench Clerk………………… 8. Date on which the file goes to the Head Clerk…………………………………... 9. The date on which the file goes to the Assistant Registrar for signature on the order…………………….. 10. Date of Despatch of the Order………………