M/S. CITI FINANCIAL INSURANCE (I) LTD, MUMBAI v. THE ADDL CIT RG 15(1), MUMBAI

ITA 1916/MUM/2007 | 2003-2004
Pronouncement Date: 04-10-2013 | Result: Partly Allowed

Appeal Details

RSA Number 191619914 RSA 2007
Assessee PAN AABCC8249F
Bench Mumbai
Appeal Number ITA 1916/MUM/2007
Duration Of Justice 6 year(s) 6 month(s) 30 day(s)
Appellant M/S. CITI FINANCIAL INSURANCE (I) LTD, MUMBAI
Respondent THE ADDL CIT RG 15(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 04-10-2013
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted K
Tribunal Order Date 04-10-2013
Date Of Final Hearing 26-09-2013
Next Hearing Date 26-09-2013
Assessment Year 2003-2004
Appeal Filed On 05-03-2007
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL K KK K BENCH BENCH BENCH BENCH MUMBAI MUMBAI MUMBAI MUMBAI ! ! ! ! ' ' ' ' #$ #$ #$ #$ % % % % & & & & . BEFORE SHRI BEFORE SHRI BEFORE SHRI BEFORE SHRI RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH AM AM AM AM & && & SHRI SHRI SHRI SHRI VIJAY PAL RAO JM VIJAY PAL RAO JM VIJAY PAL RAO JM VIJAY PAL RAO JM ./ I II I.T.A. NO. .T.A. NO. .T.A. NO. .T.A. NO.1916/MUM/2007 1916/MUM/2007 1916/MUM/2007 1916/MUM/2007 ( '( '( '( '( ) ) ) ) / ASSESSMENT YEAR :2003-04) CITI FINANCIAL INSURANCE (I) LTD. 61 CITI TOWER DR. S. S. RAO MARG PAREL MUMBAI ( ( ( ( / VS. ADDL. COMMISSIONER OF INCOME TAX RANGE 15(1) MUMBAI $* ' ./ + ./ PAN/GIR NO. : AABCC8249F ( * / APPELLANT APPELLANT APPELLANT APPELLANT) .. ( -.* / RESPONDENT RESPONDENT RESPONDENT RESPONDENT) * * * * / / / / / APPELLANT BY : SHRI ARVIND SONDE -.* -.* -.* -.* 0 00 0 / / / / /RESPONDENT BY : SHRI AJEET KUMAR JAIN & SHRI NEERJA PRADHAN ( ( ( ( 0 00 0 1' 1' 1' 1' / DATE OF HEARING : 26 TH SEPTEMBER 2013 23) 23) 23) 23) 0 00 01' 1' 1' 1' /DATE OF PRONOUNCEMENT: 4 TH OCTOBER 2013 #4 / O R D E R PER : & . . / VIJAY PAL RAO JM THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST TH E ORDER DATED 28.11.2006 OF COMMISSIONER OF INCOME TAX(APPEALS) F OR THE ASSESSMENT YEAR 2003-04. 2. THE ASSESSEE HAS RAISED THE FOLLOWING EFFECTIVE GROUNDS IN THIS APPEAL: 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LEARNED CIT(A) HAS ERRED IN LAW IN HOLDING THAT DISALLOWANCE OF CLAIM OF REFERRAL FEE MADE BY A.O AT ` 258 00 00 0/- IS IN ACCORDANCE WITH LAW. 2. A) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE THE LEARNED CIT(A) ERRED IN LAW IN SUSTAINING THE D ISALLOWANCE OF ` 131874/- BEING EMPLOYEES CONTRIBUTION OF P.F THERE BY HOLDING ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 2 THAT EXTENSION OF DUE DATE FOR DEPOSIT OF P.F UNDER SECTION 43B OF THE IT ACT BY F. ACT 2003 IS APPLICABLE TO EMPLOYEE S CONTRIBUTION ONLY. B) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THA T CASES RELIED UPON BY ASSESSEE AS SITED IN THE APPELLATE ORDER FO R EMPLOYERS CONTRIBUTION ORDER DEALS WITH AND ARE APPLICABLE T O BOTH DEPOSIT OF EMPLOYERS AS WELL AS EMPLOYEES CONTRIBUTION TO P.F. C) THAT THE LEARNED CIT(A) FAILED TO APPRECIATE THA T DUE DATE AS DEFINED UNDER IT ACT FOR THE PURPOSE OF SECTION 43B AS WELL AS 2(24)(X)/36(1)(VA) OF THE ACT IS ONE AS SHOWN UNDER SECTION 36(1)(VA) AND ITS MODIFICATION AS DUE DATE FOR FILI NG OF RETURN U/S 139 OF THE ACT BY FINANCE ACT 2003 IS APPLICABLE TO BOTH CATEGORY OF P.F CONTRIBUTION. D) THAT THE LEARNED CIT(A) HAS FAILED TO APPRECIATE THAT IN THE INTEREST OF EQUITY & NATURAL JUSTICE A FAIR AND LOG ICAL INTERPRETATION OF THE PROVISION OF THE ACT HAS TO M ADE. 3. GROUND NO. 1 REGARDING DISALLOWANCE OF CLAIM OF REFERRAL FEE. THE ASSESSEE COMPANY IS ENGAGED IN THE BUSINESS OF INSU RANCE ACTIVITIES BEING AN INSURANCE INTERMEDIATARY AS CORPORATE INSURANCE AGENT. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR UNDER CONSIDERATION THE ASSESSEE HAS DECLARED INCOME FROM AGENCY COMMISSION AT ` 5.86 CRORES. IN THE COURSE OF ASSESSMENT PROCEEDINGS THE AO FOUN D THAT THE ASSESSEE HAS DEBITED PROFESSIONAL CHARGES AT ` 2. 61 CRORES IN THE PROFIT AND LOSS ACCOUNT WHICH INCLUDED THE PAYMENT OF ` 2.58 CRORES TO CITI BANK NA AS REFERRAL FEES. ON QUERY FROM THE AO THE ASSESSEE EX PLAINED THAT THE IMPUGNED PAYMENT TO CITI BANK NA IS AGAINST USING THEIR DATABASE TO SELL THE POLICY. THE ASSESSEE RELIED UPON THE AGREEMENT ENTERED INTO WITH CITI BANK NA INDIA BRANCH TERMED AS SERVICE LEVEL AGRE EMENT AND CLAIMED THAT ` 2.58 CRORES HAS BEEN PAID AS REFERRAL FEE/RO YALTY TO CITI BANK INDIAN BRANCH FOR SERVICE RENDERED IN TERMS OF THE SAID AG REEMENT. THE AO ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 3 DISALLOWED THE CLAIM OF THE ASSESSEE FOR VARIOUS RE ASONS AS DISCUSSED IN THE ORDER. THE MAIN OBJECTIONS RAISED BY THE AO INT ER-ALIA ARE AS UNDER: I) THE ALLEGED AGREEMENT IS ON PLAIN PAPER AND NOT ON STAMP PAPER II) THE DESIGNATION OF THE SIGNATORIES ARE NOT MENT IONED III) THE AGREEMENT IS NOT WITNESSED IV) THERE IS NO ARBITRATION CLAUSE IN THE AGREEMENT ETC. 4. THUS THE AO HAS HELD THAT THE AGREEMENT HAS NO LEGAL AND BINDING FORCE. ACCORDINGLY THE AO DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT NO SERVICES WERE RENDERED BY THE CITI B ANK NA. THOUGH THE ASSESSING OFFICER DISALLOWED THE CLAIM OF REFERRAL FEE IN FULL HOWEVER ALTERNATIVELY WITHOUT PREJUDICE ITS FINDING THE AO HAS ALSO HELD THAT THE PAYMENT IS OTHERWISE NOT AT ARMS LENGTH AS THE ASS ESSEE PAID 75% OF THE REVENUE EARNED IN THE POLICIES IN THE CASES REFERRE D BY CITI BANK NA. THE AO HELD THAT ONLY 10% OF THE INSURANCE COMMISSION R ECEIVED BY THE ASSESSEE IN RESPECT OF THE CASES REFERRED BY THE CI TI BANK NA CAN BE CONSIDERED AS REFERRAL FEE. ON APPEAL THE CIT(A) C ONFIRM THE ACTION OF THE AO FOR DISALLOWING THE CLAIM OF REFERRAL FEE IN TOT AL. SINCE THE CLAIM WAS DISALLOWED FOR WANT OF EVIDENCE TO SHOW THAT ANY SE RVICE WAS RENDERED THEREFORE THE CIT(A) DID NOT THINK IT FIT TO DECID E THE ISSUE OF ARMS LENGTH PRICE UNDER TRANSFER PRICING PROVISION. 5. BEFORE US THE LD. COUNSEL FOR THE ASSESSEE HAS S UBMITTED THAT THE AUTHORITIES BELOW HAVE DISALLOWED THE CLAIM OF THE ASSESSEE BY HOLDING THAT THE AGREEMENT HAS NO LEGAL AND BINDING FORCE F OR WANT OF STAMP DUTY WITNESS DATE OF AGREEMENT AND PRODUCTION OF ORIGIN AL AGREEMENT. THE LD. ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 4 COUNSEL HAS FORCEFULLY CONTENDED THAT THERE IS NO R EQUIREMENT OF STAMP DUTY FOR THE AGREEMENT UNDER CONSIDERATION AND IT I S ALSO NOT REQUIRED TO BE WITNESSED AS PER THE PROVISIONS OF THE CONTRACT ACT. FURTHER THE LD. COUNSEL HAS SUBMITTED THAT EVEN A ORAL AGREEMENT IS LEGALLY ENFORCEABLE IF THE CONDITIONS AS PRESCRIBED UNDER CONTRACT ACT I.E . COMPETENCY OF THE PARTIES FREE CONSENT CONSIDERATION FOR LAWFUL OB JECT AND THE AGREEMENT IS FOR LAWFUL OBJECT AND NOT DECLARED AS VOID BY THE L AW INFORCE. THUS THE LD. COUNSEL HAS CONTENDED THAT THE REASONS FOR REJECTIN G THE AGREEMENT ARE NOT SUSTAINABLE AS THE SAME ARE NOT REQUIRED AS PER THE PROVISIONS OF CONTRACT ACT. HE HAS REFERRED THE SERVICE LEVEL AGR EEMENT AT PAGE 12 OF THE PAPER BOOK AND SUBMITTED THAT WHEN PARTIES HAVE ACTED IN TERMS OF SAID AGREEMENT THEN EVEN IF THE AGREEMENT IS NOT RE DUCED IN WRITING THE SAME IS LEGALLY ENFORCEABLE. IN SUPPORT OF HIS CONT ENTION HE HAS RELIED UPON THE DECISION OF HONBLE JURISDICTION HIGH COUR T IN CASE OF SHANKARLAL NARAYANDAS VS THE NEW MOFUSSIL CO. LTD. (1946) 48 B OMLR 456 AND SUBMITTED THAT THE HONBLE HIGH COURT HAS HELD THAT EVEN AN ORAL CONTRACT IS VALID AND ENFORCEABLE IF IT IS PROVED THAT THERE IS AN AGREEMENT BETWEEN THE PARTIES. THE LD. COUNSEL HAS REFERRED THE LEDGE R ACCOUNT CREDIT NOTE AND CONFIRMATION BY THE CITI BANK NA TO SHOW THAT THE PARTIES HAVE ADMITTED THE EXISTENCE OF AGREEMENT AND THE PAYMENT IN QUESTION HAS BEEN MADE AS PER THE AGREEMENT BETWEEN THE PARTIES. HE HAS ALSO REFERRED THE TRANSFER PRICING STUDY REPORT AND FORM 3CCB TO SHOW THE WORKING OF THE REFERRAL FEE AS WELL AS THE RELATED PARTY TRANSACTION AND SUBMITTED THAT WHEN THE ASSESSEE HAS BROUGHT ON REC ORD THE RELEVANT EVIDENCE TO SHOW THAT THE SERVICE WERE RENDERED BY THE CITI BANK NA THEN ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 5 THE PAYMENT OF REFERRAL FEE IS AN ALLOWABLE EXPENDI TURE THOUGH THE SAME IS ALSO SUBJECTED TO TRANSFER PRICING. THEREFORE T HE LD. COUNSEL HAS URGED THAT FOR THE PURPOSE OF DETERMINATION OF ALP THE MA TTER MAY BE REMITTED TO THE CIT(A). 5. ON THE OTHER HAND THE LD. DR HAS SUBMITTED THAT THE AO RAISED THE SPECIFIC QUERY ABOUT THE DEFICIENCIES/DEFECTS SUFFE RED BY THE AGREEMENT FOR WANT OF WITNESS STAMP DUTY AND DESIGNATION OF THE PERSONS WHO SIGNED THE AGREEMENT. THUS THE AO DOUBTED THE GENU INENESS OF THE AGREEMENT AND ACCORDINGLY ASKED THE ASSESSEE TO PRO DUCE THE ORIGINAL AGREEMENT. THE ASSESSEE FAILED TO PRODUCE THE ORIGI NAL AGREEMENT EITHER BEFORE THE AO OR BEFORE THE CIT(A) AND EVEN BEFORE THIS TRIBUNAL. THE LD. DR HAS FURTHER CONTENDED THAT THE AO HAS ALSO CALLE D FOR DETAILED EXPLANATION FROM THE ASSESSEE TO JUSTIFY THE CLAIM OF REFERRAL FEE TO HAVE PAID TO THE CITI BANK NA. BUT THE ASSESSEE FAILED TO DISCHARGE ITS ONUS TO SUBSTANTIATE THE CLAIM AND PARTICULARLY WHEN THE PA YMENT WAS MADE TO THE RELATED PARTY. WHEN THE ASSESSEE FAILED TO PROD UCE THE ORIGINAL AGREEMENT AND OTHER CORRESPONDENCE BETWEEN THE PART IES TO PROVE THE GENUINENESS OF THE AGREEMENT THEN THE ASSESSING OFF ICER IS JUSTIFIED IN HOLDING THAT THE AGREEMENT HAS NO LEGAL AND BINDING FORCE. THE ASSESSEE HAS ALSO FAILED TO PROVE WITH EVIDENCE THAT ANY SER VICE WAS RENDERED BY THE CITI BANK NA TO JUSTIFY SUCH A PAYMENT WHICH I S 75% OF THE TOTAL REVENUE EARNED BY THE ASSESSEE ON THE BROKERAGE INC OME. SHE HAS STRONGLY RELIED UPON THE ORDERS OF THE AUTHORITIES BELOW. SHE HAS ALSO RELIED UPON THE DECISION OF HONBLE SUPREME COURT I N CASE OF ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 6 LACHMINARAYAN MADAN LAL VS CIT 86 ITR 439 AND SUBMI TTED THAT THE HONBLE SUPREME COURT HAS OBSERVED THAT MERE EXISTE NCE OF AN AGREEMENT BETWEEN THE PARTIES OR ANY PAYMENTS MADE THERE UNDER DOES NOT BIND THE INCOME TAX OFFICER TO HOLD THAT THE PA YMENT WAS MADE EXCLUSIVELY AND WHOLLY FOR THE PURPOSE OF THE ASSES SEES BUSINESS. 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AS WELL AS RELEVANT MATERIAL ON RECORD. A REGARDS THE VALIDITY OF AGREE MENT WE NOTE THAT THE ALLEGED AGREEMENT IS UNDATED AND NO DESCRIPTION REG ARDING THE AUTHORITY OF THE PERSONS WHO HAVE SIGNED THE SAID AGREEMENT. THOUGH NO STAMP DUTY WAS PAID AND ALSO IT HAS NOT BEEN ATTESTED BY ANY WITNESS HOWEVER THERE IS NO SUCH REQUIREMENT FOR ENFORCEABILITY OF THE AGREEMENT BETWEEN THE PARTIES. IT IS PERTINENT TO NOTE THAT THE ENFOR CEABILITY OF THE AGREEMENT IS RESTRICTED BETWEEN THE PARTIES TO THE AGREEMENT AS PER THE INDIAN CONTRACT ACT. A VALID AND ENFORCEABLE AGREEMENT MUS T BE BETWEEN THE PARTIES WHO ARE COMPETENT TO ENTER INTO AGREEMENT A PART FROM THE SATISFACTION OF THE OTHER CONDITIONS PROVIDED UNDER THE INDIAN CONTRACT ACT. THE AGREEMENT IN QUESTION THOUGH SIGNED BY THE PERSONS ON BEHALF OF THE PARTIES HOWEVER IT DOES NOT SHOW AS HOW THE SIG NING PERSONS ARE COMPETENT AND AUTHORISED ON BEHALF OF THE RESPECTIV E PARTY. EVEN OTHERWISE THE ASSESSEE HAS NOT PRODUCED THE ORIGINA L AGREEMENT AS WELL AS OTHER SUPPORTING EVIDENCE TO ESTABLISH THAT THE AGREEMENT WAS SIGNED BY THE COMPETENT AND DULY AUTHORISED PERSONS. THE A GREEMENT ALSO DOES NOT BEAR ANY DATE AS WELL AS THE DATE FROM WHICH IT IS EFFECTIVE FROM. SINCE THE PARTIES HAVE NOT DISPUTED THE EXISTENCE OF AGRE EMENT THEREFORE FOR ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 7 THE PURPOSE OF ALLOWING THE CLAIM IN QUESTION THE EXISTENCE OF THE AGREEMENT IS NOT SO RELEVANT RATHER THE CLAIMS SHO ULD BE SUPPORTED BY THE EVIDENCE TO SHOW THAT THE SERVICES WERE RENDERE D BY THE CITI BANK NA AGAINST WHICH THE PAYMENTS ARE MADE BY THE ASSESSEE . 7. THE AUTHORITIES BELOW DISALLOWED THE CLAIM OF TH E ASSESSEE PURPORTEDLY U/S 37 AND ARRIVED TO THE CONCLUSION TH AT THE AGREEMENT IN QUESTION HAS NOT BINDING FORCE AND ACCORDINGLY THE ASSESSEE FAILED TO PROVE THAT THE PAYMENT OF REFERRAL FEE IS JUSTIFIED FOR RENDERING OF SERVICES. AS WE HAVE OBSERVED THAT FOR ALLOWING THE CLAIM OF EXPENDITURE WHAT IS RELEVANT AND IMPORTANT ASPECT IS WHETHER THE EXPEND ITURE HAS BEEN LAID OUT WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF BUSIN ESS OF THE ASSESSEE. THE PRIMARY ONUS IS ON THE ASSESSEE TO ESTABLISH TH AT THE PAYMENTS ARE MADE AGAINST THE SERVICES RENDERED BY THE PAYEE. TH E AUTHORITIES BELOW HAVE GIVEN MUCH EMPHASIS ON THE VALIDITY AND ILLEGA LITY OF THE AGREEMENT THEN THE MERITS OF THE ISSUE AND PARTICULARLY THE N ATURE OF SERVICE AND WHETHER IN FACT THE SERVICES WERE RENDERED BY THE C ITI BANK NA. FURTHER THE CIT(A) HAS NOT ENTERED INTO THE ISSUE OF TRANSF ER PRICING AND COMPUTATION OF THE ALP AND RESTRICTED ITS FINDING O NLY TO THE ISSUE OF ALLOWABILITY OF THE CLAIM U/S 37. 8. IN THE FACTS AND CIRCUMSTANCES OF THE CASE WE AR E OF THE CONSIDERED VIEW THAT THE ENTIRE ISSUE IS REQUIRED TO BE CONSID ERED AFRESH REGARDING THE FINDING ON THE ASPECT OF RENDERING OF SERVICES BY THE CITI BANK NA AND THE NATURE OF SERVICES. WE NOTE THAT THE ASSESSEE F ILED CERTAIN DETAILS REGARDING TOP 25 CASES WHICH WERE REFERRED BY THE C ITI BANK NA BUT THE ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 8 AUTHORITIES BELOW DID NOT EXAMINE THE RELEVANT RECO RD. ACCORDINGLY IN THE INTEREST OF JUSTICE WE SET ASIDE THIS ISSUE TO THE RECORD OF THE CIT(A) TO ADJUDICATE THE MATTER AFRESH BY CONSIDERING WHETHER ANY SERVICES HAS BEEN RENDERED BY THE CITI BANK NA IRRESPECTIVE OF AGREEMENT IN QUESTION FOR ALLOWING THE CLAIM U/S 37 AND FURTHER THE ISSUE OF TRANSFER PRICING TO BE ADJUDICATED BY TAKING INTO CONSIDERATION THE SUITAB LE COMPARABLES AND MOST APPROPRIATE METHOD. 9. GROUND NO. 2 REGARDING DISALLOWANCE OF EMPLOYEES CONTRIBUTION TO P.F U/S 43B. THE AO NOTED THAT THE ASSESSEE HAS NOT MADE PAYMENT OF CONTRIBUTION RECEIVED FROM EMPLOYEES AND ALSO EMPLO YER CONTRIBUTION BEFORE THE DUE DATE AS DEFINED IN THE EXPLANATION T O SECTION 36(1)(VA). ACCORDINGLY THE AO DISALLOWED BOTH THE PAYMENTS BE ING EMPLOYEES AS WELL AS EMPLOYERS CONTRIBUTION BY INVOKING THE PROV ISIONS U/S 43B OF THE INCOME TAX ACT. ON APPEAL THE CIT(A) HAS ALLOWED T HE CLAIM WITH RESPECT TO THE EMPLOYERS CONTRIBUTION P.F HOWEVER CONFIRM T HE DISALLOWANCE REGARDING EMPLOYEES CONTRIBUTION. 10. WE HAVE HEARD THE LD. AR AS WELL AS LD. DR AND CONSIDERED THE RELEVANT MATERIAL ON RECORD. THE LD. AR HAS RELIED UPON THE DECISION OF THIS TRIBUNAL IN CASE OF HINDUSTAN CONSTRUCTION CO. LTD. VS DCIT 140 ITD 642. ON THE OTHER HAND THE LD. DR HAS RELIED UPON THE DECISION OF THE TRIBUNAL IN ITA NO. 338/2012 DATED 17.5.2013. THOUG H THERE ARE DECISIONS OF THIS TRIBUNAL HAVING DIVERGENT VIEW ON THIS ISSU E HOWEVER IN THE CASE OF HINDUSTAN CONSTRUCTION CO. LTD. VS DCIT (SUPRA) ONE OF US THE JUDICIAL MEMBER IS A PARTY HAS TAKEN A VIEW THAT IF THE PAYM ENT IS MADE BEFORE ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 9 THE DUE DATE FOR FILING THE RETURN OF INCOME THEN T HE SAME IS ALLOWABLE. THE TRIBUNAL HAS CONSIDERED THE ISSUE IN PARA 6 AND 6.1 AS UNDER: 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND TH E RELEVANT MATERIAL ON RECORD. AT THE OUTSET WE NOTE THAT IN THE CASE OF PL DRUGS & PHARMACEUTICALS LTD. (SUPRA) THE TRIBUNAL HAS CONSIDERED AND DECIDED AN IDENTICAL ISSUE IN FAVOUR OF THE ASSESSEE IN PARAS 4 TO 6 AS UNDER: 4. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED THE MATERIAL ON RECORD AND DULY CONSIDERED FACTUAL MATR IX OF THE CASE AS ALSO THE APPLICABLE LEGAL POSITION. 5. A CO-ORDINATE BENCH OF THIS TRIBUNAL IN THE CAS E OF PRANAVADITYA SPINNING MILLS V. ACIT(ORDER DATED 22N D MARCH 2010) AND SPEAKING THROUGH ONE OF US (I.E. TH E PRESIDENT) HAS INTER ALIA OBSERVED AS FOLLOWS: THE LEARNED COUNSEL FOR THE ASSESSEE RELIED ON SEV ERAL ORDERS OF THE MUMBAI BENCHES OF THE TRIBUNAL IN SUP PORT OF HIS CONTENTION THAT THE EMPLOYEES CONTRIBUTION SHO ULD BE ALLOWED UNDER SECTION 43B IS DEPOSITED WITHIN THE D UE DATE FOR FILING THE RETURN FOR THE ASSESSMENT YEAR IN QU ESTION. IN THE CASE OF SIMPLED ENGINEERING AND FOUNDRY WORKS ( P) LTD V. JCIT [ITA NO.5760/MUM./2006 DATED 29TH NOVEMBER 2007] (ASSESSMENT YEAR 2003-04) AND CONNECTED APPEA LS IT HAS BEEN OPINED BY THE TRIBUNAL IN PARA 16 THAT SINCE THE CONTRIBUTION OF THE EMPLOYEES IS WITHHELD BY THE E MPLOYER BY DEDUCTING THE SAME FROM THE WAGES AND SALARIES THE DUES OF THE EMPLOYEES MERGED WITH THE FUNDS OF THE EMPLOYER ARID THE EMPLOYEES CONTRIBUTION THUS BECO MES SIMILAR TO THE EMPLOYERS CONTRIBUTION. IT HAS BEEN OBSERVED THAT THE NATURE OF THE SOURCE OF BOTH EMPL OYERS AS WELL AS EMPLOYEES CONTRIBUTION IS THE SAME NAM ELY THE FUNDS OF THE EMPLOYER. IN THIS VIEW OF THE MATT ER IT HAS BEEN HELD THAT THE CONTRIBUTION OF THE EMPLOYEES P AID WITHIN THE DUE DATE FOR FILING THE RETURN OF INCOME IS ALLOWABLE UNDER SECTION 43B. THIS ORDER OF THE TRIB UNAL HAS NOT BEEN REFERRED TO IN THE SUBSEQUENT ORDER OF THE TRIBUNAL DATED 28TH JANUARY 2010 IN THE CASE OF THE SAME ASSESSEE NAMELY SIMPLEX ENGINEERING & FOUNDRY WOR KS FOR THE ASSESSMENT YEAR 2004-05 IN ITA NO.378/MUM./ 2009 AND WITH REFERENCE TO THE EARLIER ORDER THE DISALL OWANCE OF THE EMPLOYEES CONTRIBUTION WAS UPHELD BY THE TRIBU NAL. IN ANOTHER ORDER PASSED ON 28TH JANUARY2010 IN ITA NO.6847/MUM./2008 (ASSESSMENT YEAR 2005-06) IN THE CASE OF PINK PEN PRIVATE LTD. V ITO THE TRIBUNAL W AS DEALING WITH THE EMPLOYEES CONTRIBUTION TO PROVIDE NT FUND ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 10 AND ESIC WHICH WAS PAID EVEN BEYOND THE GRACE PERIO D. THE ASSESSING OFFICER HAD DISALLOWED THE PAYMENT UN DER SECTION 36(1)(VA) HOLDING THAT THE CONTRIBUTION WA S NOT COVERED BY SECTION 43B. THE TRIBUNAL WAS OF THE OPI NION THAT THE CASE WAS COVERED BY THE JUDGMENT OF THE SU PREME COURT IN THE CASE OF CIT V. ALOM EXTRUSIONS LTD.(20 09) 319 ITR 306 AND ACCORDINGLY HELD THAT THE CONTRIBUTION OF THE EMPLOYEES; IF PAID BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME AS CONTEMPLATED BY THE PROVISO TO SECTION 438 IS TO BE ALLOWED AS A DEDUCTION. IN THE CASE OF RADHAK RISHNA FOOD LAND PVT. LTD. V ACIT IN ITA NO.4211 / MUM./20 (ASSESSMENT YEAR 2003-04) THE TRIBUNAL BY ORDER DA TED 11TH FEBRUARY 2008 HELD FOLLOWING THE VIEW TAKEN B Y THE SUPREME COURT IN THE CASE OF VINAY CEMENT LTD (2007 )213 CTR 268 THAT THE EMPLOYEES CONTRIBUTION PAID BEFOR E THE DUE DATE FOR FILING THE RETURN OF INCOME IS ALLOWAB LE AS A DEDUCTION. THERE IS THUS A SERIES OF ORDERS OF THE MUMBAI BENCHES OF THE TRIBUNAL ON THE ISSUE AND RESPECTFUL LY FOLLOWING THEM WE DELETE THE DISALLOWANCE OF RS. 14 02 512/- OUT OF WHICH RS. 5 62 450/- WAS PAID A FTER THE DUE DATE BUT BEFORE THE GRACE PERIOD AND RS. 8 40 0 62/- WAS PAID AFTER THE GRACE PERIOD BUT BEFORE THE DUE DATE FOR FILING THE RETURN OF INCOME. THE FIRST GROUND IS AC CORDINGLY ALLOWED. 6. THE ABOVE OBSERVATIONS WITH WHICH WE ARE IN RES PECT AGREEMENT APPLY TO THE FACT SITUATION BEFORE US AS WELL. IN THIS VIEW OF THE MATTER AS LONG AS EVEN EMPLOYEES CONTRIBUTION TO PR AND ESIC ARE PAID BY THE ASSESSE E BEFORE THE DUE DATE OF FILING THE INCOME TAX RETURN THE S AME ARE TO BE ALLOWED AS DEDUCTION IN COMPUTATION OF INCOME OF THE ASSESSEE. IT IS AN UNDISPUTED POSITION THAT THE ASS ESSEE HAS PAID THE EMPLOYEES CONTRIBUTION TO PF AND ESIC WELL BEFORE THE DUE DATE OF FILING OF INCOME TAX RETURN. LEARNED DEPARTMENTAL REPRESENTATIVE DOES NOT DISPUTE THAT A SPECT OF THE MATTER. ON THESE FACTS AND IN VIEW OF THE L EGAL POSITION SUMMED UP ABOVE WE ARE OF THE CONSIDERED VIEW THAT THE IMPUGNED ADDITION INDEED DESERVES TO BE DE LETED. WE DIRECT SO. THE ASSESSEE GETS THE RELIEF ACCORDIN GLY. 6.1 FOLLOWING THE ORDER OF THE COORDINATE BENCH OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND AGAINST THE REVENUE. ACCORDINGLY THE ADDITION MADE BY THE ASSE SSING OFFICER U/S 43B IS DELETED. 11. IT IS CLEAR FROM THE ABOVE ORDER OF THIS TRIBUN AL THAT A SERIES OF DECISIONS OF THIS TRIBUNAL AS WELL AS THE DECISION OF HONBLE DELHI HIGH ITA NO.1916/M/2007 CITI FINANCIAL INSURANCE (I) LTD. 11 COURT ON THIS POINT ARE IN FAVOUR OF THE ASSESSEE. ACCORDINGLY FOLLOWING THE ORDERS OF THIS TRIBUNAL WE DECIDE THIS ISSUE IN FAVOUR OF THE ASSESSEE AND THE ADDITION MADE U/S 43B IS DELETED. 12. IN THE RESULT THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 4 TH DAY OF OCTOBER 2013 SD/- SD/- ( ! ) ' #$ ( RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH RAJENDRA SINGH ) ACCOUNTANT MEMBER ( & ) ' #$ (VIJAY PAL RAO) JUDICIAL MEMBER PLACE: MUMBAI : DATED: 4 TH OCTOBER 2013 SUBODH COPY FORWARDED TO: 1 APPELLANT 2 RESPONDENT 3 CIT 4 CIT(A) 5 DR /TRUE COPY/ BY ORDER DY /AR ITAT MUMBAI