ACIT CIR 6(2), MUMBAI v. DUPEN LABORATORIES P. LTD, MUMBAI

ITA 4741/MUM/2009 | 2005-2006
Pronouncement Date: 30-04-2010

Appeal Details

RSA Number 474119914 RSA 2009
Assessee PAN AAACD2943E
Bench Mumbai
Appeal Number ITA 4741/MUM/2009
Duration Of Justice 8 month(s) 17 day(s)
Appellant ACIT CIR 6(2), MUMBAI
Respondent DUPEN LABORATORIES P. LTD, MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-04-2010
Appeal Filed By Department
Bench Allotted D
Assessment Year 2005-2006
Appeal Filed On 13-08-2009
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D BEFORE SHRI N.V. VASUDEVAN (JM) & B. RAMAKOTAIAH (A M) I.T.A.NO. 4741/MUM/09 (ASSESSMENT YEAR : 2005-06) ACIT CIRCLE 6(2) ROOM NO. 583 AAYAKAR BHAVAN M.K. ROAD MUMBAI-400 020. VS. M/S. DUPEN LABORATORIES PVT. LTD. DHEERAJ HERITAGE 44A 5 TH FLOOR SANTACRUZ WEST MUMBAI-400 054. APPELLANT RESPONDENT PAN/GIR NO. : AAACD2943E ASSESSEE BY : NONE DEPARTMENT BY : SHRI T.T. JACOB ORDER PER N.V. VASUDEVAN JM :- THIS IS AN APPEAL BY THE REVENUE AGAINST THE ORDER DAED 16.6.2009 OF LEARNED CIT(A)-VI MUMBAI RELATING TO A.Y. 2005- 06. 2. GROUNDS OF APPEAL OF THE REVENUE READ AS FOLLOWS :- 1) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND I N LAW LEARNED CIT(A) ERRED IN DELETING THE ADDITION MADE ON ACCOUNT OF BELATED PAYMENT OF EMPOOYEES CONTRIBUTI ON TO PF AND ESIC AS PER THE PROVISIONS OF SECTION 2(24)( X) R.W.S. 36(1)(VA) OF THE I.T. ACT 1961 BY RELYING ON THE AM ENDMENTS IN SECTION 43B OF THE ACT VIDE FINANCE ACT 2003. 2) ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN L AW LEARNED CIT(A) WAS NOT CORRECT IN HOLDING THAT DEPO SIT OF EMPLOYEES CONTRIBUTION TO PF AND ESIC ARE TO BE AL LOWED EVEN WHEN THESE ARE DEPOSITED BEYOND THE DUE DATE A S FIXED BY RELEVANT FUND AS PER PROVISIONS OF SECTION 36(1) (VA) OF THE ACT. 3) THE APPELLANT PRAYS THAT THE ORDER OF LEARNED CIT(A ) ON THE ABOVE GROUNDS BE SET ASIDE AND THAT OF THE ASSESSIN G OFFICER BE RESTORED. M/S. DUPEN LABORATORIES PVT. LTD. 2 3. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF MANUF ACTURE OF PHARMACEUTICAL FORMULATION. THE ASSESSING OFFICER D ISALLOWED A SUM OF RS. 62 415/- BEING EMPLOYEES SHARE OF CONTRIBUTION TO PF AND ESIC ON THE GROUND THAT THE PAYMENTS WERE NOT MADE ON OR BE FORE THE DUE DATE UNDER THE ESIC & PF ACT. THE DETAILS OF CONTRIBUTIO N MADE BEYOND THE DUE DATE ARE GIVEN IN PARAGRAPH 4 OF THE ASSESSMENT ORDER. 4. ON APPEAL BY THE ASSESSEE LEARNED CIT(A) FOLLOW ING THE ORDER OF THE ITAT IN ASSESSEES OWN CASE IN A.Y. 1998-99 ON AN IDENTICAL ISSUE DELETED THE ADDITION MADE BY THE ASSESSING OFFICER GIVING RISE TO THE PRESENT APPEAL BY THE REVENUE BEFORE THE TRIBUNAL. 5. WE HAVE HEARD THE SUBMISSIONS OF LEARNED DR WHO RELIED ON THE ORDER OF THE ASSESSING OFFICER. IN CIT VS. AIMIL LI MITED THE HONBLE DELHI HIGH COURT IN ITA NO. 1063 OF 2006 ITA NO.755 OF 2008 ITA NO. 204 OF 2009 ITA NO. 1214/2008 WITH ITA NO. 1246/2008 ITA N O. 50/2009 ITA NO. 78/2009 JUDGMENT DATED DECEMBER 23 2009 HAD T O DEAL WITH A CASE OF DISALLOWANCE U/S.36(1)(VA) OF THE ACT. THE HONBLE COURT DISCUSSED THE PROVISIONS OF S. 2 (24) (X) WHICH PRO VIDES THAT AMOUNTS RECEIVED BY AN ASSESSEE FROM EMPLOYEES TOWARDS PF C ONTRIBUTIONS ETC SHALL BE INCOME AND S. 36 (1) (VA) WHICH PROVIDE S THAT IF SUCH SUMS ARE CONTRIBUTED TO THE EMPLOYEES ACCOUNT IN THE RELEVAN T FUND ON OR BEFORE THE DUE DATE SPECIFIED IN THE PF ETC LEGISLATION T HE ASSESSEE SHALL BE ENTITLED TO A DEDUCTION. THE COURT ALSO NOTICED THA T THE SECOND PROVISO TO S. 43B (B) PROVIDED THAT ANY SUM PAID BY THE ASSESS EE AS AN EMPLOYER BY WAY OF CONTRIBUTION TO ANY PROVIDENT FUND ETC. SHAL L BE ALLOWED AS A DEDUCTION ONLY IF PAID ON OR BEFORE THE DUE DATE SP ECIFIED IN 36(1)(VA). AFTER THE OMISSION OF THE SECOND PROVISO W.E.F 1.4. 2004 THE DEDUCTION IS ALLOWABLE UNDER THE FIRST PROVISO IF THE PAYMENT IS MADE ON OR BEFORE THE DUE DATE FOR FURNISHING THE RETURN OF INCOME. IN AL OM EXTRUSIONS 319 ITR 306 (SC) THE DELETION OF THE SECOND PROVISO HAS BE EN HELD TO BE WITH RETROSPECTIVE EFFECT. THE HIGH COURT HAD TO CONSIDE R WHETHER THE BENEFIT OF S. 43B CAN BE EXTENDED TO EMPLOYEES CONTRIBUTIO N AS WELL WHICH ARE M/S. DUPEN LABORATORIES PVT. LTD. 3 PAID AFTER THE DUE DATE UNDER THE PF LAW BUT BEFORE THE DUE DATE FOR FILING THE RETURN. THE HONBLE COURT HELD THAT: (I) THOUGH THE REVENUE HAS ARGUED THAT A DISTINCTIO N IS TO BE MADE BETWEEN EMPLOYERS CONTRIBUTION AND EMPLOYEES C ONTRIBUTION AND THAT EMPLOYEES CONTRIBUTION BEING IN THE NATUR E OF TRUST MONEY IN THE HANDS OF THE ASSESSEE CANNOT BE ALLOWE D AS A DEDUCTION IF NOT PAID ON OR BEFORE THE DUE DATE SPE CIFIED IN THE PF ETC LAW THE SCHEME OF THE ACT IS THAT EMPLOYEES C ONTRIBUTION IS TREATED AS INCOME U/S 2 (24) (X) ON RECEIPT BY THE ASSESSEE AND ALLOWED AS A DEDUCTION U/S 36 (1) (VA) ON MAKING DE POSIT WITH THE CONCERNED AUTHORITIES. S. 43B (B) STIPULATES THAT S UCH DEDUCTION WOULD BE PERMISSIBLE ONLY ON ACTUAL PAYMENT; (II) THE QUESTION AS TO WHEN ACTUAL PAYMENT SHOULD BE MADE IS ANSWERED BY VINAY CEMENTS 213 CTR 268 WHERE THE DEL ETION OF THE SECOND PROVISO TO S. 43B W.E.F 1.4.2004 WAS HEL D APPLICABLE TO EARLIER YEARS AS WELL. AS THE DELETION OF THE 2ND P ROVISO IS RETROSPECTIVE THE CASE HAS TO BE GOVERNED BY THE F IRST PROVISO. DHARMENDRA SHARMA 297 ITR 320 (DEL) & P.M. ELECTRON ICS 313 ITR 161 (DELHI) FOLLOWED; (III) IF THE EMPLOYEES CONTRIBUTION IS NOT DEPOSIT ED BY THE DUE DATE PRESCRIBED UNDER THE RELEVANT ACTS AND IS DEPOSITED LATE THE EMPLOYER NOT ONLY PAYS INTEREST ON DELAYED PAYMENT BUT CAN INCUR PENALTIES ALSO FOR WHICH SPECIFIC PROVISIONS ARE M ADE IN THE PROVIDENT FUND ACT AS WELL AS THE ESI ACT. THEREFOR E THE ACT PERMITS THE EMPLOYER TO MAKE THE DEPOSIT WITH SOME DELAYS SUBJECT TO THE AFORESAID CONSEQUENCES. INSOFAR AS T HE INCOME-TAX ACT IS CONCERNED THE ASSESSEE CAN GET THE BENEFIT IF THE ACTUAL PAYMENT IS MADE BEFORE THE RETURN IS FILED AS PER THE PRINCIPLE LAID DOWN IN VINAY CEMENT. 6. IN THE LIGHT OF THE DECISION OF HON'BLE DELHI HI GH COURT WE ARE OF THE VIEW THAT THE ORDER OF LEARNED CIT(A) DOES NOT CALL FOR ANY INTERFERENCE. THE SAME IS CONFIRMED AND THIS APPEA L BY THE REVENUE IS DISMISSED. ORDER HAS BEEN PRONOUNCED ON 30 TH DAY OF APRIL 2010. SD/- (B. RAMAKOTAIAH) ACCOUNTANT MEMBER SD/- (N.V. VASUDEVAN) JUDICIAL MEMBER DATED : 30 TH APRIL 2010 M/S. DUPEN LABORATORIES PVT. LTD. 4 COPY TO : 1. THE ASSESSEE 2. THE RESPONDENT 3. THE CIT(A)-CONCERNED. 4. THE CIT CONCERNED. 5. THE DR CONCERNED MUMBAI 6. GUARD FILE BY ORDER TRUE COPY ASSTT. REGISTRAR ITAT MUMBAI PS