Income Tax Appellate Tribunal - Ahmedabad
A. Menarini India Pvt. Ltd.,, Ahmedabad vs The Dy. Cit, Circle-1(1)(1),, ... on 23 May, 2019
आयकर अपील य अ धकरण, अहमदाबाद यायपीठ 'B'अहमदाबाद ।
IN THE INCOME TAX APPELLATE TRIBUNAL "B" BENCH, AHMEDABAD BEFORE SHRI MAHAVIR PRASAD, JUDICIAL MEMBER &SHRI AMARJIT SINGH, ACCOUNTANT MEMBER आयकर अपील सं./I.T.A. No. 2199/Ahd/2017 ( नधा रण वष / Assessment Year:2014-15) A. Menarini India Pvt. Ltd. बनाम/ DCIT A-101, Shapath IV, Vs. Circle- 1(1)(1), Near Karnavati Club, Ahmedabad S.G. Highway, Ahmedabad- 380015 थायीले खासं . /जीआइआरसं . /PAN/GIR No.: AAA CI9 822 K (अपीलाथ /Appellant) .. ( यथ / Respondent) अपीलाथ ओर से/Appellant by : Written Submission यथ क ओरसे / Respondentby: Kamlesh Makwona, Sr . DR सन ु वाईक तार"ख/Date of Hearing 10/05/2019 घोषणाक तार"ख /Date of Pronouncement 23/05/2019 आदे श/O R D E R PER AMARJIT SINGH - AM:
The appeal has been filed by the assessee for A.Y. 2014-15, arise from order of the CIT(A)-1, Ahmedabad dated 31.07.2017, in proceedings under section 143(3) of the Income Tax Act, 1961; in short "the Act".
2. All the ground of appeal of the assessee against the order of CIT(A)- Ahmedabad are pertained to the solitary issue of confirming disallowance of Rs. 11,95,274/- being the amount of employees' Contribution to Provident Fund and ESIC. Therefore, for the sake of convenience all the grounds of appeal are adjudicated together with this common order. The fact in brief is that assessee had ITA NO. 2199/AHD/2017 A.Y. 2014-15 filed return of income declaring loss of Rs. (-)23,58,10,490/- on 29.11.2014. Subsequently, the case was selected under scrutiny by issuing of notice u/s. 143(2) of the Act on 03.09.2015. During the course of assessment the AO noticed that assessee has not made payment towards the contribution of employees' to Provident Fund and ESIC within the due date prescribed in the particular Act. The detail of such payment is reproduced as under:-
Provident Fund:-
Month Employees' Due Date Actual Date of
Contribution in Rs. Payment
Apr-13 186026 21.05.2013 23.05.2013
Apr-13 1038700 20.05.2013 29.05.2013
Therefore, the assessee was asked to explain why employees' contribution of Provident Fund/ESIC paid after due date should not be disallowed as per sec. 36(1)(v)(a) r.w.s. 2(24)(x) of the Act. In response the assessee explained that the payment were made before the due date of filing the return of income and quoted the decision of Hon'ble Karnataka High Court in the case of EssaeTereoka Private Limited reported in 266 CIR 246. The AO has not accepted the explanation of the assessee and stated that assessee has failed to make payment in respect of employees' contribution toward Provident Fund/ESIC within the gross period allowed and after placing reliance on the decision of the Hon'ble Jurisdictional Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation disallowed the deduction of Rs. 12,24,726/- and the same was added to the total income of the assessee.
3. The assessee has filed the appeal before the Ld. CIT(A) in not allowing the deduction of payment of employees' contribution to the Provident and ESIC. The Ld. CIT(A) has dismissed the appeal of the assessee after placing reliance on the 2 ITA NO. 2199/AHD/2017 A.Y. 2014-15 decision of Hon'ble Gujarat High Court in the case of State Road Transport Corporation 366 ITR 170. The relevant part of the decision of the Ld. CIT(A) is reproduced as under:-
"3.3. I have carefully considered Assessment order and submission filed by the Appellant. I have carefully considered the assessment order and the submission filed by the appellant. The Assessing Officer has observed that appellant has failed to deposit employees' contribution to Provident Fund before due date prescribed under relevant provisions of the said Acts hence he relied upon provisions of section 36(1)(va) r.w.s 2(24)(x) and decision of Hon'ble Gujarat High Court in the case State Road Transport Corporation and made disallowance of Rs.12,24,726/-. On the other hand, appellant has argued that as employees' contribution to Provident Fund is made before due date of filing of return of income and even before completion of financial year, disallowance cannot be made.
3.4 On carefully consideration of observation of Assessing Officer and contention of appellant, I observe that entire issue is covered against appellant by decision of Hon'ble Gujarat High Court in case of State Road Transport Corporation (366 ITR
170) wherein it is held 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 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] 3.5 In view of the express provisions of Section 2 (24)(x) and Section 36(1)(va) of the Income Tax Act, I am inclined to hold that contribution received by the appellant from the employees towards provident fund, ESI, etc. which are paid after the due date prescribed under the relevant Act is liable to be disallowed as held by the jurisdictional High Court of Gujarat in the case of CIT vs. Gujarat State Road Transport Corporation. Respectfully following the judgment of the Hon'ble High Court of Gujarat cited supra, I hold that the Assessing Officer is right in making the disallowance with respect to the delayed payment of Employees' Contribution to the Provident Fund. Further, during the course of appellate proceedings, the appellant 3 ITA NO. 2199/AHD/2017 A.Y. 2014-15 has contended that the A.O. has wrongly taken an amount of Rs. 10,38,700/- instead of 10,09,248/-. Thus, the actual disallowance in respect of late payment of PF and ESIC of Rs. 11,95,274/- instead of 12,24,726/-. The addition made by the AO for a sum of Rs. 11,95,274/- is therefore, confirmed. Accordingly, this ground is dismissed and decided against the appellant."
4. No one has attended from the side of the assessee, however, the assessee has filed written submission mainly stating that the assessee has paid the entire amount and employees' contribution to Provident Fund and ESIC before the due date for filing the return of income u/s. 139(1) of the Act. It is further stated that assessee has paid the aforesaid contribution within the time prescribed u/s. 43B of the Act. In the written submission assessee has referred a number of judicial pronouncement and stated that if the employees' contribution is paid before the due date for filing the return of income u/s. 139 the deduction of the expenditure are allowable u/s. 43B of the Act.
5. The Ld. DR has supported the order of Ld. CIT(A) and submitted that in view of the decision of jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation 366 ITR 170 the assessee is not entitled to get deduction in respect of late payment of employees' contribution to Provident Fund and ESIC.
6. We have heard both the sides and perused the material on record carefully. During the course of assessment proceeding the AO has noticed that amount received by the assessee by way of employees' contribution towards Provident Fund has not been deposited by the assessee in the employees account in the relevant fund on order before due date. Before the AO it was contended that if the payment of Provident Fund contribution has been made within the due date of filing return of income then the same is allowable as deduction u/s. 43B of the Act. The AO has rejected contention of the assessee that the non-obstante clause of sec. 43B cannot override the specific provision in sec. 36(1)(va) for employees' 4 ITA NO. 2199/AHD/2017 A.Y. 2014-15 contribution. The Ld. CIT(A) has not agreed with the contention of the assessee and held that as per sec. 36(1)(va) of the Act any amount not deposited till the due date as specified in the respective Act should be added to the total income of the assessee. The Ld. CIT(A) has also placed reliance on the decision of Hon'ble Jurisdictional High Court of Gujarat in the case of CIT vs. Gujarat State Road Transport Corporation reported in 265 CTR 64 (Guj) wherein it is held that were the employer has not credited the sum received by it as employees' contribution to employees account in relevant fund on or before due date as prescribed in explanation to sec. 36(1)(va) the assessee shall not be entitled to deduction of such amount though it deposit the said sum before the due date prescribed u/s. 43B i.e. prior to filing of return u/s. 139 (1) of the Act. We consideredthat decision of the Hon'ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation more relevant to the case of the assessee. The Hon'ble Jurisdictional High Court in the case of CIT vs. Gujarat State Road Transport Corporation has held that as per explanation to sec. 36(1)(va) for the purpose of said clause, "Due Date" means the date by which the assessee is required as an employer to credit the employees' contribution to the employees account in the relevant fund under the Act. The assessee shall be entitled to deduction of such amount in computing the income referred to in sec. 28 if such sum is credited by the assessee to the employees account in the relevant fund or funds on or before due date i.e. date by which the assessee is required as employer to credit the employees' contribution to the employees account in the relevant fund. We consider that explanation to sec. 36(1)(va) makes it very much clear that for the purpose of clause (va) of sub-section 1 of sec. 36 "Due Date" means the date by which the assessee is required as an employer to credit the employees' contribution to employees account in the relevant fund under any Act. We have also perused the Para 38 of Chapter VI of the of the Employees' Provident Fund Act, 1952 provide that the employer's and the employees' contribution shall be remitted within 15 days of the close of every month refer to close of the month to which the 5 ITA NO. 2199/AHD/2017 A.Y. 2014-15 wages pertain. Therefore, after taking into consideration the decision of Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation wherein it is held that deduction towards employees' contribution is to be made as per the due date prescribed in the relevant Act, we do not find any merit in the submission of the assessee. Accordingly, the appeal of the assessee is dismissed.
7. In the result, the appeal of the assessee is dismissed.
This Order pronounced in Open Court on 23/05/2019
Sd/- Sd/-
(MAHAVIR PRASAD) (AMARJIT SINGH)
JUDICIAL MEMBER ACCOUNTANT MEMBER
Ahmedabad: Dated 23/05/2019
TANMAY TRUE COPY
आदे श क त ल प अ े षत / Copy of Order Forwarded to:-
1. राज व / Revenue
2. आवेदक / Assessee
3. संबं(धत आयकर आयु)त / Concerned CIT
4.आयकर आयु)त- अपील / CIT (A)
5. *वभागीय त न(ध,आयकर अपील"य अ(धकरण, अहमदाबाद /
DR, ITAT, Ahmedabad
6. गाड फाइल / Guard file.
By order/आदे श से,
उप/सहायक पंजीकार
आयकर अपील"य अ(धकरण,अहमदाबाद ।
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