Income Tax Appellate Tribunal - Hyderabad
Gvk Technical & Consultancy Pvt. Ltd., ... vs Department Of Income Tax on 24 March, 2016
IN THE INCOME TAX APPELLATE TRIBUNAL
HYDERABAD BENCHES "A" : HYDERABAD
BEFORE SMT. P. MADHAVI DEVI, JUDICIAL MEMBER
AND
SHRI S. RIFAUR RAHMAN, ACCOUNTANT MEMBER
ITA.No.1248/Hyd/2015
Assessment Year 2012-2013
The ACIT, Circle-2(2), M/s. GVK Technical and
Hyderabad. vs. Consultancy P. Ltd.,
Secunderabad - 003
PAN AACCG1259Q
(Appellant) (Respondent)
For Revenue : Mr. M. Sitaram
For Assessee : Mr. V. Sivakumar
Date of Hearing : 16.03.2016
Date of Pronouncement : 24.03.2016
ORDER
PER SMT. P. MADHAVI DEVI, J.M.
This is Revenue's appeal for the A.Y. 2012- 2013. In this appeal, the Revenue is aggrieved by the Order of the CIT(A) in allowing the appeal of the assessee on the issue of remittance of ESI and P.F. under section 36(1)(va) of the I.T. Act, 1961, though the Explanation of the said Section specifies due date for remittance.
2. Brief facts of the case are that the assessee company which is engaged in the business of Engineering and Project Consultancy, filed its return of income for the A.Y. 2012-2013 on 28.09.2012 declaring total income of Rs.4,41,85,000. During the assessment proceedings 2 ITA.No.1248/H/2015 M/s. GVK Technical and Consultancy Pvt. Ltd., Secunderabad.
under section 143(3) of the I.T. Act, the A.O. observed that the assessee has paid employees share of contribution of P.F. belatedly to the extent of Rs.75,56,654. Observing that the assessee has to remit the said sum to the employees account in the P.F. on or before the due date as prescribed under the Provident Fund Act, he held that it is not allowable under section 36(1)(va) of the Act. Assessee was issued a show cause notice as to why the above mentioned sum of Rs.75,56,654 should not be disallowed under section 36(1)(va). In response to the said show cause notice, the assessee, vide letter dated 21.01.2015, submitted that the employees contribution to P.F. and ESI are also covered under section 43B and no disallowance is required if the payments are made before the due date of filing of the Income Tax Return. The assessee also relied upon various judicial precedents to the effect that employees contribution are also to be allowed, if paid before the due date of filing of the income tax returns since they come under section 43B of the Income Tax Act. The A.O. however, was not satisfied with the assessee's contentions and holding that the provisions of section 36(1)(va) and section 43(B)(b) of the Act are distinct, the employees contribution is not allowable under section 43(B)(b) of the Act. He, accordingly, disallowed the sum of Rs.75,56,654 and brought it to tax. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who allowed the same by following the following decisions -
3ITA.No.1248/H/2015 M/s. GVK Technical and Consultancy Pvt. Ltd., Secunderabad.
(i) CIT vs. Sabari Enterprises (2007) 298 ITR 141 (Kar.).
(ii) Magus Customers Dialog P. Ltd., (2015) 371 ITR 242 (Kar.)
(iii) Yum Restaurant India P. Ltd., (2015) 371 ITR 139 (Del.)
(iv) CIT vs. Nipso Poly Fabriks Ltd., (2013) 350 ITR 327 (HP)
(v) CIT vs. Nuchem Ltd., (2015) 371 ITR 164 (P&H).
3. Against the relief granted by the Ld. CIT(A), the Revenue is in appeal before us. The Ld. D.R., reiterated the findings of the A.O. while the Ld. Counsel for the assessee, relied upon the order of the Ld. CIT(A). The Ld. D.R. has also placed reliance upon the decision of the Hon'ble Kerala High Court in the case of Merchem Ltd., (2015) 61 taxmann.com 119 (Kerala) in support of his contention.
4. Having regard to the rival contentions and the material on record, we find that the Hon'ble Supreme Court in the case of Alom Extrusions 319 ITR 306 has held that the contributions to P.F. and ESI are allowable under section 43B of the Act if they are paid before the due date of filing of the return of income. Thereafter, the issue arose as to whether the decision of Alom Extrusions (cited supra) was applicable only to the employer's contribution and not to the employees contribution. Various High Courts have held that the decision of 4 ITA.No.1248/H/2015 M/s. GVK Technical and Consultancy Pvt. Ltd., Secunderabad.
Hon'ble Supreme Court in the case of Alom Extrusions (cited supra) is applicable to both the employer's as well as employees' contribution to P.F. and ESI. The respective High Courts, in the following cases, have held that the employees contribution is also an allowable deduction, provided, it is paid before the due date of filing of the return.
(i) CIT vs. Sabari Enterprises (2007) 298 ITR 141 (Kar.).
(ii) Magus Customers Dialog P. Ltd., (2015) 371 ITR 242 (Kar.)
(iii) Yum Restaurant India P. Ltd., (2015) 371 ITR 139 (Del.)
(iv) CIT vs. Nipso Poly Fabriks Ltd., (2013) 350 ITR 327 (HP)
(v) CIT vs. Nuchem Ltd., (2015) 371 ITR 164 (P&H).
4.1. We find that the Coordinate Bench of this Tribunal in the case of VBC Industries Limited, Hyderabad vs. DCIT, Circle-3(3), Hyderabad in ITA.Nos.143 & 144/H/2013 etc., dated 08.05.2015 and also in the case of M/s. Veljan Denison Limited, Hyderabad vs. Addl. CIT, Range-3, Hyderabad in ITA.No.1251/Hyd/2015 dated 16.12.2015, has followed the Hon'ble Karnataka, Rajasthan and Himachal Pradesh High Courts to hold that the contribution of the employees contribution to P.F. and ESI is also allowable if it is paid before the due date of filing of the income tax 5 ITA.No.1248/H/2015 M/s. GVK Technical and Consultancy Pvt. Ltd., Secunderabad.
return. In the case before us, we find that the assessee has filed its return of income on 28.09.2012 i.e., before the due date of filing of the return of income while the payments were made by 05.01.2012. Therefore, the above judgments are applicable to the facts of the case before us and we do not see any reason to interfere with the order of the Ld. CIT(A). Accordingly, Revenue's appeal is dismissed.
5. In the result, appeal of the Revenue is dismissed.
Order pronounced in the open Court on 24.03.2016.
Sd/- Sd/- (S. RIFAUR RAHMAN) (SMT. P. MADHAVI DEVI) ACOUNTANT MEMBER JUDICIAL MEMBER Hyderabad, Dated 24th March, 2016 VBP/- Copy to :
1. The ACIT, Circle-2(2), 8th Floor, 'B' Block, Room No.824, I.T. Towers, A.C. Guards, Hyderabad-004.
2. M/s. GVK Technical and Consultancy Pvt. Ltd., Paigah House, 156-159, Sardar Patel Road, Secunderabad - 500 003.
3. CIT(A)-II, Hyderabad.
4. Pr. CIT-II, Hyderabad.
5. D.R. ITAT 'A' Bench, Hyderabad.
6. Guard File