Income Tax Appellate Tribunal - Hyderabad
Nagarjuna Engineering Constructions, ... vs Acit, Circle-14(1), Hyderabad, ... on 30 November, 2017
ITA No 766 of 2017 Nagarjuna Engg Con Hyderabad.
IN THE INCOME TAX APPELLATE TRIBUNAL
Hyderabad ' B ' Bench, Hyderabad
Before Smt. P. Madhavi Devi, Judicial Member
AND
Shri S.Rifaur Rahman, Accountant Member
ITA No.766/Hyd/2017
(Assessment Year: 2013-14)
M/s. Nagarjuna Vs ACIT Circle 14(1)
Engineering Constructions Hyderabad
Hyderabad
PAN: AADFN 2846 E
(Appellant) (Respondent)
For Assessee : Shri M.Chandramouleswara Rao
For Revenue : Shri Ramakrishna Bandi, DR
Date of Hearing: 30.11.2017
Date of Pronouncement: 30.11.2017
ORDER
Per Smt. P. Madhavi Devi, J.M.
This is assessee's appeal for the A.Y 2013-14 against the order of the CIT (A)-6, Hyderabad, dated 6.2.2017. In this appeal, the assessee is aggrieved by the order of the learned CIT (A) dated, 6.2.2017 in confirming the assessment order disallowing the payment of Employees' contribution to PF and ESIC with delay, but before the due date for filing of the Income- tax returns u/s 139(1) of the Act.
2. Brief facts of the case are that during the course of assessment proceedings u/s 143(3) of the Act, the AO noticed that the employees' contribution to PF of Rs.43,01,134 and ESI of Rs.45,000 was paid beyond the prescribed due date but the assessee has not added back the same to the total income in its Page 1 of 5 ITA No 766 of 2017 Nagarjuna Engg Con Hyderabad.
computation of income. The assessee's explanation as to why disallowance should not be made was called for. Assessee relied upon various case law in support of his claim that if it is paid before the due date of filing of the return u/s 139(1) of the Act, it should be allowed. The AO was not convinced with the contention of the assessee. He observed that there are different due dates for paying ESIC and PF and therefore, as per the amended proviso to section 43B r.w.s. 36(1)(va), the same is not allowable as expense. Further, he also observed that u/s 2(24)(x) of the Act, if any sum is received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of Employees' State Insurance Act, or any other fund for welfare of such employee is treated as income in his hands, it is allowable as an expenditure only if it is paid into the govt. a/c on or before the due date prescribed under the relevant Act. Accordingly, he disallowed the employees' contribution to the PF & ESIC and brought it to tax.
3. Aggrieved, the assessee preferred an appeal before the CIT (A) by relying upon the decision of the Hon'ble Andhra Pradesh High Court in the case of Hitech(India) Pvt. Ltd and others vs. UOI, reported in (1997) 227 ITR 446 and also the decision of the Hon'ble Supreme Court in the case of CIT vs.Vinay Cement Ltd (2009) 313 ITR (St.). The CIT (A) however, was not convinced with the arguments of the assessee and held that the decisions relied upon by the assessee are not applicable to the assessee's case. She relied upon the decision of the Hon'ble Kerala High Court in the case of CIT vs. Merchem Ltd reported in (2015) 378 ITR 0443 which has distinguished the decision of the Hon'ble Supreme Court in the case of Alom Extrusions for arriving at a Page 2 of 5 ITA No 766 of 2017 Nagarjuna Engg Con Hyderabad.
conclusion that the employees contribution is not allowable if it is not paid within the prescribed due date. She also relied upon the decision of the Hon'ble Gujarat High Court in the case of CIT vs. Gujarat State Road Transport Corporation (2014) 57(I)ITCL 72 (Guj. High Court). Therefore, she confirmed the disallowance and the assessee is in second appeal before us.
4. The learned Counsel for the assessee submitted that both the employees and employer's contribution is to be remitted to the Govt. A/c within the prescribed date or before the due date for filing of the return u/s 139(1) of the Act. He submitted that the Hon'ble Supreme Court in the case of Alom Extrusions has held that both the employer's as well as employees contribution which is paid before the due date of filing of return u/s 139 (1) is allowable u/s 43B of the Act. He also relied upon the judgment of the Hon'ble Andhra Pradesh High Court in the case of Hitech(India) (P) Ltd (cited Supra) wherein the constitutional validity of section 43B and explanation to clause (va) of sub- section (1) of section 36 were under consideration and the Hon'ble High Court has brought out that para materia both the sections are having the same effect and are not unconstitutional. Further, he also placed reliance upon the decision of the Coordinate Bench of this Tribunal in the case of ACIT vs. Tanla Solutions Ltd (ITA No.879/Hyd/2015) and the decision of the Coordinate Bench at Visakhapatnam in the case of DCIT vs. Eastern Power Distribution Company of A.P. Ltd (ITA No.609/Vizag/2014).
5. The learned DR, on the other hand, supported the orders of the authorities below and tried to bring out the distinction between the proviso to section 43B and section Page 3 of 5 ITA No 766 of 2017 Nagarjuna Engg Con Hyderabad.
36(1)(va) of the Act. He also relied upon the judgment of the Hon'ble Gujarat High Court referred to by the CIT (A) in her order.
6. Having regard to the rival contentions and the material on record, we find that as regards the allowability of deduction u/s 43B of the Act of Employer's contribution to PF and ESIC, the Hon'ble Supreme Court has held that if it is paid on or before the due date of the filing of the return u/s 139(1) of the Act, it is allowable. As regards the applicability of such proviso to the disallowance made u/s 36(1)(va) of the Act, we find that decisions are both against and in favour of the assessee. We find that the Coordinate Bench of this Tribunal at Visakhapatnam in the case of DCIT vs. Eastern Power Distribution Company of A.P. Ltd (cited Supra) has considered all the above decisions referred to by the assessee as well as the DR and has held that there is no distinction between the employees' and employer's contribution of PF and if the total contribution is deposited on or before the due date of furnishing the return u/s 139(1) of the Act, then no disallowance can be made of employees contribution to PF. Respectfully following the decision of the Coordinate Bench on similar set of facts, this appeal of the assessee is allowed.
7. In the result, assessee's appeal is allowed.
Order pronounced in the Open Court on 30th November, 2017.
Sd/- Sd/-
(S.Rifaur Rahman) (P. Madhavi Devi)
Accountant Member Judicial Member
Hyderabad, dated 30th November, 2017.
Vinodan/sps
Page 4 of 5
ITA No 766 of 2017 Nagarjuna Engg Con Hyderabad.
Copy to:
1 M.Chandramouleswara Rao, CA, C-3 Skylark Apartments, Basheerbagh, Hyderabad 500029 2 ACIT, Circle 14(1) Hyderabad 3 CIT (A)-6, Hyderabad 4 Pr. CIT - 6 Hyderabad 5 The DR, ITAT Hyderabad 6 Guard File By Order Page 5 of 5