Income Tax Appellate Tribunal - Chennai
Acit Corp Circle 1 (1), Chennai vs M/S Amtex Info Solutions Pvt Ltd, ... on 12 September, 2024
आयकर अपीलीय अिधकरण, 'डी' ायपीठ, चे ई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'D' BENCH: CHENNAI
ी यस यस िव ने रिव, ाियक सद एवं ी जगदीश, लेखासद के सम(
BEFORE SHRI SS VISWANETHRA RAVI, JUDICIAL MEMBER AND
SHRI JAGADISH, ACCOUNTANT MEMBER
आयकर अपील सं ./ITA No.546/Chny/2018
िनधा;रण वष; /Assessment Year: 2013-14
The Asst. Commissioner of Income M/s. Amtex Info Solutions Pvt.
Tax, Vs. Ltd.,
Corporate Circle-1(1), Plot No.54, 27th Street,
Chennai. Sri Krishna Nagar, Maduravoyal,
Chennai - 600 095.
[PAN: AAICA 6676K]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथH की ओर से/ Assessee by : None
JKथH की ओर से /Revenue by : Shri G. Suresh. JCIT
सुनवाई की तारीख/Date of Hearing : 02.07.2024
घोषणाकी तारीख /Date of Pronouncement : 13.09.2024
आदेश / O R D E R
PER JAGADISH, A.M :
Aforesaid appeal filed by the Revenue for Assessment Year (AY) 2013-14 arises out of the order of Learned Commissioner of Income Tax (Appeals)-, Chennai [hereinafter "CIT(A)"] dated 12.12.2017 in the matter of assessment framed by the Assessing Officer [A.O] u/s. 143(3) of the Act on 30.03.2016.
ITA No.546/Chny/2018
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2. The grounds of appeal raised by the Revenue are as under:
"1. The order of the learned CIT(A) is contrary to law and facts and circumstances of the case.
2.1 The learned CIT(A) erred in deleting the addition to the tune of Rs.6.56 crores made by the AO treating the loan received by the assessee as deemed dividend u/s.2(22) (e) of the Act.
2.2 The Learned CIT(A) erred in holding that the provisions of section 2(22)(e)_ of the Act are not applicable to the loan transaction entered between the assessee company and its related concern, without appreciating the fact that the advances can only be treated as deemed dividend.
2.3 The learned CIT(A) failed to appreciate that the Apex Court decision in the case of Madhur Housing & Development Company (Civil Appeal No. 3961 of 2013 dated 05.10.2017) which upheld the decision of the Delhi HC in the case of Ankitech Pvt Ltd 11 TaXmann.com 100 (2011) wherein it was held that provisions of Sec.2(22) (e) could be invoked only if the recipient of the loan was both a beneficial and registered shareholder in the lender company, relied upon upon in the instant case has been subsequently held by the Apex Court as incorrect and requiring reconsideration vide its decision in the case of M/s. National Travel Services (Civil Appeal No.2068-2071 of 2012) dated 18.01.2018.
2.4 The disallowance made by the A0 invoking provisions of Sec.2(22) (e) of the Act in respect of the impugned loan transaction was required to be upheld in view of the Apex Court decision in the case of M/s. National Travel Services cited supra. 3.1 The learned CIT(A) erred in deleting the disallowance made u/s.36(1) (va) read with section 2(24)(x) of the I.T. Act to the tune of Rs.1,05,750/-, towards non-payment of employees part of contribution to EPF and ESI, by the assessee. 3.2 The learned CIT(A) failed to appreciate the fact that unlike the Employers contribution, the employees part of contribution to EPF and ESI are not allowable U/s. 43B of the IT Act, if the said contributions are not paid within the due dates, as specified in the respective Acts, and such unpaid employees contributions are liable for disallowance U/s. 36(1)(va) read with section 2(24) (x) of the Act?.
3.3 The learned CIT(A) erred in not appreciating the fact that the decision of the Hon'ble Supreme Court in the case of M/s. Alom employers part of EPF and ESI relates to the employers Extrusions relates to the Contribution and not with regard to ITA No.546/Chny/2018 :- 3 -:
Employees Contribution to ESI and EPF, and this is further evidenced by the Boards communication in circular No. 22 of 2015 dated 17.12. 2015.
3.4 The learned CIT(A) erred in allowing the employees part of contribution to ESI and EPF u/s. 43B of the Act, which is actually applicable to employers part of contribution, then the provisions of section 36(1) (va) and 2(24)(x) of the Act, which governs the situation arising out of non-payment of employees contribution to EPF and ESI, Would not have any applicability and become redundant? 4.1 For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer restored."
3. Ground No.1 & 4 are general in nature hence, no adjudication is required.
4. Ground No.2 relates to deletion of addition on account of deemed dividend amounting to Rs. 6,56,54,278/- by the Ld. CIT(A).
The A.O has made the addition of unsecured loan from Amtex Software Solutions Pvt. Ltd amounting to Rs. 6,56,54,278/- invoking the provisions of section 2(22)(e) of the Act as there is a common shareholder, Shri Sai Nadh Pokala, holding more than 20% shares in both the companies. The A.O has held that the unsecured loan is deemed dividend invoking the provisions of Section 2(22)(e) of the Act. The Ld. CIT(A) relying upon the decision of Hon'ble Supreme Court in the case of CIT vs. Madhur Housing and Development Company Ltd. in Civil Appeal No.3961 of 2013 dated 5th October, 2017 has deleted ITA No.546/Chny/2018 :- 4 -:
the addition as the Hon'ble Supreme Court has held that the provisions of Section 2(2)(e) of the Act would be applicable only in the hands of registered shareholder and in the present case, the assessee is not a shareholder of M/s. Amtex Software Solutions Pvt. Ltd. Now, the Department is in appeal on the ground that the Hon'ble Supreme Court in the case of M/s. National Travel Services in Civil Appeal No.2068- 2071 of 2012 dated 18.01.2018 (SC) has held that the decision in the case of CIT vs. Madhur Housing and Development Company Ltd., supra, is not correct and requires re-consideration.
5. The Ld. DR reiterated the ground and stated that reliance of Ld. CIT(A) in the case of CIT vs. Madhur Housing and Development Company Ltd., supra, was not correct in view of the observation made by Hon'ble Apex Court in the case of M/s. National Travel Services, supra.
6. The Ld. AR, on the other hand, has submitted that in the case of M/s. National Travel Services, supra, has referred the matter to the Hon'ble Chief Justice of India in order to constitute larger Bench for re-
consideration of the issue whether the shareholder should be both registered and beneficiary. The Ld. Counsel invited our attention to ITA No.546/Chny/2018 :- 5 -:
the fact that the assessee in the above case has withdrawn the appeal referred by the Hon'ble Supreme Court to the Hon'ble Chief Justice of India for constitution of larger Bench by opting under direct taxes VSVS, 2020.
7. We have heard the rival submissions, and perused the materials available on record. The A.O has invoked the provisions of Section 2(22)(e) of the Act as there is a common shareholder having share more than 20% in assessee's company and M/s. Amtex Software Solutions Pvt. Ltd. from which unsecured loan of Rs.6,56,54,278/- was taken. The Ld. CIT(A) has allowed the relief relying on the decision of Hon'ble Supreme Court in the case of CIT vs. Madhur Housing and Development Company Ltd., supra. The Department is in appeal as the Hon'ble Apex Court in the case of M/s.
National Travel Services, supra, has referred the matter to the larger Bench, but as stands now the appeal before Larger Bench of Hon'ble Supreme Court has been withdrawn by the assessee and therefore, the decision of Hon'ble Apex Court in CIT vs. Madhur Housing and Development Company Ltd., supra becomes the binding decision. The Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Checkpoint Apparel Labelling Solutions India Ltd., [2020] 120 ITA No.546/Chny/2018 :- 6 -:
taxmann.com (Mad.) has also held that if recipient of the loan is not a shareholder of a company the loan cannot be assessed as deemed dividend. In view of the above, we do not find any infirmity in the order of Ld. CIT(A) and therefore, the ground No.2 of the Revenue is dismissed.
8. Ground No.3 is against the deletion of disallowance of employees contribution to PF & ESI amounting to Rs. 1,05,750/- not paid before the due date prescribed under the relevant statute, though has been paid within due date provided for furnishing the return of income u/s.139(1) of the Act. The A.O has made the disallowance of employee contribution to PF and ESI of Rs. 1,05,750/- on the ground that the same has not been deposited before the due date of prescribed under the relevant statute. The Ld. CIT(A) has relying on the decision of Hon'ble Madras High court CIT vs. Industrial Security and Intelligence India (P.) Ltd. and the decision of Hon'ble Supreme Court in the case of CIT vs. Alom Extrusions Ltd. has deleted the addition as the employee contribution has been paid before due date of filing the return of income.ITA No.546/Chny/2018
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9. The Ld. DR has submitted that the Hon'ble Supreme Court in the case of CIT vs. Alom Extrusions, supra, relevant to employer part of PF & ESI contribution and the issue is now settled by the decision of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. Vs CIT in Civil Appeal No.2833 of 2016 dated 12.10.2022 (SC).
10. The Ld. AR, on the other hand, relied on the order of the Ld. CIT(A).
11. We have heard the rival submissions, and perused the materials available on record. The Ld CIT(A) has allowed the appeal on the basis of decision of Hon'ble Madras High court CIT vs. Industrial Security and Intelligence India (P.) Ltd. and other judgments where Honorable courts have held that deduction u/s.36(1)(va) of the employees' share of EPF/ ESIC etc. even if the deposit was made after the due date under respective Acts but before the time limit provided for filing the return u/s.139(1) of the Act are allowable.
However this view has since been reversed by the Hon'ble Supreme Court in the case of Checkmate Services P. Ltd.(SC). In view of the judgment of the Hon'ble Supreme Court, which is binding under Article 141 of the Constitution, this issue is now settled in revenue's favor by ITA No.546/Chny/2018 :- 8 -:
the cited decision of Hon'ble Supreme Court in the case of Checkmate Services P. Ltd. Vs CIT, supra, and therefore, the disallowance of employees contribution to PF & ESI amounting to Rs.1,05,750/- stands confirmed. Hence, ground No.3 of the Revenue is allowed.
12. In the result, the appeal filed by the Revenue is partly allowed.
Order pronounced on 13th September, 2024.
Sd/- Sd/-
(यस यस िव ने रिव) (जगदीश)
(SS Viswanethra Ravi) (Jagadish)
याियक सद य / Judicial Member लेखा सद य /Accountant Member
चे ई/Chennai, दनांक/Dated: 13th September, 2024. EDN/-
आदेश क ितिलिप अ ेिषत/Copy to:
1. अपीलाथ /Appellant
2. थ /Respondent
3. आयकर आयु /CIT, Chennai
4. िवभागीय ितिनिध/DR
5. गाड फाईल/GF