Income Tax Appellate Tribunal - Bangalore
Dcit, Bangalore vs M/S Duster Total Solutions Services ... on 21 April, 2017
ITA.1266/Bang/2015 Page - 1
IN THE INCOME TAX APPELLATE TRIBUNAL
BANGALORE BENCH 'C', BANGALORE
BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER
AND
SHRI. S. JAYARAMAN, ACCOUNTANT MEMBER
I.T.A No.1266/Bang/2015
(Assessment Year : 2012-13)
Deputy Commissioner of Income-tax,
Circle - 2(1) (2), Bengaluru .. Appellant
v.
M/s. Duster Total Solutions Services P. Ltd,
No.40, 4th floor, Zakakia Centre, 100 ft.Road,
Indiranagar, Bengaluru 560 038 .. Respondent
PAN : AACCD5989Q
Assessee by : Shri. Saroj Kumar Parida, CA
Revenue by : Shri. M. K. Biju, JCIT
Heard on : 09.02.2017
Pronounced on : 21.04.2017
ORDER
PER S. JAYARAMAN, ACCOUNTANT MEMBER :
This is an appeal filed by the Revenue against the order of the CIT (A), Bengaluru-2, Bengaluru, dt.09.07.2015, for A. Y. 2012-13.
02. The assessee, a private limited company, engaged in rendering facility management services. While doing the assessment, the AO noted that though it had made deductions from the salary payments of its employees towards contributions to PF and ESI aggregating to Rs.4,28,54,679/-, it had remitted the same to the government account ITA.1266/Bang/2015 Page - 2 beyond the dates prescribed by the respective laws and therefore, he disallowed the deduction claimed u/s 43B (b) on the ground that the retention of the amounts with it beyond the dates due for their remittance to the government account constituted its income for the respective assessment years in terms of section 2(24)(x) read with section 36(1)(va) as it is independent of section 43B. In doing so, the AO rejected the assessee's contention that irrespective of whether the belated remittance of PF /ESI contributions included the contributions made by the employees of the assessee, the deduction claimed was allowable if the deductions had been remitted to the government account within the time allowed for filing the return of income u/s 139(1) of the Act. Thus, according to the AO, only the delay in remitting the contributions of the e m p lo y e r to the government account w it h in the tim e prescribed for filing the return u/s 139(1) was allowable and not the contributions made by the employees withheld by the employer until the date due for filing the return of income u/s 139(1) . Accordingly, he disallowed Rs.4,28,54,679/- representing the amount consisting of the contribution of both the employer and the employees, which had been belatedly remitted to the government account. Aggrieved, the assessee filed an appeal before the CIT (A), Bengaluru-2. The CIT (A), inter alia, relying the Jurisdictional High Court decision in the case of M/s. Essae Teraoka P. Ltd v. DCIT (ITA No.480/2012), reported in [2014] 43 Taxmann.Com 33 (Kar) held that the disallowance is unwarranted. Aggrieved, the Revenue filed this appeal mainly with following ground :
ITA.1266/Bang/2015 Page - 3 "The CIT (A) has erred in relying on the jurisdictional High Court in the case of M/s. Essae Teraka P. Ltd v. DCIT (ITA No.480/2012), by holding that the disallowance made by the AO is unwarranted and by deleting the disallowance of Rs.1,45,12,672/- *(subsequently the CIT (A) corrected it at Rs. Rs.4,28,54,679/- by her order in ITA No 248/DC-11(1)/CIT(A)-2/14-15 dt 24.9.2015) made by the AO since the same case has also not reached its final state."
*supplied by us
03. The relevant portion of the Jurisdictional High Court's decision in the case of M/s. Essae Teraoka P. Ltd v. DCIT, re p o r t e d i n [ 2 0 1 4 ] 2 6 6 CTR 0246 is extracted as under:
19. From bare perusal of sub-para (1) of paragraph- 3 0 , i t i s c l e a r t h a t t h e w o r d contribution is used not only to mean contribution of the employer but also contribution to be made on behalf of the member employed by the employer directly.
20. Paragraph-38 of the PF Scheme provides for Mode of payment of contributions. As provide d in sub- para( 1), the em ploye r shall, be fore paying the m em be r, his wages, de duct his contribution from his wages and de posit the same toge the r with his own contribution and other charges as stipulated therein with the provident fund or the fund under the ESI Act within fifteen days of the closure of every month pay. It is clear that t h e w o r d contribution' used in Clause (b) of Section 43-B of the I T A c t m e a n s t he contribution of the employer and the employee. That being so, if the contribution is made on or before the due date for furnishing the return of income under sub-section(1) of Section 139 of the IT Act is made, the employer is entitled for deduction.
21. The submission of Mr. Aravind, learned counsel for the revenue that if the employer fails to de duct the ITA.1266/Bang/2015 Page - 4 employees' contribution on or be fore the due date, contemplate d under the provisions of the PF Act and the PF Scheme, that would have to be treated as income within the me aning of Se ction 2( 24) ( x) of the IT Act and in which case , the assessee is liable to pay tax on the said amount treating that as his income, deserves to be rejected."
From the above, it is clear that the order of the CIT (A) deserve no interference as the Jurisdictional High Court's above decision is in operation.
04. In the result, the Revenue's appeal is dismissed. Order pronounced in the open court on 21st April, 2017.
Sd/- Sd/-
(VIJAY PAL RAO) (S. JAYARAMAN)
JUDICIAL MEMBER ACCOUNTANT MEMBER
MCN*
Copy to:
1. The assessee
2. The Assessing Officer
3. The Commissioner of Income Tax
4. The Commissioner of Income Tax (A)
5. DR
6. GF, ITAT, Bangalore
By Order
Assistant Registrar.