Income Tax Appellate Tribunal - Delhi
Acit, Circle-19(2), New Delhi vs Pearl Global Industries Ltd, New Delhi on 21 June, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH "SMC", NEW DELHI
BEFORE SHRI H.S. SIDHU, JUDICIAL MEMBER
I.T.A. No. 7614/DEL/2017
A.Y. : 2014-15
ACIT, CIRCLE 19(2), M/S PEARL GLOBAL INDUSTRIES
NEW DELHI VS. LTD.,
ROOM NO. 221, 2ND FLOOR, A-3, NARAINA INDUSTRIAL
CR BUILDING, AREA, PHASE-II,
NEW DELHI - 110 028
NEW DELHI - 110 002
(PAN: AAACM0175F)
(APPELLANT) (RESPONDENT)
Department by : Ms. Ashima Neb, Sr. DR
Assessee by : Sh. R.K. Kapoor, CA
ORDER
This appeal by the Revenue is directed against the Order of the Ld. Commissioner of Income Tax (Appeals)-38, New Delhi dated 20.09.2017 pertaining to assessment year 2014-15 on the following grounds:-
1. On the facts and circumstances of the case, Ld. CIT(A) erred in law by deleting the addition / disallowance of Rs. 38,61,219/- made by the AO u/s.
2(24)(x) r.w.s. 36(1)(va) on account of delayed payment of EPF and ESIC, ignoring the clarification issued by the binding circular no. 22/2015 of CBDT.
2. On the facts and under the circumstances of the case, Ld. CIT(A) has erred in law in deleting the disallowance of Rs. 10,26,674/- u/s. 14A of the I.T. 1 Act ignoring the mandatory nature of Rule 8D and the binding CBDT Circular No. 5/2014 dated 11.2.2014.
3. On the facts and under the circumstances of the case, Ld. CIT(A) erred in law in deleting the disallowance of Rs. 3,10,000/- on account of provision made for wealth tax.
4. The appellant craves to be allowed to add and alter any fresh ground(s) of appeal and / or delete or amend any of the ground(s) of appeal.
2. The brief facts of the case are the assessee filed e-return of income on 30.11.2014 declaring at NIL income. Further revised return was filed on 6.2.2015 declaring again NIL income. The case of the assessee company was selected for 'Complete Scrutiny' under CASS and statutory notice u/s. 143(2) of the I.T. Act was issued on 17.09.2015 and served upon the assessee company. Subsequently, notice u/s. 142(1) of the Act alongwith questionnaire was issued on 13.05.2016 information in support of its claim was called for. In compliance thereto, the A.R. of the assessee attended the proceedings from time to time and filed the details / information etc. AO observed that assessee has not paid the amount of employees contribution towards provident fund /ESI within the due date prescribed as noted in Column No. 16(b) Form 3CD. Hence, the AO was of the view that due date as per explanation to section 36(1)(va) would mean the due date of deposit as per the respective Acts i.e. ESI & EPF. He 2 further draw support from the Circular issued by the CBDT being Circular No. 22/2015, the amount were disallowed by the AO to the extent of Rs. 38,61,219/- and treated the same as assessee's income u/s 2(24)(x) of the Act. AO further observed that assessee company has added back disallowance of Rs. 10,26,674/- on account of u/s 14A in its normal provisions of income. Also a provision for wealth tax of Rs. 3,10,000/- has been added back to its normal income. Since these two disallowance are required to be added back from Book Profit of the assessee company, a show caused vide note sheet dated 23.12,2016 has been given to the A.R. of the assessee company by the AO and in resposne4 to the same the AR filed a note which was not acceptable to the AO, therefore, MAT income was made and disallowance of Rs u/s. 14A r.w. rule 8D amounting to Rs. 10,26,674/- and provision of wealth tax amounting to Rs. 3,10,000/- were made and income of the assessee was assessed at Rs. 38,61,219/- under normal provision and the declared book profit u/s. 115JB at Rs. 14,27,79,863/- was taken as assessed income vide order dated 23.12.2016 passed u/s. 143(3) of the I.T. Act, 1961.
3. Against the aforesaid assessment order, the assessee appealed before the Ld. CIT(A)-38, New Delhi, who vide its impugned order dated 20.9.2017 has partly allowed the appeal of the assessee and deleted the additions in dispute.
4. Aggrieved with the impugned order, the Revenue is in appeal before the Tribunal.
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5. At the time of hearing, Ld. DR relied upon the order passed by the AO and reiterated the contentions raised by the Revenue in the grounds of appeal.
6. On the other hand, Ld. Counsel of the Assessee relied upon the order of the Ld. CIT(A) and reiterated the contentions made before the Ld. CIT(A). He further stated that since the Ld. CIT(A) has passed a well reasoned order which does not need any interference on our part. Hence, the appeal of the Revenue may be dismissed.
7. I have heard both the parties and perused the relevant records available with us, especially the orders of the revenue authorities. Apropos ground no. 1 relating to disallowance of Rs. 38,61,219/- is concerned, I find that Ld. CIT(A) has allowed the relief to the assessee by following the judgment of Hon'ble Delhi High Court on this issue in the case of CIT vs. Aimil Limited 321 ITR 508 (Del) wherein, it has been held that even if the amounts of employee's contribution are deposited beyond the specified dates as per the provisions of PF and ESI Act, the assessee not only pays interest but can also be subject to penal provisions. However, so far as Income Tax Act is concerned, the assessee can get benefit if actual payment has been made before the filing of Income Tax Return. I further note from the assessment order that income tax return has been filed by the assessee on 30.11.2014 and all the payments have been made by the assessee either in 2013 itself or by April, 2014 as per details in the assessment order. The delay in deposit even as per those 4 specific dates range between 1 to 7 days and most of the deposits have been made on 31st or 22nd of the month as against the due date of 20th of each month. In view of the aforesaid facts and circumstances of the case as well as applying the ratio of the aforesaid precedent i.e. CIT vs. AIMIL Ltd. (Supra), I am of the considered view that Ld. CIT(A) has rightly deleted the addition in dispute and allowed this ground which does not need any interference on my part, hence, I uphold the same and reject the ground no.1 raised by the Revenue.
8. Apropos ground no. 2 relating to relief of Rs. 10,26,674/- u/s. 14A of the Act and ground no. 3 relating to disallowance of provision for Wealth Tax of Rs. 3,10,000/- u//s. 115JB of the Act are concerned, I note that the AO noticed that the assessee had made certain disallowance under the normal provisions of the Act. But however the book profits have not been enhanced by these disallowances. The AO, therefore, has enhanced the book profits u/s. 115JB by these two amount. I note that the issue of enhancement of books profits by the amounts of disallowance made u/s. 14A of the Act is squarely covered by the Special Bench of Delhi, ITAT decision in the case of ACIT vs. Vireet Investment Pvt. Ltd. 82 taxman.com 415 (Delhi) ITAT(SB) wherein, it has been held that while calculating Minimum Alternative Tax (MAT), the provisions of section 14A r.w. Rule 8D are not applicable, hence, the question of increasing book profit due to disallowance u/s. 14A does not arise, therefore, Ld. CIT(A) has rightly deleted the disallowance by applying the aforesaid precedent, which does not need any interference on my part, hence, I uphold the 5 same. As regards the enhancement of book profits by the provisions of Wealth Tax is concerned, I find that Ld. CIT(A) has followed the decision of Special Bench of Kolkata, ITAT in the case of Usha Martin Ltd. 81 TTJ 1518 (ITAT-Kol) wherein, the Tribunal has held that Wealth Tax paid or payable or a provision thereof cannot be treated at par with Income Tax Act and the same is not required to be added back to the book profits of the assessee u/s. 115JB of the Income Tax Act. In view of the above discussions and precedents relied upon by the Ld. CIT(A), I am of the considered view that Ld. CIT(A) has rightly allowed these ground which does not need any interference on my part, hence, I uphold the same and reject the ground nos.2 & 3 raised by the Revenue.
9. In the result, the Appeal filed by the Revenue stands dismissed.
Order pronounced on 21/06/2018.
Sd/-
[H.S. SIDHU] SIDHU] JUDICIAL MEMBER Date 21/06/2018 "SRBHATNAGAR"
Copy forwarded to: -
1. Appellant -
2. Respondent -
3. CIT
4. CIT (A)
5. DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Benches 6