Income Tax Appellate Tribunal - Chennai
Acit, Chennai vs Spell Semiconductor Ltd., Chennai on 23 July, 2019
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH : CHENNAI
ी जॉज माथन, या यक सद य एवं
ी इंटूर रामा राव, लेखा सद य के सम
BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
आयकर अपील सं./I.T.A. No.3263/CHNY/2018
नधा रण वष /Assessment year : 2013-2014.
The Assistant Commissioner M/s. SPEL Semiconductor Ltd,
of Income Tax, Vs. 5, CMDA Industrial Estate,
Corporate Circle 6 (OSD) Maraimalai Nagar,
Chennai 600 034. Kancheepuram,
Tamil Nadu 603 209.
[PAN AAACS 8519B]
(अपीलाथ /Appellant) ( यथ /Respondent)
अपीलाथ# क$ ओर से/ Appellant by : Shri. R. Vijayaraghavan, Adv
&'यथ# क$ ओर से /Respondent by : Shri. R. Clement Ramesh
Kumar, Addl. CIT.
सन
ु वाई क$ तार ख/Date of Hearing : 22-07-2019
घोषणा क$ तार ख /Date of Pronouncement : 23-07-2019
आदे श / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
This is an appeal filed by the Revenue directed against the order of the Commissioner of Income Tax (Appeals)-16, Chennai :- 2 -: ITA No.3263/2018 ('CIT(A)' for short) dated 25.09.2018 for the Assessment Year (AY) 2013-2014.
2. The Revenue raised the following grounds of appeal:
''1. The order of the Ld. CIT(A) is contrary to the law and facts of the case.
2. The Ld. CIT(A) erred in allowing the disallowance u/s.36(1) (va) r.w.s. 2(24)(x) of C72,77,266/- by relying on the decision of Hon'ble Madras High Court in the case & Intelligence India Private Limited in the Mds. 585 and 586 of 2015 & M M.P.No.1 of 2015 dated 24-07-20 15.
2.1. The decision of the CIT(A) based on the decision of Hon'ble Madras High Court in the case of CIT vs. Industrial Security & Intelligence India Private Limited is misplaced in view of the subsequent pronouncement of the Hon'ble Madras High Court in the case of Unifac Management Services (India) vs. DCIT in W.P. No. 5264 of 2018 and 6461 of 2018.
3. For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the Ld.CIT(A) be set aside and that of the Assessing Officer be restored''.
3. The brief facts of the case are as under:
The Respondent-assessee namely M/s. SPEL Semiconductor Ltd., is a company incorporated under the provisions of the Company Act, 1956. It is engaged in the business of manufacturing integrated circuits. The return of income for the assessment year 2013-14 was filed on 16.08.2013 declaring loss of :- 3 -: ITA No.3263/2018 C6,59,44,129/-. Against the said return of income, the assessment was completed by the Deputy Commissioner of Income Tax, Corporate Circle- 6(2), Chennai, (hereinafter referred as ''AO') vide order dated 31.03.2016 passed u/s.143(3) of the Income Tax Act, 1961 (in short ''the Act'') at total loss of Rs.5,86,66,863/-. While doing so, the ld. Assessing Officer made an addition of Rs.72,77,266/- u/s.36(1)(va) r.w.s. 2(24)(x) of the Act on account of belated remittance of employees contribution towards Employees Provident Fund (PF) and Employees State Insurance (ESI) which are not made within the stipulated period under the provisions of respective statute. Aggrieved, the assessee preferred an appeal before the ld.CIT(A), who vide impugned order deleted the addition. Being aggrieved with the order of the ld.CIT(A), the Revenue is before us in the present appeal.
4. Ld. Counsel for the Revenue placed reliance in the decision of Unific Management Services (India) Ltd. Vs.DCIT (supra) and submitted that Revenue had not accepted the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. Industrial Security & Intelligence India Pvt Ltd. (TCS No.585 & 586 of 2015, dated 24.07.2015). According to him, contribution by the employees, towards welfare funds, remitted after due date prescribed in the respective enactments had to be disallowed u/s.36(i) (va) of the Act. :- 4 -: ITA No.3263/2018
5. On the other hand, ld. Authorised Representative strongly supported the order of the ld. Commissioner of Income Tax (Appeals). Further, the ld.AR submitted that the ld. Commissioner of Income Tax (Appeals) deleted the addition by following the judgment of Hon'ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security &Intelligence India Pvt. Ltd in TC Nos.585 & 586 of 2015, dated 24.07.2015, had held that when EPF/ESI contribution are made within due date of filing the return, the same should be allowed as deduction.
6. We have heard the rival contentions and perused the material available on record. The sole issue in the present appeal is whether the employee's contribution to EPF/ESI credited by the Appellant to the employees' account in the relevant PF account on or before due date prescribed under Explantion-1 to Section 36(1)(va) of the Act is entitled to deduction or not. In the present case, admittedly the contribution received from employees'' for PF and ESI are not credited by the respondent to the employee's account within due date stipulated under the relevant statute, but before the due date of filing of return. We find that the decision of the Hon'ble Madras High Court in the case of Unific Management Services (India) Ltd. Vs. DCIT (supra) is by a single judge, however a contrary view was taken by the :- 5 -: ITA No.3263/2018 Division Bench of Hon'ble Jurisdictional High Court in the case of Industrial Security & Intelligence India Pvt Ltd. (supra) wherein the Division Bench held as follows:-
'5. We find that the Tribunal has righty relied on the decision of the Supreme Court in the case of CIT vs. Alom Extrusions Ltd, reported in 319 ITR 306, whereby the Supreme Court held that omission of second proviso to Section 43B and amendment to first proviso by Finance Act, 2003 are curative in nature and are effective retrospectively. i.e. with effect from 01.01.1988 i.e the date of insertion of first proviso. The Delhi High Court in the case of CIT vs. Amil Ltd, reported in 321 ITR 508 held that if the assessee had deposited employee's contribution towards Provident Fund and ESI after due date as prescribed under the relevant Act, but before the due date of filing of return under the Income Tax Act, no disallowance could be made in viepw of the provisions of Section 43B as amended by Finance Act, 2003.
6.In the present case, the assessee had remitted the employees contribution beyond the due date for payment, but within the due date for filing the return of income. Hence, following the above said decisions, we find no reason to differ with the findings of the Tribunal. Accordingly, we find no question of law much less any substantial question of law arises for consideration in these appeals."
Further we note that the decision of the single judge decision of Jurisdictional High Court in the case of Unific Management Services (India) Ltd. (supra) is also reversed subsequently by the Divisional Bench in the case of Unific Management Services (India) Ltd. Therefore, we are bound to follow the decision of the Division Bench in the case of M/s. Industrial Security & Intelligence India Pvt. Ltd :- 6 -: ITA No.3263/2018 (supra). Accordingly, we approve the reasoning given by the ld.CIT(A).
7. In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 23rd day of July, 2019, at Chennai.
Sd/- Sd/-
(जॉज माथन) (इंटूर रामा राव)
(GEORGE MATHAN) (INTURI RAMA RAO)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai
.दनांक/Dated:23rd July, 2019.
KV
आदे श क$ & त1ल2प अ3े2षत/Copy to:
1. अपीलाथ#/Appellant 3. आयकर आयु4त (अपील)/CIT(A) 5. 2वभागीय & त न9ध/DR
2. &'यथ#/Respondent 4. आयकर आयु4त/CIT 6. गाड फाईल/GF