Income Tax Appellate Tribunal - Delhi
Qualcomm India Private Limited, New ... vs Assistant Commissioner Of Income Tax , ... on 27 September, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F': NEW DELHI
BEFORE,
SHRI SHAMIM YAHYA, ACCOUNTANT MEMBER
AND
SHRI VIMAL KUMAR, JUDICIAL MEMBER
ITA No.1356/Del/2024
(ASSESSMENT YEAR 2022-23)
Qualcomm India Private Dy.CIT,
Limited, Circle-19(1),
Unit No.201, 2 n d Floor, Vs. Delhi-110002
Tolstoy House,
15 Tolstoy Marg,
New Delhi-110001
PAN:AAACQ0231C
(Appellant) (Respondent)
Assessee by Ms. Nusrat Fareheen, CA &
Sh. Shyam Agarwal
Department by Shri P.N.Barnwal, CIT- DR
Date of Hearing 31/07/2024
Date of Pronouncement 27/09/2024
ORDER
PER VIMAL KUMAR, JM:
The 1. Assessee's Appeal is against order dated 31.01.2024 of Learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as 'Ld. CIT(A)'] in DIN & Order No. ITBA/APL/S/250/2023-24/1060326688(1) arising from order dated 16.03.2023 of the Dy. Director of Income Tax, CPC, Bangalore (hereinafter referred to the 'Ld. AO') u/s 2 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT 143(1) of the Income Tax Act, 1961 (hereinafter referred to as 'the Act') for the Assessment Year 2012-23.
2. Brief facts of case are that assessee had filed its return of income ('ROI') for the Financial Year ('FY') 2021-22 on 24th November, 2022 declaring its total income under the normal provisions of the Income Tax act, 1961 ('the Act') at INR 1902,76,89,334 and a tax liability of INR 4,79,55,85,000. The said tax liability was discharged by the assessee through payment of advance tax of INR 4,77,13,000/-, Self-assessment tax of INR 1,07,85,390/- Tax Collected at Source ('TCS') of INR 1,38,327 and Tax Deducted at Source ('TDS') of INR 1,33,61,280.
3. Pursuant to filing the ROI, the assessee had received an intimation under section 143(1)(a) of the Act dated 14th December, 2022 from Centralized Processing Centre ('CPC') proposing adjustment of disallowance on account of delay in the payment of employees contribution to the provident fund ('PF') as per section 36(1)(va) of the Act amounting to INR 19,48,63,463. The assessee submitted its response on the income tax-filing portal against proposed adjustments on 4th January 2023. Subsequently, the assessee received intimation dated 16th March, 2023 under section 143(1) of the Act for the subject AY wherein the following additions were made to the returned income which resulted in the demand of INR 5,07,14,260 for the subject A.Y i.e. 3 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT a. Disallowance on account of delay in the payment of employees contribution to the Provident Fund ('PF') as per section 36(1)(va) of the Act amounting to INR 19,48,63,463/-.
b. Non-grant of TDS credit amounting to INR 74,688 on interest on electricity deposit under section 194A by Bangalore Electricity Supply Company Limited ('BESCL'). c. Incorrect computation of interest under section 234C of the Act.
4. The assessee filed rectification application under section 154 of the Act dated 14th April 2023 before the CPC and Learned Assessing Officer.
5. Aggrieved by the adjustments made by the CPC in the intimation under section 143(1), the appellant/assessee filed an appeal before the Learned CIT(A), which was dismissed vide order dated 31.01.2024.
6. Appellant/Assessee preferred present appeal.
7. Learned Authorized Representative for the appellant/assessee submitted that Ld. CIT(A) erred in disallowing the employee's contribution of provident fund amounting to INR 19,48,63,463 (INR 19,48,65,610-INR 2147) made by the Company, without appreciating that out of the said amount, an amount of INR 19,43,57,768 was duly debited from the bank account on the due 4 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT date under the provident fund law (15 June 2021 ) and an amount of INR 5,07,842 was due to non-AADHAR seeded cases.
8. Learned Authorized Representative for appellant/assessee submitted that Ld. CIT(A) erred in not considering submissions filed by the appellant/assessee that date of debit from the bank account should be taken as date of payment which was within the due date under provident fund law.
9. Learned Authorized Representative for appellant/assessee submitted that Ld. CIT(A) erred in not considering submissions filed by the appellant that delay in deposit for an amount of INR 5,07,842 was due to non-seeding of Aadhar in the UANs of the Employees and Employees's Provident Fund Organisation had issued a circular dated 31 August, 2021 which relaxes penal provisions for delay in deposit of contribution for the month of May 2021 in case of non-seeding of Aadhar in the UANs.
10. During the AY 2022-23, the appellant has deposited an amount of INR 19,48,65,610 towards Employee's Contribution Provident Fund ('PF') for the month of May,2021. The details of the challans for the month of May, 2021 are as under:
SI. Challan Reference Employee's Total amount Date of Debit in Date of No Number Contribution as per Challan Bank A/c Challan 1 259160621002965 25,66,403 49,94,817 15-Jun-21 16-Jun-21 2 259160621002919 13,10,01,695 24,81,60,668 15-Jun-21 16-Jun-21 3 259160621002953 1 11,56,102 1 21,78,876 15-Jun-21 16-Jun-21 4 259160621002939 5,96,33,568 11,19,58,937 15-Jun-21 16-Jun-21 5 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT 5 259160621005055 57,311 1,12,385 16-Jun-21(Non- 16-Jun-21 seeding of Aadhar) 6 259160621005065 4,50,531 8,20,910 16-Jun-21 (Non- 16-Jun-21 seeding of Aadhar) With regard to Serial No. 1 to 4, the PF Payments amounting to INR 36,72,93,297 bearing challan numbers 259160621002965, 259160621002919, 259160621002953 & 259160621002939 (copy of payment receipt enclosed as Annexure 1) were duly debited from Appellant's bank account on 15 June 2021 i.e., within the due date.
(Refer Page 183 of Factual Paper book) However, the date of e- challans was reflecting as 16 June 2021. The Appellant has deposited the PF contribution pertaining to May 2021 before the due date. However, due to technical glitch on the EPFO Portal on the due date i.e., 15 June 2021 the e-challan was generated only on 16 June 2021.
11. Learned Authorized Representative for appellant/assessee submitted that Para 2 of Circular No. Bkg.1 (4) 2010/ Online Remit/ Vol. II/2570 dated 14th September 2016 issued by the Employee's Provident Fund Organization (Refer Page 182 of Factual Paper Book) which provides that with the implementation of internet banking date of debit from the employer account may be taken as date of payment. The relevant extract of circular is provided below:
6 ITA No.1356/Del/2024Qualcomm India Pvt. Ltd. vs. ACIT "With the Implementation of Internet Banking, the date of debit from the employer's account may be taken as the date of payment for the purpose of levy of damages by way of penalty. Other issues e.g. delay in credit in EPFO account or delay in transfer of funds for the Investment by the bank may be dealt in accordance with banking arrangements with different banks"
12. Learned Authorized Representative for appellant/assessee submitted that since the remittance towards PF contributions was done via internet banking the date of debit i.e., 15 June 2021 ought to be considered as date of payment and not the date reflecting in e- challan generated on EPFO portal. CPC while issuing the intimation under section 143(1) of the Act has considered the date of payment as 16 June 2021 basis the tax audit report in Form 3CD and disallowed the deduction claimed under section 36(1)(va) of the Act. Ld. CIT(A) without understanding the facts of the case and without considering the submissions filed by Appellant in relation to date of debit of amount from the bank account, has relied on the Supreme Court judgement in case of Checkmate services Private Ltd vs CIT-1 [2022] 143 taxmann.com 178 (SC) which states that deduction under section 36(1) (va) of the Act in respect of delayed deposit of amount collected towards employee's contribution to PF cannot be claimed when deposited within the due date of filing of return even when read with Section 43B of the Act. Further, the Apex court had clarified the distinction between section 43B and the non- obstante clause provided in that section by observing that the said clause could not be applied to the deemed income under section 36(1)(va) r.w.s 2(24)(x) of the Act. The CPC and Ld. CIT(A) 7 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT has erred in considering the date of payment mentioned in audit report and following the judgement of Hon'ble Supreme Court in the present case since the Appellant had duly paid the PF contribution on or before the due date specified in the Employee Provident Fund Scheme as specified in explanation 1 to section 36(1)(va) of the Act.
13. Learned Authorized Representative for appellant/assessee submitted that the Hon'ble Delhi Income Tax Appellate Tribunal ('ITAT') in case of FIL India Business & Research Services (P.) Ltd. v. Deputy Commissioner of Income-tax ([2023] 154 taxmann.com 251) (Refer para 8 on page 207 of Legal Paper book has held that Assessee could not be penalized with addition on the account of delayed deposits when Assessee had initially deposited employee contribution before the prescribed due date but due to the glitches on the portal such amount was reversed by Bank. The relevant extracts of the judgment are provided below:
'8. We are therefore of the view that when the assessee had initially deposited the employees dues before the prescribed due dates but due to the glitches at the end of the respective authorities, the amounts were reversed by the bank, then the assessee cannot be penalized with the addition on account of delayed deposits......' Hon'ble High Court of Andhra Pradesh judgment in case of K Venkata Reddy v. Commissioner of Income Tax ([2001] 117 Taxman 141 (Andhra Pradesh)) (Refer para 9 on page 214 of Legal Paper book) wherein it was held that the date of presentation of the 8 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT cheque should be treated as the date of payment. The relevant extracts of the judgment are provided below:
"9... It is settled law that payment of any amount by a cheque, would be the date of the presentation of the cheque if it is not dishonoured. It is not the case of the department that the cheque presented by the petitioner was dishonoured. But their claim is only that the cheque was realized after the prescribed period of 30 days. It is not open to the department to deny the benefit to the petitioner on that ground in view of the above settled position with which we are in agreement"
Hon'ble Delhi ITAT in Assistant Commissioner of Income Tax v. Nokia Siemens Networks (P.) Ltd. ([2017] 88 taxmann.com 571) (Refer para 4 on page 215 and 216 of Legal Paper book) has held that where amount of TDS was debited from bank account of assessee on due date and delay in deposit of such tax by a day was on account of system and connectivity issues at bankers' end, levy of interest under section 201(1) read with section 201(1A) was to be deleted. The relevant extracts of the judgement are provided below:
"On having gone through the material available on record, we find that undisputedly the amount of TDS was debited from the bank account of the assessee on the due date ie. October 7, 2009 and the delay in deposit of such tax by a day was on account of system and connectivity issues at the bankers' end, which was beyond the control of the assessee. The learned Commissioner of Income-tax (Appeals) was thus not justified in holding the levy of interest on the alleged late deposit of tax deducted at source under section 201(1) read with section 201(IA) of the Act. He was, however, justified in deciding the issue of 9 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT delay in payment of TDS in favour of the assessee questioned by the Revenue in view of the decision of the hon'ble Supreme Court in the case of CIT v. Ogale Glass Works Ltd. [1954] 25 ITR 529. "
Hon'ble Delhi ITAT in case of Natma Securities Ltd V. ACIT ([2022] 145 taxmann.com 291) (Refer para 9 and 10 on page 222 of Legal Paper book) has held that no interest could be levied under section 201(1A) when the cheque was deposited within the due date in the Bank, however due to mistake of the Banker such cheque is cleared late. The relevant extracts of the judgement are provided below:
"9.....We have heard the parties perused the material on record and gave our thoughtful consideration. The question as to 'whether the payment would be deemed to have been made on the date of handing over of cheque to the banker or on the date of clearance of cheque by debiting the Assessee's account for the purpose of tendering the TDS......
10. In the instance case, there is One day delay in debiting the amount from the Assessee's bank account which is apparently due to the mistake to the banker. Further by relying on the ratio laid down in the case of Standard Chartered Bank (supra) we are of the opinion that the payment of TDS by the assessee would relate bank to the date of presentation of the cheque i.e. on 31/07/2013 by the assessee to the banker."
14. Learned Authorized Representative for appellant/assessee regarding Serial No. 5 & 6 i.e. challan numbers bearing 259160621005055 & 259160621005065, submitted that payments of PF contribution were made on 16 June 2021 due to Non-seeding 10 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT of Aadhar in the UANs of the Employees. Circular No. BKG- 27/7/2020-G/pt. file dated 01 June 2021 (enclosed as Annexure 2) issued by EPFO which stated that employers shall be allowed to file ECR only for those employees whose Aadhar numbers are seeded and verified with UAN as on 01 June 2021. The relevant extracts of the circular is provided below:
'(2)... section 142 of Chapter XIV of the Social Security Code, includes the provisions related to Aadhaar, wherein the beneficiary under this Code or rules, regulations or Schemes made or framed there under, shall establish his identity or, as the case may be the identity of his family members or dependents through Aadhaar number. (3) In compliance of the above provision in EPFO, the Competent Authority has approved that the ECR shall be allowed to be filed only for those members, whose Aadhaar numbers are seeded and verified with the UANs, w.e.f. 01.06.2021' (4) Accordingly, the employers shall be allowed to file the ECR only for the UANs seeded with Aadhaar, w.e.f. 01.
06.2021...
Appellant was unable to file ECR for month of May 2021 for the employees whose Aadhar numbers were not seeded and verified with the UANs on/ before the due date i.e., 15 June 2021. On the due date of 15 June 2021, the EPFO vide Circular No. WSU/15(1)2019/ATR/529 (enclosed as Annexure 3) had extended the due date for mandatory seeding of Aadhar by Individuals till 01 September 2021. The relevant extract of the circular is:-
In partial modification of the Circular under Reference, it is informed that the dates in Para 3 and 4 (of the 11 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT referred Circular) mentioned as 01.06.2021 may be read as 01.09.2021' Pursuant to the above extension, the Appellant was able to generate the ECR and remit the contribution on 16 June 2021. The copy of challan evidencing the contribution made on account of employees whose Aadhar is not linked to UAN is enclosed as Annexure 4. Considering the challenges faced by the employers, the EPFO subsequently issued Circular No. C-I/MISC/Pandemic Relief/2021/Vol-1 dated 31 August 2021 (Refer Page 185 of Factual Paper book) clarifying that delay in deposit of contribution for the month of May 2021 in case non-seeding of Aadhar in the UANs should not be considered as default by the employer. The relevant extract of the circular is reproduced below for your reference:
The Field Offices are advised that delay in the filing of ECRs for wage month of May 2021 statutorily due on or before 15.06.2021 only in respect of EPF members due to non-seeding of Aadhaar in the UANs should not be presumed as employer's default and to appreciate each case in its own facts under Section 14B of the EPF & MP Act' As per above circular and challan evidencing the payment made towards PF contribution for employees whose Aadhar is not linked to their UAN, and due to persistent technical issues on the EPFO portal which were beyond the control of the Appellant on the due date had prevented the Appellant from generating the challans pertaining to employees whose Aadhar is not seeded with their 12 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT UAN account. Hence considering the circumstances were beyond the control of the Appellant, the Ld. CIT(A) ought to have granted relief from the aforementioned disallowance.
15. Learned Authorized Representative for appellant/assessee submitted that, for the impugned AY the interest under section 234C of the Act was computed at INR 66,96,150 (Refer Page 33 of Factual Paper book) and was duly paid by the Appellant in its return of income. The provisions of section 234C of the Act states that, where an Assessee who is liable to pay advance tax under section 208 of the Act has failed to pay such advance tax then the Assessee shall be liable to pay simple interest at the rate of one percent per month for a period as specified on such shortfall of the tax due on the returned income. Therefore, the Appellant was liable to interest under section 234C of the Act on tax due on returned income, which the Appellant had duly considered and remitted to the credit of revenue while filing return of income. The Hon'ble Delhi ITAT in case of Salesforce.com Singapore Pte. Ltd V. ACIT, Circle- 3(1)(2) (ITA no. 1923/Del/2022) (Refer para 5.1 on page 276 of Legal Paper book) has held that interest u/s 234C of the Act can be levied only on the returned income. The relevant extracts are reproduced below:
"5.1 In view of our decision in ground nos. 2 to 6, the issue has become academic. Suffice to say, interest u/s 234C of the Act can be levied only on the returned income."13 ITA No.1356/Del/2024
Qualcomm India Pvt. Ltd. vs. ACIT Considering the provision of section 234C of the Act the Appellant humbly requests your honours to direct the Ld. AO/CPC to restrict the interest under section 234C of the Act to the returned income.
16. Learned Authorized Representative for Department relied on impugned order.
17. From examination of record in light of above said rival contentions it is crystal clear that with regard to Serial No. 1 to 4 the PF payments were duly debited from appellant's account on 15.06.2021 i.e. within the due date refer to page 183 of PB. Appellant deposited the PF Contribution pertaining to May 2021 before the due date. However due to technical glitch on the EPFO Portal on the due date i.e. 15 June, 2021 the e-challan was generated only on 16 June, 2021. As per ratio of Judgment in FIL India Business & Research Services (P.) Ltd. v. Deputy Commissioner of Income-tax, it is well settled that when the assessee had deposited the employees dues before the prescribed due dates but due to the glitches at the end of the respective authorities, the amounts were reversed by the bank, then the assessee cannot be penalized with the addition on account of delayed deposits.
18. Regarding Serial No. 5 & 6 i.e. challan numbers bearing 259160621005055 & 259160621005065, submitted that payments of PF contribution were made on 16 June 2021 due to Non-seeding 14 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT of Aadhar in the UANs of the Employees. As per Circular dated 01/06/2021 and 31/08/2021 and Challan of payments made towards PF Contribution for Employees whose Adhar is not linked to UAN Account as well as due to technical issues on EPF Portal which were beyond control of appellant on the due date had prevented the appellant from generating the Challans to Employees whose Adhar was not seeded with their UAN Account. Therefore, Appellant deserves relief qua amounts to Rs. 19,43,57,768/- i.e. Employees Contribution towards Provident Fund and allow deduction u/s 36(1)(va) of the Act. Appellant also deserves relief of Employees Contribution earned to Rs. 66,96,150/-. For the delayed contribution in accordance with Circular dated 31/08/2021 issued by Employees Provident Fund Organization and deduction allowed u/s 36(1)(va) of the Act.
19. In the relevant Assessment Year interest u/s 234C was computed at INR 66,96,150/- wad duly paid by the appellant in its return. The provision of Section 234C of the Act states that, where an Assessee who is liable to pay advance tax under Section 208 of the Act has failed to pay such advance tax then the assessee shall be to pay simple interest at the rate of one percent per month for a period as specified on such shortfall of the tax due on the returned income. Therefore, the Appellant was liable to interest under section 234C of the Act on tax due on returned income, which the Appellant had duly considered and remitted to the credit of revenue while filing return of income. As per ratio of 15 ITA No.1356/Del/2024 Qualcomm India Pvt. Ltd. vs. ACIT Salesforce.com Singapore Pte. Ltd V. ACIT (supra), it is well settled that interest u/s 234C of the Act can be levied only the returned income. Therefore, the Ld. A.O./CPC are required to restrict the interest on the returned income u/s 234C of the Act.
20. In the result, the appellant/assessee's appeal is allowed impugned orders are set aside. Ld. A.O. is directed to restrict the interest u/s 234C of the Act to the returned income in accordance with law.
Order pronoun on 27th September, 2024.
SdSsd Sd/- Sd/-
(SHAMIM YAHYA) (VIMAL KUMAR)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Dated: 27/09/2024
Pk/R.N sps
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR
ITAT, NEW DELHI
16 ITA No.1356/Del/2024
Qualcomm India Pvt. Ltd. vs. ACIT