Sec 35D: Benifit once granted in initial year cannot be denied later
IN THE INCOME TAX APPELLATE TRIBUNAL
The Relevant Text of the Order as follows :
15. For the reasons discussed above, therefore, we do not see any reason to interfere with the order of the Ld. CIT(A). Therefore, ground no. 1 of the Revenue’s appeal is dismissed.
16. Ground No. 2 relates to disallowance u/s. 14A of the Act read with Rule 8D of the Income-tax rules, 1962 (hereinafter referred to as the “Rules”). The AO found that the assessee had earned dividend income of Rs. Rs.9,47,93,946/- which was claimed as exempt u/s. 10(34)/10(35) of the Act. In relation to earning of this income, the assessee had suomoto computed and disallowed expenditure of Rs.63,47.905/- u/s 14A of the Act. When enquired regarding the basis of disallowance by the AO, the assessee explained that the disallowance has been worked out in accordance with Rule 8D with reference to the investments which actually yielded dividend income. The AO, however was not agreeable to the computation of the assessee and computed disallowance u/s 14A read with Rule 8D with reference to all investments, which worked out to Rs.l,60,98,204/-. On appeal the Ld. CIT(A) found merit in the disallowance of Rs.63,47,905/- which was suo moto disallowed and offered by the assessee and directed the AO to verify the same and restrict the disallowance under Rule 8D(2)(iii) by considering only those investments which have yielded tax free income during the year. Aggrieved by this order of Ld. CIT(A), the Revenue is in appeal before us.
17. We have heard rival submissions and gone through the facts and circumstances of the case. We note that the Ld. ClT(A) directed the AO to restrict the disallowance under Rule 8D(2)(iii) by considering only those investments which have yielded tax free income during the year. We find that this direction of the Ld. ClT(A) is in accordance with the decision rendered by this Tribunal in the case of REI Agro Ltd. Vs. DClT in ITAT No.1331/K01/2011, which has since been upheld by the Hon’ble Calcutta High Court. Since the Ld. CIT(A) adjudicated the issue, as stated above, by following the decision the Tribunal, Kolkata Benches following the dictum of law laid in REI Agro Ltd. (supra), we do not see any reason to interfere with the order of the Ld. CIT(A) on this issue. Therefore, this ground of the Revenue is dismissed.
18. Ground No. 3 of the Revenue is against the action of Ld. CIT(A) in holding that employees’ contribution deposited by employer beyond the prescribed due date is allowable as deduction u/s 43B of the Act. Briefly stated, facts are that in this case the AO disallowed a sum of Rs.13,57,305/- being delayed payment of Employees PF contributions which the assessee had paid beyond the statutory date as provided in the Provident Fund Act [PF Act], but within the due date of filing of Income Tax Return u/s. 139(1) of the Act. On appeal, the Ld. CIT(A) following the decision of the Hon’ble jurisdictional Calcutta High Court in the case of CIT Vs. M/s. Vijay Shree Ltd. in ITAT No. 245 of 2011 held that the disallowance of Rs.13,57,305/- made on account of payment of Employees PF contributions after due date as prescribed in the PF Act but before the filing return of’ income satisfies the requirement of Section 43B of the Act and therefore the disallowance was unwarranted and ordered to delete the same. Aggrieved, the Revenue is in appeal before us.
19. We have heard rival submissions and gone through the facts and circumstances of the case. We note that this issue is no longer res integra. We note that the Hon’ble Calcutta High court has held that employees’ contribution to PF and ESI paid on or before the due date of filing of return of income u/s. 139(1) of the Act should be allowed as deduction. In this regard we gainfully refer to the decisions of Hon’ble Calcutta High Court in the case or M/s. Akzo Nobel India Ltd. Vs. CIT in ITA No.110 of’ 2011 dated 14.06.2016 and in the case of’ CIT Vs. Vijayshree Ltd. (supra). In the order in the case of’ Vijayshree Ltd. (supra) the Hon’ble Calcutta High Court held as follows:
“The only issue involved in this appeal is as to whether the deletion of the addition by the Assessing Officer on account of Employees ‘Contribution to ESI and PF by invoking the provision of Section 36(1 )(va) read with Section 2(24 )(x) of the Act was correct or not. It appears that the Tribunal below, in View of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was Justified.
Being dissatisfied, the Revenue has come up with the present appeal.
After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec. 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1 st April, 1988.
Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act.
We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal.”
20. In view of the aforesaid decision of the Hon’ble Calcutta High Court, we are of the view that the Ld. CIT(A) has rightly allowed the deduction in respect of the employee’s contribution to PF & ESI which admittedly remitted on or before the due date for filing the return of income u/s. 139(1) of the Act. We therefore do not find any infirmity in the order of the Ld. CIT(A) and, we confirm the same and dismiss this ground or appeal of revenue.
ITA No. 115/Ko/2019 [AY 2013-141
21. Ground no. 1 of the appeal relates to the Ld. CIT(A)’s action of deleting the disallowance on account of the amortization of demerger expenses of Rs.2,26,32,237/- claimed by the assessee u/s 35DD of the Act. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground no. 1 of Revenue‘s appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss this ground of the Revenue.
22. Ground no. 2 of the Revenue is against the action of Ld. CIT(A) in restricting the disallowance u/s 14A read with Rule 8D(2)(iii) with reference to investments which actually yielded dividend income. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 2 or Revenue’s appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss these grounds of the Revenue.
ITA No. 116/Kol/2019 [ AY 2014-15]
22. Ground no.1 of the appeal relates to the Ld. CIT(A)’s action of deleting the disallowance on account of the amortization of demerger expenses of Rs.2,26,32,237/- claimed by the assessee u/s 35DD of the Act. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 1 of Revenue‘s appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss this ground of the Revenue.
23. Ground no. 2 of the Revenue is against the action of Ld. CIT(A) in restricting the disallowance u/s 14A read with Rule 8D(2)(iii) with reference to investments which actually yielded dividend income. After considering the rival submissions, it is observed that the issue involved in this ground is similar to the Ground No. 2 or Revenue’s appeal in A.Y. 2012-13. Following our conclusion drawn in A.Y. 2012-13, we dismiss these grounds of the Revenue.
24. Before parting, it is noted that the order is being pronounced after the ninety (90) days of hearing. However, taking note of the extraordinary situation in the light of the COVID-19 pandemic and lockdown, the period of lockdown days need to be excluded. For coming to such a conclusion, we rely upon the decision of the Co-ordinate Bench of the Mumbai Tribunal in the case of DCIT vs. JSW Limited in ITA No. 6264/Mum/2018 & 6103/Mum/2018, Assessment Year 2013-14, order dt. 14th May, 2020. In the light of the above discussion, all the appeal of revenue are dismissed.
25. In the result, all the appeals of the revenue are dismissed.
Order is pronounced in the open court on 10th June, 2020.
For Further Details – Read Order
Tags: Judgement, Appellant Tribunal
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