Taxap/504/2007 Of Commissioner Of Income Tax v. Ocean Agro (India) Ltd

O/TAXAP/504/2007 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL NO. 504 of 2007 FOR APPROVAL AND SIGNATURE: HONOURABLE MR.JUSTICE M.R. SHAH sd/-and HONOURABLE MR.JUSTICE S.H.VORA sd/- ============================================= 1.Whether Reporters of Local Papers may be NOallowed to see the judgment ?2.To be referred to the Reporter or not ?NO3.Whether their Lordships wish to see the fair copy NOof the judgment ?4.Whether this case involves a substantial question NOof law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? =============================================COMMISSIONER OF INCOME TAX....Appellant(s)VersusOCEAN AGRO (INDIA) LTD.....Opponent(s)============================================= Appearance: MR NITIN K MEHTA, ADVOCATE for the Appellant(s) No. 1RULE SERVED for the Opponent(s) No. 1 ============================================= CORAM: HONOURABLE MR.JUSTICE M.R. SHAH andHONOURABLE MR.JUSTICE S.H.VORA Date : 23/03/2015 ORAL JUDGMENT (PER : HONOURABLE MR.JUSTICE M.R. SHAH) 1.0.Feeling aggrieved and dissatisfied with the impugned judgment and order passed by the Income Tax Appellate Tribunal, Ahmedabad “C” Bench dated 16.06.2006 passed in ITA No. 4375/AHD/2003 for AY 2000-01, the Revenue has preferred present Tax Appeal to consider / raising the following substantial question of law. A.Whetherthe Appellate Tribunal was right in law and on facts in directing the Assessing Officer to allow, after proper verification, the payment made to PF & ESI on the basis of actual payment during the relevant previous year?B.Whether the Appellate Tribunal was right in law and on facts in not appreciating the deduction of PF and ESI collected from employees can be allowed u/s. 36(1) (va)if the payment was made within due date prescribed under the relevant Acts and the provision of Section 43 B are not applicable? 2.0.That the assessee filed return of income for AY 2000-01 declaring income of Rs.32,36,618/-. The return was processed under Section 143(1) on returned income. The case was selected for scrutiny. During the course of assessment and on verification of the audit report filed along with return of income, it was noticed by the AO that the assessee has not made payment of Employees Provident Fund and ESI in the government account within the stipulated period. It was found that the assessee company did not make the payment of (1) Contribution of PF amounting to Rs.10,12,934/- and (2) ESI payment of Rs.2,83,914/- totaling to Rs.12,96,848/- into the Government account within the stipulated time, considering the gross period allowed under the PF Act. Therefore, the assessee was issued show cause notice informing the assessee that since all the payments made during the FY 1999-00 (AY 2000-01) were late and on account of cumulative effect of provision of Section 43B(b), 36(1)(va) and definition of Section 2(24)(x) of the Income Tax Act, to such late payment has to be ignored and the same to be treated as income. That while finalizing the assessment and by passing the assessment order, AO did not allow deduction claim for late payments of Employees Contribution for PF and for ESI and consequently made the additions of Rs. 4,74,543/- and Rs.2,83,914/- to the total income. 2.1. Feeling aggrieved and dissatisfied with the aforesaid addition and dis-allowance of late payment of Employees Provident Fund and ESI contribution, assessee preferred appeal before the learned CIT(A) and learned CIT(A) partly allowed the said appeal directing the AO to allow after proper verification, the payment made to PF / ESI on the basis of actual payment during the relevant previous year. 2.1. Feeling aggrieved and dissatisfied with the aforesaid addition and dis-allowance of late payment of Employees Provident Fund and ESI contribution, assessee preferred appeal before the learned CIT(A) and learned CIT(A) partly allowed the said appeal directing the AO to allow after proper verification, the payment made to PF / ESI on the basis of actual payment during the relevant previous year. 2.2.Feeling aggrieved and dissatisfied with the order passed by the CIT(A), the revenue preferred appeal before the learned Tribunal being ITA No. 4375/AHD/2003 and by impugned judgment and order, the learned Tribunal has dismissed the appeal confirming the order passed by the learned CIT(A). 2.3.Feeling aggrieved and dissatisfied with impugned judgment and order passed by the learned Tribunal, the revenue has preferred present Tax Appeal to consider the aforesaid substantial question of law. 3.0.Though served, nobody appears on behalf of respondent. Shri Nitin Mehta, learned advocate has appeared on behalf of the Revenue. He has vehemently submitted that now issue / question raised in the present Tax Appeal are not res-integra in view of the decision of the Division Bench of this Court in the case of Commissioner of Income Tax vs. Gujarat State Road Transport Corporation reported in 366 ITR 170 (Guj). It is submitted that both the substantial question of law raised in the present appeal are answered in favour of the Revenue and against the assessee. 4.0.We have gone through and considered the decision of the Division Bench of this Court in the case of Gujarat State Road Transport Corporation (supra). Identical question came to be considered by the Division Bench in the case of Gujarat State Road Transport Corporation (supra) and the Division Bench has observed and held as under: “It is held that in view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the income referred to in section 28 with respect to such sum credited by the assessee to the employees account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1)(va). Consequently, it is held that the learned tribunal has erred in deleting respective disallowances being employees contribution to PF Account / ESI Account made by the AO as, as such, such sums were not credited by the respective assessee to the employees accounts in the relevant fund or funds (in the present case Provident Fund and/or ESI Fund on or before the due date as per the explanation to section 36(1)(va) of the Act i.e. date by which the concerned assessee was required as an employer to credit employees contribution to the employees account in the Provident Fund under the Provident Fund Act and/or in the ESI Fund under the ESI Act. 5.0.The aforesaid binding decision of this Court and how the substantial questions of law raised in the present Tax Appeal are answering in favour of the Revenue and against the assessee, we allow the present Tax Appeal and quashed and set aside the impugned judgment and order passed by the learned CIT(A) with respect to dis- allowance of deduction of PF and ESI collected from the employees but not deposited in the government account within the stipulated time and the addition of the aforesaid amount into total income of the assessee and restored order passed by the learned AO. 6.0.With this, present Tax Appeal is allowed. No costs. sd/- (M.R.SHAH, J.) Kaushik sd/- (S.H.VORA, J.)