The Commissioner Of Income Tax-5 v. M/S. Fouress Engineering (India) Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGNAL CIVIL JURISDICTIONINCOME TAX APPEAL NO. 481 OF 2011 The Commissioner of Income Tax-5 ..Appellant Versus M/s. Fouress Engineering (India) Ltd. ..Respondent.-------- Mr. N. A. Kazi for Appellant. Dr. K. Shivaram and Mr. Paras S. Savla i/b Mr. Ajay R. Singh and Paras S. Savla for Respondent. -------- CORAM : S.J.VAZIFDAR &M.S. SANKLECHA, JJ. DATE: 11 June 2012. P.C.: (PER M.S.SANKLECHA,J.) 1This is an Appeal filed by the Revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the said Act) from the order dated 12[th] February, 2012 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the Tribunal) relating to the assessment year 1999-2000 (previous year ending on 31.03.1999). In its appeal the Revenue has raised the following substantial questions of law: A)Whether in the facts and in the circumstances of the case Tribunal was justified in condoning the delay of 100 days in admitting the appeal of the Assessee Company? B)Whether in the facts and in the circumstances of the case the order of the Tribunal dated 12.02.2012, deleting the addition of Rs.29,64,715/- made by the A.O. u/s 43(b) of the said Act is sustainable in law wherein the co-ordinate bench of Tribunal has confirmed the addition of Rs.14,68,664/- made by the A.O. under Section 43B in the case of the same Assessee Company for the same Assessment Year vide Tribunal Order dated 23.09.2008? 2. To bring out the real controversy between the parties question (B) above is reframed as under: (B) Whether in the facts and circumstances of the case the Tribunal by its Order dated 12.02.2012 was justified in deleting the addition of Rs.29.64,715/- made in respect of employers contribution towards Provident Fund and to the Employees State Insurance Corporation by the Assessing Officer in exercise of its powers under Section 154 of the said Act in respect of the original Order dated 28.03.2002 ? 3.Briefly, the facts leading to the present Appeal are as under: (a ) On 30.12.1999 the Respondent filed its return of income for the previous year ending 31.03.1999 declaring its total income as Nil. (b ) On 28.03.2002 the Assessing Officer passed an order under Section 143(3) of the said Act assessing the Respondent to a total income of Rs.1,96,64,200/-. In the course of the assessment, the Assessing Officer disallowed an amount of Rs.14,68,884/- being the payment made towards Provident Fund (hereinafter referred to as PF) SNC and to the Employee State Insurance Corporation (hereinafter referred to as ESIC). This disallowance was under Section 43(B) of the said Act as being payments made beyond the time limit prescribed under the respective Acts. The aforesaid disallowance of Rs.14,68,884/- was carried in Appeal by the Respondent but the same was confirmed by an order dated 23.09.2008 of the Tribunal. (c )In the meantime on 05.07.2004, the Assessing Officer passed an order under Section 154 of the Act rectifying the original order dated 28.03.2002 by enhancing the disallowance in respect of the said payments from Rs.14,68,664/- by a further sum of Rs.29,64,750/-. (d ) Aggrieved by the Order of the rectification dated 05.07.2004, the Respondent filed an Appeal to the CIT (Appeals). This appeal was dismissed by the CIT(Appeals) by an Order dated 5.03.2007. (e ) Being aggrieved by the Order dated 05.03.2007, the Respondent preferred an Appeal to the said Tribunal. The Tribunal allowed the Respondent s Appeal by its order dated 12.02.2012 which’is challenged in the present appeal. The Respondents appeal was allowed on the ground that the issue sought to be rectified is not a mistake apparent from the record as there could be two possible views on the same and held on merits that on the basis of law as it stood the deduction itself is allowable under Section 43B of the said Act. (d ) Aggrieved by the Order of the rectification dated 05.07.2004, the Respondent filed an Appeal to the CIT (Appeals). This appeal was dismissed by the CIT(Appeals) by an Order dated 5.03.2007. (e ) Being aggrieved by the Order dated 05.03.2007, the Respondent preferred an Appeal to the said Tribunal. The Tribunal allowed the Respondent s Appeal by its order dated 12.02.2012 which’is challenged in the present appeal. The Respondents appeal was allowed on the ground that the issue sought to be rectified is not a mistake apparent from the record as there could be two possible views on the same and held on merits that on the basis of law as it stood the deduction itself is allowable under Section 43B of the said Act. 4. In support of the Appeal, Mr. N.A. Kazi, Advocate for the Revenue submits that (a) There was no reason for the Tribunal to condone the delay of 100 days in the Respondent filing its appeal before it from the Order dated 5.03.2007 of the CIT(Appeals); (b) The Tribunal misdirected itself by not considering the fact that on 5.07.2004 when the Rectification Order was passed there was no decision of the Supreme Court and the position in law as on the date of the Rectification Order has alone to be considered; and (c ) The Tribunal erroneously came to the conclusion that there are two possible view with regard to allowability of deduction of payments made towards PF and to the ESIC particularly when the Tribunal in its earlier Order dated 23.09.2004 had confirmed the disallowance of deduction of Rs.14,68,664/- in respect of the said payments. 5. On the other hand, Dr. K. Shivraman the Advocate for the Respondent submits that (a) The Tribunal has properly exercised jurisdiction to condone the delay as the same was explained as being on account of a mistake on the part of the of the office of the tax consultant; (b) The application of Rectification could not lie as there were divergent views on the issue and (c) The entire issue is academic in view of the decision of the Supreme Court in the matter of CIT V/s Alom Extrusions Ltd. reported in (2009) 319 ITR 306, wherein it has been held that employers contribution made to any Provident Fund/ESIC before the due date of filing the return of income tax would be allowed as a deduction with retrospective effect from 01.04.1998. Therefore it was submitted that no substantial question of law arises and the appeal be dismissed. 6. So far as question (A) is concerned, that the delay of 100 days in filing the Appeal by the Respondent was explained as being on account of an inadvertent mistake on the part of the employee of the Respondent s Tax Consultant. The Tribunal accepted the’explanation of the Respondent and entertained the appeal. This condonation of delay has not been challenged as perverse and/or without any evidence. Consequently, question (A) does not raise any substantial question of law requiring consideration by this court. 6. So far as question (A) is concerned, that the delay of 100 days in filing the Appeal by the Respondent was explained as being on account of an inadvertent mistake on the part of the employee of the Respondent s Tax Consultant. The Tribunal accepted the’explanation of the Respondent and entertained the appeal. This condonation of delay has not been challenged as perverse and/or without any evidence. Consequently, question (A) does not raise any substantial question of law requiring consideration by this court. 7. So far as, question (B) is concerned, in view of the decision of the Supreme Court in the matter of CIT V/s Alom Extrusions Ltd. reported in (2009) 319 ITR 306 the entire issue becomes academic. In the above decision the Supreme Court held that employers contribution made to any P.F./ESIC before the due date of filing the return of income tax even after the due date of payment under the respective act would be allowed as a deduction with retrospective effect from 01.04.1998 even though the amendment was made by the Finance Act, 2003. The aforesaid decision covers the controversy on merits and as rightly held by the Tribunal a rectification application will not be sustainable as on merits the amount of Rs.29.64 lacs is deductible under Section 43B of the said Act. This was in view of the decision of the Supreme Court in the matter of Alom Extrusion (supra). It is well settled that the courts do not make law, but only declares the law as it exists. Consequently, the decision of the Supreme Court in the matter of Alom Extrusions Ltd.(supra) would apply to the present facts. Therefore the Order of rectification dated 5.07.2004 passed by the assessing officer has been correctly set aside by the Tribunal. Consequently, question (B) does SNC not raise any substantial question of law requiring consideration by this court. 8. In view of the above, no substantial question of law arises for consideration of this court. Therefore the Appeal filed by the Revenue is dismissed. No order as to costs. (S.J.VAZIFDAR J.) (M.S. SANKLECHA, J.)