IN THE INCOME TAX APPELLATE TRIBUNAL
"H" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri Rajendra, Accountant Member
ITA No. 1006/Mum/2011
(Assessment Year: 2007-08)
M/s. HSBC Invest Direct Securities Dy. Commissionr of Income
(India) Ltd. (Previously IL&FS Vs. Tax - 10(1), Mumbai
Investsmart Securities Ltd.)
Dhanasingh Processor Premises
J.B. Nagar, Andheri (E)
Mumbai 400059
PAN - AABCI4793G
Appellant Respondent
Appellant by: Shri D.V. Lakhani
Respondent by: Shri Pitamber Das
Date of Hearing: 24.03.2014
Date of Pronouncement: 24.03.2014
ORDER
Per D. Manmohan, V.P.
This appeal by the assessee is directed against the order dated
01.12.2010 passed by CIT(A)-21, Mumbai and it pertains to A.Y. 2007-08.
2. The appellant made payment of Provident Fund of `15,87,729/- and
ESIC of `1,47,862/- being employees contribution beyond the specified date
but before the due date for filing the return. There was a cleavage of opinion
of various forums on the issue at the time of filing the return of income and
therefore the assessee thought it fit to declare the same as income
chargeable under section 2(24)(x) of the Act but in the wake of later
judgement of the Hon'ble Supreme Court the assessee contended before the
CIT(A) that the same cannot be treated as income in the hands of the
assessee. It is not in dispute that the payments are made before the due
date for filing the return of income and these facts were already on record
before the AO. Before the CIT(A) the learned counsel for the assessee has
also placed the decisions of various Benches of ITAT wherein it was held
2 ITA No. 1006/Mum/2011
M/s. HSBC Invest Direct Securities (I) Ltd.
that in the light of the decision of the Apex Court in the case of CIT vs. Alom
Extrusions Ltd. 319 ITR 306 employees contribution to PF, etc. paid in the
government account before the due date for filing the return of income is
allowable as deduction. However, the learned CIT(A) was of the opinion that
the issue involved in the case of Alom Extrusions Ltd. was in respect of
payments of employers contribution and there was no issue of employees
contribution and thus he concluded that the payment is governed by the
provisions of section 43B r.w.s. 36(1)(va) of the Act and thus the same has to
be treated as income under section 2(24)(x) of the Act. Thus, the learned
CIT(A) observed that the additional ground is not maintainable since it did not
emanate from the assessment order and consequently it is not allowable.
3. Further aggrieved, assessee preferred an appeal before the Appellate
Tribunal contending, inter alia, that the issue involved herein is a pure legal
issue and the facts being already available on record (as per the Annexure to
Annual Report the dates of payment are not in dispute) and thus the same
deserves to be admitted and to be decided in favour of the assessee. He
relied upon the following decisions of various High Courts and also the ITAT
in support of his contention that even in respect of employees contribution,
so long as the payment is made before the due date for filing the return, it is
not hit by section 43B of the Act and consequently it cannot be assessed to
tax as income of the assessee: -
i. CIT vs. M/s. Kichha Sugar Company Ltd. ITA No. 50 of 2009
(Calcutta High Court)
ii. ITO vs. LKP Securities Ltd. IOTA No. 638/Mum/2012 (Mum)
iii. CIT vs. AIMIL Ltd, Delhi High Court
iv. Harrisons Malayalam Ltd. vs. ACIT 32 SOT 497 (Cochin)
v. CIT vs. M.N. Chari 310 ITR 445 (Karn)
vi. CIT vs. P.M. Electronics Ltd. 313 ITR 161 (Del)
vii. CIT vs. ANZ Information Technology P. Ltd. 318 ITR 123 (Karn)
viii. CIT vs. AIMIL Ltd. ITA No. 1603 of 2009 (Delhi High Court)
He also submitted that being a pure legal issue the same deserves to be
admitted and the learned CIT(A) erred in not following the decisions of the
ITAT, which are binding on him.
3 ITA No. 1006/Mum/2011
M/s. HSBC Invest Direct Securities (I) Ltd.
4. On the other hand, the learned D.R. strongly relied upon the orders
passed by the tax authorities. He submitted that the assessee has offered to
tax in the return of income and hence the assessee company should not be
permitted to raise this plea at a later stage.
5. We have carefully considered the rival submissions and perused the
record. Various Benches of the Tribunal as well as the High Courts have
consistently taken a view that in the light of the judgement of the Apex
Count in the case of Vinay Cements 213 CTR 268 if employees/employers
contrition is paid before the due date of filing the return no disallowance can
be made under section 43B of the Act. No contrary decision was placed
before us on this issue after the decision of the Apex Court which in turn
was followed by various forums as listed above. Consistent with the view
taken therein, we are of the view that the additional ground deserves to be
admitted since it gives rise to a pure question of law backed by facts which
are already placed before the AO. Further, in the light of the decisions cited
above, we are of the view that the impugned payments are not hit by section
43B and consequently it cannot be treated as income under section 2(24)(x)
of the Act. We, therefore, decide ground No. 1 & 2 accordingly.
6. Vide ground No. 3 assessee contends that the CIT(A) erred in
confirming the levy of interest under section 234B of the Act. This is
consequential in nature and, therefore, we set aside this issue to the file of
the AO who is directed to allow consequential relief to the assessee.
7. Ground No. 4 is general in nature and, therefore, did not require any
adjudication.
8. In the result, the appeal filed by the assessee company is allowed for
statistical purpose.
Order pronounced in the open court on 24th March, 2014.
Sd/- Sd/-
(Rajendra) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 24th March, 2014
4 ITA No. 1006/Mum/2011
M/s. HSBC Invest Direct Securities (I) Ltd.
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 21, Mumbai
4. The CIT 10, Mumbai City
5. The DR, "H" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.
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