1
M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
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IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "G", MUMBAI
BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND
SHRI RAJESH KUMAR, ACCOUNTANT MEMBER
ITA No. : 7606/Mum/2013
(Assessment year: 2010-11)
Dy Commissioner of Income Tax Vs M/s Gopinath Engineering Co Pvt
10(2), Ltd,
Room No. 432, 4th Floor, 15C, Satyam Shivam Sundaram,
Aayakar Bhavan, M K Road, M G Road, Ghatkopar East,
Mumbai 400 020 Mumbai-400 077
(Appellant) (Respondent)
Appellant by : Shri B D Naik
Respondent by : Shri Surendra Damle
Cross Objection No. 113/Mum/2015
Arising out of ITA No. : 7606/Mum/2013, AY 2010-11
(Assessment year: 2010-11)
M/s Gopinath Engineering Co Pvt Vs Dy Commissioner of Income Tax
Ltd, 10(2),
15 Satyam C, M G Road, Ghatkopar Room No. 432, 4th Floor,
East, Mumbai 400 077 Aayakar Bhavan, M K Road,
.:PAN: AAACG 1935 D Mumbai 400 020
Cross objector (Appellant) (Respondent)
Appellant Cross Objector by : Shri Surendra Damle
Respondent by : Shri B D Naik
/Date of Hearing
: 01-09-2015
/Date of Pronouncement : 04-09-2015
ORDER
, . .:
PER AMIT SHUKLA, JM:
The aforesaid appeal has been filed by the revenue and
Cross Objection by the assessee against the impugned order dated
15.10.2013, passed by CIT(A)-21 Mumbai, for the quantum of
assessment passed u/s 143(3) r.w.s. 147 for the assessment year
2010-11 on following grounds:
1. On the facts and in the circumstances of the case as
well as in law, the Ld. CIT(A) erred in deleting the
disallowance made by the AO u/s 43B of the Act made
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M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
on account of late payment of Service Tax liability of Rs.
1,29,79,838/-.
1.1 On the facts and in the circumstances of the case as
well as in law, the Ld. CIT(A) erred in not appreciating
the fact that the assessee made the payment of the
Service Tax liability amounting to Rs. 1,02,21,606/-
after filing of Return of Income for the current year.
1.2 On the facts and in the circumstances of the case as
well as in law, the Ld. CIT(A) erred in not appreciating
the fact that the balance Service Tax payment made on
amount of late payment of Employees' Contribution of
PF amounting to Rs. 29,69,876/-.
2. On the facts and in the circumstances of the case as
well as in law, the Ld. CIT(A) erred in deleting the
disallowance by the AO u/s 43B of the Act made on
account of late payment of Employees' Contribution to
PF amounting to Rs. 29,69,876/-.
2.1 On the facts and in the circumstances of the case as
well as in law, the Ld. CIT(A) erred in not applying the
ratio of the decision of the Hon'ble Mumbai Tribunal in
the case of LKP Securities Ltd in ITA No. 638/M/2012
w.r.t. late payment of Employees' Contribution to PF by
the assessee company".
2. During the course of the assessment proceedings, the
Assessing Officer on the perusal of the Balance Sheet noticed that
there is a mention in Schedule "H"', regarding unpaid service tax
liability and `Employees contribution to provident fund' for sums
amounting to Rs. 1,29,79,838/- and Rs. 29,69,876/- respectively.
The Assessing Officer held that such a payment should be
disallowed u/s 43B as there has been delayed payment on account
of both, Employee's contribution to PF and delay in payment of
Service Tax.
3. The Ld. CIT(A), so far as disallowance of service tax liability
is concerned, gave a very important finding of fact from the perusal
of the records that the assessee had not deducted amount of Rs.
1,29,79,838/- on account of service tax liability from the profit and
loss account and hence there was no deduction claimed in the P&L
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M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
Account so as to reduce the profit of the business during the year,
therefore, Assessing Officer could not have disallowed this amount
u/s 43B. Further, he held that assessee had to pay the service tax
after collecting the service tax from the payers as per the Service
Tax Rules, which the assessee had done as per the details
mentioned at page 4 of the appellate order. The relevant
observation and finding of the CIT(A) in this regard are as under :-
I have considered the facts and circumstances of the case.
During the year under consideration AO had added Rs.
1,29,79,838/- for non-payment of service tax liability as on
31.03.2010. On verification of the records of the appellant,
appellant had not deducted this amount from the P&L
account, hence, the deduction was not claimed in P&L account
to reduce the profit of the business during the year. Therefore,
AO could not disallow this amount u/s 43B as appellant had
not claimed this amount in the P&L account in view of Delhi
High Court in the case of CIT vs Noble & Hewitt (I) P Ltd
(2008) 166 Taxman 48 (Delhi) wherein it is held as under:
"In our opinion since the assessee did not debit the
amount to the profit and loss account as on expenditure
nor did the assessee claim any deduction in respect of
the amount and considering that the assessee is
following the mercantile system of accounting, the
question of disallowing the deduction not claimed would
not arise".
In the case of ACIT vs Real Image Media Technologies (P) Ltd
(2008) 116 TTJ 964 (Chennai) wherein it is held as under:
"(2009) 21 ITD 461 (Chennai) (TM) Section 43B can only
be invoked when the assessee claims deduction for any
sum payable by way of tax or duty, under any law for
the time being in force, and, as such, whether neither
such deduction is claimed nor charge is made to the
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M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
profit and loss account, there is no question of
disallowing the amount. Having regard to the facts, the
Assessing Officer was not justified in marking the
addition under section 43B".
In view of the above decision, it is clear that addition u/s 43B
is applicable and appellant had claimed deduction in P&L
account. In the instant cases appellant had not claimed any
deduction, hence, AO cannot disallow the amount. Moreover
till July 2011, the appellant had to pay service tax only after
collecting the service tax from the payers as per the service tax
rules. The appellant had collected the service tax later and
paid the same as under:
Date Amount
BEFORE FILING OF ITR
06.05.2010 1,043,679.00
06.05.2010 62,972.00
06.05.2010 677,202.00
30.06.2010 974,379.00
TOTAL 2,758,232.00
Date Amount
AFTER FILING OF ITR
01.11.2010 999,100.00
15.11.2010 499,550.00
23.11.2010 1,249,905.00
25.11.2010 1,999,951.00
27.11.2010 2,499,501.00
30.11.2010 1,249,905.00
07.12.2010 1,723,694.00
GRAND TOTAL 12,979,838.00
As the appellant had paid the service tax and also not claimed
the deduction in profit and loss account, sec. 43B of the IT Act
Is not applicable in view of the above mentioned case. Hence
ground of appeal is allowed".
Regarding Employees' contribution to PF dues of Rs. 29,69,876/-,
he held from the perusal of records that the same has been paid
much before the due date of filing of the return of income,
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M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
therefore, following the decision of Hon'ble Supreme Court in the
case of CIT vs Alom Extrusions Limited, reported in 319 ITR 306,
he allowed the said deduction.
4. After hearing both the parties and on perusal of the
impugned order, we find that so far as disallowance on account of
non-payment of service tax liability u/s 43B is concerned, the
same is not tenable, firstly, the Ld. CIT(A) has given a categorical
finding of fact that the assessee had not claimed the amount of
Service Tax Liability of Rs. 1,29,79,838/- in the profit and loss
account and hence there was no question of making disallowance
and Secondly, the assessee had collected the Service Tax and paid
later, on the dates as incorporated above. Thus, no disallowance
u/s 43B can be sustained under these facts and circumstances.
Accordingly, the finding of CIT(A) is upheld. Regarding
disallowance of Employee's contribution to PF also, we uphold the
order of the CIT(A) as it is not disputed before us that the PF dues
though have been paid beyond the due date of Provident Fund Act,
but much before the due date of filing of return of income u/s
139(1) which is allowable in view of the decision of Hon'ble
Supreme Court. Thus, the order of the CIT(A) on this score also is
upheld.
5. Regarding Cross Objection, it has been admitted that it is in
support of the order of the CIT(A). Accordingly, Cross Objections
raised by the assessee is treated as allowed in view of the finding
given in the Departmental appeal.
6. In the result, appeal of the revenue is dismissed and Cross
Objection of the assessee are allowed.
Order pronounced in the open court on 4th September, 2015.
Sd/- Sd/-
(RAJESH KUMAR) (AMIT SHUKLA)
ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Date: 4th September, 2015
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M/s Gopinath Engineering Co Pvt Ltd
ITA No. 7606/Mum/2013
CO No. 113/Mum/2015
/Copy to:-
1) /The Appellant.
2) /The Respondent.
3) The CIT(A) -21, Mumbai.
4) The CIT 10, Mumbai.
5) "", , /
The D.R. "G" Bench, Mumbai.
6)
Copy to Guard File.
/By Order
/ / True Copy / /
/
,
Dy./Asstt. Registrar
I.T.A.T., Mumbai
* ..
*Chavan, Sr.PS
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