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Commissioner of Income-tax, Faridabad v. Hemla Embroidery Mills (P.) Ltd.

Income Tax Appellate Tribunal

Sep 27, 2012

Judgment

CaseIQ

ORDER

Ajay Kumar Mittal, J. - This order shall dispose of ITA No. 16 and 18 of 2009 as according to the learned counsel for the appellant, the issues involved in both the appeals are identical. For brevity, the facts are being extracted from ITA No. 16 of 2009.

2. This appeal has been preferred by the revenue under Section 260A of the Income Tax Act, 1961 (in short "the Act") against the order dated 10.7.2008 passed by the Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi (hereinafter referred to as "the Tribunal) in ITA No. 4250/D/2007, for the assessment year 2003-04, claiming the following substantial question of law:—

"I. Whether, on the facts and circumstances of the case, the Hon'ble ITAT was right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.7,46,296/- made by the AO u/s 2(24)(x) read with Section 36(1)(va) of the Income Tax Act, 1961 on account of late payment of employees' contribution to Provident Fund without appreciating the fact that the payments were made beyond the due dates?

II. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in upholding the order of the Ld. CIT(A) in deleting the addition of Rs.8,32,776/- made by the Assessing Officer on account of late payment of employer's contribution in terms of second proviso to section 43B read with section 36(1)(iv) in contravention of the decisions of Hon'ble Kerala High Court in the case of CIT v. GTN Textiles Ltd. (269-ITR-282), CIT v. Jai Ram and Sons (269-ITR-285), CIT v. Common Wealth Trust (P) Ltd. (269-ITR-290) and CIT v. South India Corporation Ltd. (242-ITR-114)?

III. Whether on the facts and in the circumstances of the case, the Hon'ble ITAT was right in law in upholding the order of the Ld. CIT(A) in deleting the additions made on account of late payments to provident fund, when it has itself held in its order passed by ITAT, 'H' Bench, New Delhi in ITA No. 2090/Del/2005 in the case of M/s SSP Ltd., 19-DLF Indl. Area-II, Faridabad for the Asstt. Year 2001-02 by relying upon the judgment of the Hon'ble Madras High Court in the case of Commissioner Of Income-Tax v. Synergy Financial Exchange Ltd. (205 CTR 481) that provident fund payment made after the due dates under the Provident Fund Act were not deductible in view of the second proviso to section 43B, as it then was in force?"

3. Briefly stated, the facts necessary for adjudication of the present appeal as narrated therein are that the assessee filed its return on 27.11.2003 declaring nil income after setting off the losses. The assessment in this case was completed vide order dated 20.3.2006 (Annexure A-1) by the Assessing Officer at a total income of Rs. 24,11,200/-. Feeling aggrieved, the assessee filed an appeal before the Commissioner of Income Tax (Appeals) [in short "the CIT(A)"]. The CIT(A) vide order dated 14.8.2007 (Annexure A-2) partly allowed the appeal. Against the order of the CIT(A), the revenue filed an appeal before the Tribunal. The Tribunal vide order dated 10.7.2008 (Annexure A-3) dismissed the appeal. Hence the present appeal by the revenue.

4. We have heard the learned counsel for the appellant.

5. Learned counsel for the appellant could not dispute that the issue raised herein finally stands settled by the Apex Court judgment in Commissioner Of Income Tax v. Alom Extrusions Limited [2009] 319 ITR 306/185 Taxman 416 (SC) and this Court in (Commissioner Of Income-Tax v. Rai Agro Industries Ltd. [2011] 334 ITR 122/[2012] 207 Taxman 10 (Mag.)/20 taxmann.com 194 (Punj. & Har.) wherein it has been held that Second Proviso to Section 43B of the Act omitted by Finance Act, 2003 with effect from 1.4.2004 was clarificatory in nature and was to operate retrospectively. Once that is so, in the present case, the respondent-assessee was entitled to deduction in respect of employer and employee's contribution to ESI and Provident Fund as the same had been deposited prior to the filing of the return under Section 139 (1) of the Act.

6. In view of the above, the substantial questions of law are answered against the revenue and in favour of the assessee. Consequently, the appeals are dismissed.

Commissioner of Income-tax, Faridabad v. Hemla Embroidery Mills (P.) Ltd.

IT Appeal No. 16 of 2009