TMI Blog2013 (11) TMI 359X X X X Extracts X X X X X X X X Extracts X X X X ..... to be considered as eligible, and without inviting any penal consequences. As such, the benefit of the ‘grace period’ could not be disallowed, and which would rather bring the two enactments in harmony - Following decision of CIT v. Godaveri (Mannar) Sahakari Sakhar Kharkhana Ltd. [2007 (10) TMI 145 - BOMBAY HIGH COURT] - Decided partly in favour of Revenue. TDS u/s 194J - various payments to the Stock Exchange - Held that:- the Stock Exchange is billed for the total charges on these counts (i.e., including lease line and VSAT charges) by the Department of Telecommunication (DOT), which in turn allocates the same to its different constituents (which would be on some definite/utilization basis), without including any charge of its own. The payment to the Stock Exchange is thus, only in the nature of reimbursement. Even as, therefore, it may result in a TDS liability in the hands of the Stock Exchange (inasmuch as what it pays to the DOT is only the latter’s income), in-so-far as the individual brokers are concerned, who make the payments to the Stock Exchange, no tax is deductible inasmuch as the same is only a reimbursement of the charges as levied by DOT. - Decided in favor of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the various defaults or deficiencies, which stand to be regulated by NSE in terms of its bye-laws, cannot be regarded as an infraction of law, so as to attract disallowance. We, therefore, see no reason for inference with the impugned order on this ground. 4. The Revenue s second ground concerns the disallowance u/s.2(24)(x) r.w.s. 36(1)(va) of the Act on account of employee s contribution to the Employees Provident Fund (EPF) and Employees State Insurance Corporation (ESIC) in the sum of Rs.35,70,973/- and Rs.46,229/- respectively. The A.O. made the disallowance on the basis that the payments were made beyond the due date, being 15th of the following month in respect of contributions to the Provident Fund, and 21st of the following month in the case of payments to ESIC. Further, the grace period of 5 days for payment of PF contribution was only with respect to non-charge of penal interest and other penalties under the relevant Act. The same would not by itself extend the due date, with reference to which date only the allowability of the sum required to be paid by the assessee in respect of the employee s contribution is to be reckoned. Reliance was placed by him on the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fter the decision by it in the case of Alom Extrusions Ltd. (supra). As such, any payment made by the employer, either in respect of the employee s or the employer s contribution, by the due date of filing of the return, would qualify for being allowed as a deduction for the relevant year. In the instant case, as would be evident from the chart of the payments listed at para 9 of the assessment order, the same were during the relevant year itself, with the exception of one, i.e., for the month of March, 2008, in April, 2008, i.e., well before the due date of filing the return of income. The entire disallowance stands, thus, rightly deleted by the ld. CIT(A). 6. We have heard the parties, and perused the material on record. 6.1 The issue under reference is the allowability or otherwise in law of the sums paid by the assessee-employer by way of employee s contribution to the Provident and the Employees State Insurance Corporation (ESIC) Funds where the said payment is made beyond the due date as defined under the relevant statutes, though before the due date of the filing of the return of income for the relevant year. 6.2 The disallowance having been deleted by the ld.CIT(A) wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of a cheque or draft or by any other mode on or before the due date as defined in the Explanation below clause (va) of sub-section (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realized within fifteen days from the due date. [emphasis, ours] Vide amendment by Finance Act, 2003 w.e.f. 01.04.2004, the second proviso stands omitted, as also reference to clauses (a) and (c) to (f) in the first proviso. Section 43B is a non obstante clause providing for an overarching and additional qualification, so that it would operate without exception. As such, it would apply to any sum covered thereby, irrespective of the section or the provision governing the deduction in its respect. As per its terms, the sums specified in clause (a) to (f) would, where otherwise allowable, yet have to satisfy the test or condition of payment for the same to qualify for deduction. The deduction, in the event of non-payment, would stand deferred to the year of actual payment. An exception, by way of first proviso to the section, is drawn to sums specified in clauses (a), (c) to (f), so that the payment would not stand to be disallowed if it is mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly provides for deduction qua these sums where paid to the credit of the employee s account in the relevant fund by the due date. Due date is defined per Explanation thereto as a date by which the employer is required to credit the employee s contribution to the employee s account in the relevant fund under any Act, or any Rule, order, notification, etc., issued there-under; the relevant provision reading as under:- Other deductions. 36. (1) The deductions provided for in the following clauses shall be allowed in respect of matters dealt with therein, in computing the income referred to in section 28 - (i) (va) any sum received by the assessee from any of his employees to which the provisions of sub-clause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employee's account in the relevant fund or funds on or before the due date. Explanation.-For the purposes of this clause, "due date" means the date by which the assessee is required as an employer to credit an employee's contribution to the employee's account in the relevant fund under any Act, rule, order or notification issued there-under or under any standing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng not been made, the same is not allowable thereunder, so that there is no scope for application or invocation of section 43B. On the other hand, if the payment has been made, section 43B again becomes of no functional relevance. This aspect stands also explained by the tribunal in the case of Bengal Chemicals Pharmaceuticals Ltd. (supra), following its earlier order in ITA No.1255/Kol./2010 dated 19.11.2010, also reproducing therefrom at para 5 of its order. Reference in this context is also drawn to, inter alia, para 8 of the said order, citing the reasons why in its view section 43B does not apply to the payment of the employee s contribution. In fact, even as noted by the tribunal its order in ITA No.1255/Kol./2010 (supra), this aspect stands also clarified by the Special Bench of the tribunal in the case of Jt. CIT v. ITC Ltd. [2008[ 112 ITD 57 (Kol.)(SB), holding that section 43B does not apply to payment of the employee s contribution. Rather, as would be clear, section 43B, even assuming applicability, would become relevant only if it provides for payment terms most stringent than that provided by section 36(1)(va). This is as it is only in that case that the prescriptio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd. [2008[ 298 ITR 149 (Bom.), wherein issues other than those relating to the said amendment to s. 43B were also referred to. These questions remain unanswered or unaddressed by the decision in the case of Alom Extrusions Ltd. (supra). In fact, a mere reference to the question referred to the hon ble apex court, which stands set out by it at the beginning of its decision and, therefore, it sets out to and, accordingly, answers, would dispel any doubt in the matter, even as we have also carefully perused the judgment. A decision, it is trite, is an authority for what it actually decides (refer: CIT v. Sun Engineering Works (P.) Ltd. [1992] 198 ITR 297 (SC); Blue Star Ltd. v. CIT [1996] 217 ITR 514 (Bom.)). Further, as explained by the apex court in the case of CIT v. Murlidhar Bhagwan Dass [1964] 52 ITR 335 (SC), a finding can only be that which is necessary for the disposal of the appeal for the relevant year, or to put in a broader context, to answer the question that is referred to and, accordingly, answered by the court. There is no finding by the hon ble apex court that the employee s contribution, deduction of which is subject to s. 36(1)(va), is further subject to s. 43B. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case of AIMIL Ltd. (supra), stands rendered without considering the decision by the special bench of the tribunal in the case of ITC Ltd. (supra), besides being also inconsistent with the decision by the hon ble jurisdictional high court in Godaveri (Mannar) Sahakari Sakhar Kharkhana Ltd. (supra) insofar as the latter relates to the inapplicability of s. 43B to payments specified u/s. 36(1)(va). Finally, the absence of the relevant findings in the case of Alom Extrusions Ltd. (supra), also attend the decision in the case of AIMIL Ltd. (supra). We are therefore with respect not persuaded to follow the decision in the case of AIMIL Ltd. (supra); rather consider it as not applicable/germane and, on the contrary, are inclined to follow the decision by the special bench in ITC Ltd. (supra) as well as in the case of Bengal Chemicals Pharmaceuticals Ltd. (supra), both of which are consistent with the decisions by the hon ble jurisdictional high court on the material aspect. In doing so, we also derive support from the decision by the hon ble jurisdictional high court in the case of CIT v. Thane Electricity Supply Ltd. [1994] 206 ITR 727 (Bom.). 6.5 The deductibility of the impugned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n behalf of the clients inasmuch as the assessee company was a broker. The brokerage ranges between 0.05% to 2% of the transaction value and, therefore, the assessee s claim for bad debt could not extend to the entire amount due from its client/s, but only to the amount of brokerage income embedded therein. The ld. CIT(A), however, allowed relief to the assessee in view of the decision by the Special Bench of the tribunal in the case of Dy. CIT vs. Shreyas S. Morakhia [2010] 5 ITR (Trib) 1 (Mum.) (SB). 8. We have heard the parties, and perused the material on record. The decision by the Special Bench of the tribunal in the case of Shreyas S. Morakhia (supra) has since been upheld by the Hon ble jurisdictional High Court in the case of CIT vs. Shreyas S. Morakhia [2012] 342 ITR 285 (Bom.), even as brought to our notice by ld. AR during hearing. The hon ble court has clarified that both the components, i.e., the value of the shares transacted as well as the brokerage thereon, arise from the very same transaction and, thus, constitute a part of the debt arising therefrom. The requirement of section 36(2)(i), the non compliance of which forms the basis of the Revenue s case, has been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of Kotak Securities Ltd. (supra), confirming the deductibility of TDS u/s.194J, is in respect of transaction charges only. We have clarified this fact on going through the decision. As it would appear to us, the Stock Exchange is billed for the total charges on these counts (i.e., including lease line and VSAT charges) by the Department of Telecommunication (DOT), which in turn allocates the same to its different constituents (which would be on some definite/utilization basis), without including any charge of its own. The payment to the Stock Exchange is thus, only in the nature of reimbursement. Even as, therefore, it may result in a TDS liability in the hands of the Stock Exchange (inasmuch as what it pays to the DOT is only the latter s income), in-so-far as the individual brokers are concerned, who make the payments to the Stock Exchange, no tax is deductible inasmuch as the same is only a reimbursement of the charges as levied by DOT. Accordingly, no ground for disallowance survives, and the assessee succeeds in respect of the relevant grounds. 12. The third ground of the assessee s appeal is in respect of disallowance made u/s.14A r/w rule 8D of the Income Tax R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cord to show that there was brought forward loss for A.Y. 2003-04, as being claimed by the assessee. Neither was the same claimed per its computation of income, nor finds mention in the relevant assessment order passed u/s.143(3) of the Act. The assessment was in fact contested up to the level of the tribunal, even where there was no reference to any loss being carried forward. The assessment has accordingly attained finality and, as such, the assessee s claim for brought forward loss has no basis in law. 14. We have heard the parties, and perused the material on record. At the outset, it may be relevant to state that the said Finance Act, vide Chapter VII thereof, levies tax called Security Transaction Tax (STT) on long term capital assets, being equity shares in a company or a units in an equity oriented fund. That is, the equity share transactions which are subject to STT would not be subject to tax under Act. As such, we are unable to see as to what infirmity in law attends the Revenue s case in denying the claim of loss on transactions in equity shares subject to STT (at Rs.36.69 lakhs), against the taxable capital gains for the current year (non STT); it relying and drawing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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