TMI Blog2015 (1) TMI 1241X X X X Extracts X X X X X X X X Extracts X X X X ..... has also not called for remand report from the Assessing officer. In our opinion, it is proper to remit the issue to the file of the Assessing officer for fresh consideration in the light of the material produced before the CIT(A) on this issue as this was not placed before the Assessing officer for his comments. - Decided in favour of revenue for statistical purposes. - I.T.A. No. 454/Coch/2014 - - - Dated:- 9-1-2015 - S/SHRI N.R.S.GANESAN, JM and CHANDRA POOJARI, AM For the Appellant: Smt. Latha V. Kumar, Jr. DR O R D E R Per CHANDRA POOJARI, Accountant Member: This appeal filed by the Revenue is directed against the order dated 30-12-2014 passed by the CIT(A)-II, Kochi for the assessment year 2006-07. 2 At the time of hearing, none appeared on behalf of the assessee nor any adjournment application was filed before the Tribunal. Hence, we proceed to adjudicate this appeal ex parte. 3. The first issue is with regard to deletion of disallowance of ₹ 9,20,422/- made by the Assessing officer. 3. The brief facts of the case are that the Assessing officer has made this disallowance mainly on account of observation in Form No.3CD wherein it was men ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been defined under section 2(24) of the Act. Under section 2(24)(x), any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the Employees State Insurance Act, 1948, or any other fund for welfare of such employees, constitute income. Section 2(24)(x) reads as under :- Section 2(24)(x) :- Any sum received by the assessee from his employees as contributions to any provident fund or superannuation fund or any fund set up under the Employees State Insurance Act, 1948, or any other fund for welfare of such employees. 7.04. Section 36 of the Act provides for deduction in computing the income referred to in section 28. The relevant provisions applicable to the present cases would be Section 36(1)(va). As per sub-section 36(1)(va), assessee shall be entitled to the deduction in computing the income referred to in section 28 with respect to any sum received by the assessee from his employees to which the provisions of subclause (x) of clause (24) of section 2 apply, if such sum is credited by the assessee to the employees accounts in the relevant fund or funds on or before the Due Date . As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the Explanation below clause (va) of subsection (1) of section 36, and where such payment has been made otherwise than in cash, the sum has been realised within fifteen days from the due date. By the Finance Act, 2003, Second Proviso to section 43B of the Act came to be deleted and even the first proviso to section 43B of the Act came to be amended. The first proviso to section 43B of the Act, after its amendment by the Finance Act, 2003 reads as under :- Provided that nothing contained in this section apply in relation to any sum which is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of income under sub-section (1) of section 139 in respect of the previous year in which the liability to pay such sum was incurred as aforesaid and the evidence of such payment is furnished by the assessee along with such return. 7.06. Considering the aforesaid provisions of the Act, as per section 2(24)(x), any sum received by the assessee from his employees as contribution to any provident fund or superannuation fund or any fund set up under the provisions of ESI Act or any other fund for the welfare of such employee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade otherwise that in cash, the sum has been realized within 15 days from the due date. By the Finance Act 2003, Second Proviso of section 43B of the Act has been deleted and First Proviso to section 43B has also been amended which is reproduced hereinabove. Therefore, with respect to employer s contribution as mentioned in clause (b) of section 43(B), if any sum towards employer s contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of the employees is actually paid by the assessee on or before the due date applicable in his case for furnishing the return of the income under sub-section (1) of section 139, assessee would be entitled to deduction under section 43B on actual payment and such deduction would be admissible for the accounting year. However, it is required to be noted that as such there is no corresponding amendment in section 36(1) (va). Deletion of Second Proviso to section 43B vide Finance Act 2003 would be with respect to section 43B and with respect to any sum mentioned in section 43(B) (a to f) and in the present case, employer s contribution as mentioned in section 43B(b). Therefore, deletion of Second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to which provisions of sub-clause (x) of sub-section 24 of section 2 applies, assessee shall not be entitled to deduction of such sum in computing the income referred to in section 28 unless and until such sum is credited by the assessee to the employees account in the relevant fund or funds on or before the due date as mentioned in explanation to section 36(1)(va). Therefore, with respect to the employees contribution received by the assessee if the assessee has not credited the said sum to the employees account in the relevant fund or funds on or before the due date mentioned in explanation to section 36(1) (va), the assessee shall not be entitled to deductions of such amount in computing the income referred to in section 28 of the Act. 7.07. Now so far as the reliance placed upon the decision of the Hon blee Supreme Court in the case of Alom Extrusions Ltd. (supra), by the learned ITAT as well as learned advocates appearing on behalf of the assessee in support of their submission that in view of amendment in section 43B pursuant to Finance Act, 2003, by which the second proviso to section 43B has been deleted and therefore even with respect to employees contributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erprises (supra) is concerned, on facts and controversy raised in the present appeals, the said decision would not be any assistance to the assessee. In the case before the Karnataka High Court, the dispute was with respect to the employer s contribution and the controversy was whether the amendment to section 43B of the Act would be retrospective in nature or not. In the aforesaid case before the Karnataka High court, there was no dispute with respect to employees contribution as is there in the present case. 7.10. Similarly, the decision of the Bombay High Court in the case of Pamwi Tissues Ltd. (supra) also would not be applicable to the facts of the case on hand. In the case before the Hon ble Bombay High Court, the dispute was whether deletion of Second Proviso to section 43B would be applicable retrospectively or not and in that case the dispute was also with respect to employer s contribution. 7.11. Now, so far as the reliance placed upon the decision of the Himachal Pradesh High Court in the case of Nipso Polyfabriks Ltd. (supra); decision of the Karnataka High Court in the case of Spectrum Consultants India (P) Ltd. (supra); decision of the Rajasthan High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d counsel appearing on behalf of the assessee and his submission that if two views are possible and different High Courts have taken a particular view, this Court may not take a different view, is concerned, we are of the opinion that in the present case, and as discussed hereinabove, only one view is possible as canvassed on behalf of the revenue and as observed by under section hereinabove and we are not in agreement with the view taken by the Himachal Pradesh High Court; Karnataka High Court; Rajasthan High Court and Punjab and Haryana High Court in the cases referred to hereinabove, and therefore, the submission made on behalf of the assessee to follow the decisions of the different High Courts refereed to hereinabove and/or not to take a contrary view cannot be accepted. 8.00. In view of the above and for the reasons stated above, and considering section 36(1)(va) of the Income Tax Act, 1961 read with sub-clause (x) of clause 24 of section 2, it is held that with respect to the sum received by the assessee from any of his employees to which provisions of sub-clause (x) of clause (24) of section (2) applies, the assessee shall be entitled to deduction in computing the inco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an. The receipts are deemed dividend within the meaning of section 2(22)() of the I.T. Act. The details of such receipts are as under: Crysind Electronics Pvt. Ltd. ₹ 7,73,295/- Sun Generic Cable Pvt. Ltd. ₹ 4,91,907/- Swift Liank Pvt. Ltd. ₹ 11,53,093/- Since these amounts are received by the assessee and it holds more than 10% of the beneficial shares the amount is taxable in the hands of the assessee u/s. 2(22)(e) of the I.T. Act. 9. On appeal, the CIT(A) observed that these amounts were credited and represented salary payments on behalf of the company and thus these payments are in the nature of normal business expenses and cannot be treated as deemed dividend in the hands of the company. Therefore, the CIT(A) held that these payments cannot be treated as deemed dividend and deleted the addition of ₹ 24,18,295/-. 10. We have heard the Ld. DR. We find that during the first appellate proceedings, the CIT(A) got admitted the ledger account statements and thereafter, he came to the conclusion that the said amount received were credited on the last date of the financial year and represented salary payments made on behalf of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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