TMI Blog2018 (12) TMI 1667X X X X Extracts X X X X X X X X Extracts X X X X ..... e furnished for A.Y 2014-15 - In view of that, since the facts and circumstances associated with the issue is not on record, this issue is remitted back to the AO for a fresh examination. The Assessing Officer shall decide the issue after affording adequate opportunity to the assessee, in accordance with law. - I.T.A. Nos. 650 & 651/Chny/2018 - - - Dated:- 13-12-2018 - SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER For the Appellant : Shri. M. Srinivasa Rao, CIT For the Respondent : None ORDER PER S. JAYARAMAN, ACCOUNTANT MEMBER : The Revenue filed these appeals against the orders of the Commissioner of Income Tax (Appeals)-3, Chennai in ITA Nos. 36 235/16-17/A-3 dated 31.11.2017 for assessment year 2013-14 2014- 15, respectively. 2. M/s. Orchid Pharma Ltd., the assessee, is a manufacturer of drugs and fertilizer products. While making the assessment for assessment year 2013-14, the Assessing Officer noticed, inter alia, that the assessee has not paid employees contribution to PF ESI within the due dates as specified in the relevant Acts, although, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... categorically stated that the employee s contribution should be paid into their account within the due date allowed in the respective Acts viz,, ESI Act and PF Act. 2.2 The ld.CIT(A) ought to have appreciated that the opening words of section 438 of the IT Act make it clear that the provisions of the said section would apply only when a deduction is otherwise allowable under the Income Tax Act and thus the provisions of section 438 of the IT Act cannot be pressed into service to allow a deduction which is otherwise not allowable under the Income Tax Act including section 36(1)(va) thereof. 2.3 The ld.CIT(A) ought to have appreciated that provisions of Sec.43B(b) of the IT Act deal with allowability of employer s contribution to Provident Fund or any other funds for the welfare of employees, whereas the employee s contribution to the said funds is not an expenditure incurred by the assessee but an amount collected by the assessee, as an employer, from the employees s salary to be credited to the employees s account in the relevant funds and as such, the employee s contribution to PF/ESI funds, partakes the character of income of the assessee employer as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithout discussion on merits of the case, of the SlAP filed by the revenue against the order of the Hon ble Rajasthan High Court and as such cannot be taken as law settling the issue. 2.9 Having regard to the submissions in the foregoing grounds, the ld.CIT(A) ought to have appreciated that the decisions relied on by him to allow relief to the assessee are distinguishable to the facts of the present case and as such, ought to have upheld the action of the AO in denying deduction of belated remittance of employee s contribution to ES! PF funds and deeming the same as income of the assessee as provided in section 2(24)(c) r.w.s. 36(lj(va} of thQ IT Act in the assessment order passed u/s 143(3) of the IT Act, 1961, for AY 2013-14 in the assessee s case. 3. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored. The Ld. DR very elaborately argued on the lines of the grounds of the appeal. None was present for the assessee. 5. We heard the Ld. DR and gone t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4A of the Income Tax Act, 1961, read with Rule 8D of the Income Tax Rules, 1962, in the assessment order for AY 2014-15 passed u/s 143(3) of the ITAct,1961,in the assessee s case. 2.1 The ld.CIT(A) having deleted the disallowance u/s 14A of the IT Act on the ground that the assessee has not earned /received any dividend income nor claimed the same p the Return of Income, ought to have appreciated the CBDT circular No.5/2014 dated 11/02/2014 stating that Rule 8D r.w.s 14A of the IT Act provides for disallowance of the expenditure, even where the taxpayer, in a particular year, has not earned any exempt income. 2.2 The Ld. CIT(A) ought to have appreciated that in the present case, the assessee has declared dividend income of ₹ 1,09,943/- and that having accepted the applicability of sec. 14A of the IT Act, the assessee has disallowed on its own and added ₹ 95,079/- to the total income in this regard, in the computation of Total income filed along with the return of income furnished for A.Y 2014-15. 2.3 The ld. CIT(A) ought to have appreciated that in the present case, the AO has recorded his satisfaction in the assessment order, a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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