TMI Blog2020 (4) TMI 122X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case of CIT vs. HCL Technologies Ltd [ 2018 (5) TMI 357 - SUPREME COURT]. Belated remittance of Provident Fund/ ESI payments as deduction - CIT-A deleted the addition on the ground that payments are made within the due date of filing of return of income and not within the time stipulated u/s.36(1) (va) - HELD THAT:- Hon ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security Intelligence India Pvt. Ltd [ 2015 (7) TMI 1063 - MADRAS HIGH COURT] had held that when EPF/ESI contribution are made within due date of filing the return, the same should be allowed as deduction. Therefore we do not find any reason to interfere with the order of the ld. CIT(A). Ground No.3 raised by the Revenue stands dismissed. - I.T.A. No.182/CHNY/2018, I.T.A. No.187/CHNY/2018 - - - Dated:- 14-2-2020 - Shri Inturi Rama Rao, Accountant Member And Shri Duvvuru RL Reddy, Judicial Member For the Assessee : Shri. Ashik Shah, C.A. For the Department : Shri. S. Ramakrishnan, CIT. ORDER PER INTURI RAMA RAO, ACCOUNTANT MEMBER These are cross appeals filed by the assessee as well as Revenue directed against the order of the ld. Commissioner of Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Radiators Pressing, 129 Taxmann 709, and Co-ordinate Bench decision of Bombay and Chennai Tribunal in the case of CIT vs.Ghate Patil Transport Ltd (ITA No.1002/2012 1034/2012) and DSM Soft Pvt Ltd vs. ACIT, ITA No.11 12/Mds/2010. With regard to the claim for foreign tax paid the issue was set aside to the Assessing Officer for due verification. 4. Aggrieved by that part of the ld. CIT(A) order, which is against assessee-company, the assessee company is in appeal before us in ITA No.82/CHNY/2018 challenging the decision of ld. CIT(A) in reducing the expenditure incurred in foreign currency both total export turnover as well as total turnover contending that expenditure was not incurred in connection with delivery of computer software or services and also challenged the addition made under the head income from other sources in respect of foreign exchange gain. The assessee raised the following grounds of appeal. The grounds stated here are without prejudice to one another. 1. The order of the Ld. AO and the Ld. CIT(A), to the extent prejudicial to the Appellant, are contrary to law, facts, and circumstances of the case. 2. Exclusion of expenditure incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1 to Section 1OAA of the Act, the extract of which is provided below for your goodself sease of reference: export turnover means the consideration in respect of export by the undertaking, being the Unit of articles or things or services received in, or brought into India by the Assessee but does not include freight, telecommunication charges or insurance attributable to the delivery of the articles or things outside India or expenses, if any, incurred in foreign exchange in rendering of services (including computer software) outside India . 2.2 Our Submission A) Expenditure incurred in foreign currency not to be excluded from export turnover Our arguments for non-exclusion of the above said expenditure from export turnover are summarized below: 1. Precedent in Appellant s own case At the outset, the Appellant wishes to submit that the Hon ble Dispute Resolution Panel ( DRP ) has in Appellant s own case for AY 2009-10 examined in detail, treatment of similar expenditure and vide directions dated December 20, 2013, directed the Ld. AO to delete the exclusion of the following expenses from export turnover while computing deduction under section 1 OAA of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me Tax Appellate Tribunal in the following rulings: 1. Zylog Systems vs ITO{2011] 7 [TR (t) 348 (Chennai - Special Bench); 2. Financial Software and Systems P Ltd v DCIT [ITA No. 1 070/Mds2016] . However, ld. CIT(A) while granting relief on alternative plea that same should be reduced from both export turnover as well as total turnover, has not adjudicated the issue, the expenditure incurred in foreign currency should not be reduced from the export turnover. Hence, this issue is remitted back to the file of ld. CIT(A) for fresh adjudication after affording due opportunity of hearing to the appellant in accordance with law. Thus, ground No.2 raised by the assessee is partly allowed for statistical purposes. 7. Ground No.3 challenges the decision of ld. CIT(A) in assessing interest earned on fixed deposits as business receipts under the head income from other sources . This issue was challenged before the ld. CIT(A) in ground No.3. Though the ld. CIT(A) extracted the ground of appeal but failed to adjudicate this ground of appeal. Therefore, we remit this issue back to the file of the ld. CIT(A) for fresh adjudication after affording due opportunity of hear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the assessee credits the same to the relevant fund as per the due dates specified. 3.3 The ld CIT(A) ought to have noted that as per the decision of the Hon ble Gujarath High Court in the case of CIT II Vs Gujarath State Road Transport Corporation, as per the definition of income as per Sec.2(24)(x), any sum received by the assessee from his employees as contribution to any PF or Superannuation Fund etc., as per the Relevant Acts, is to be treated as income and the employer-assessee is eligible to claim deduction of such amount as per Explanation to Sec.36(l)(v) only when the same is credited into the relevant fund within the due dates specified under those Acts. 3.4 The ld CIT(A) failed to note that in the case of M/s Gujarath State Roj Transport Corporation, the Hon ble Gujarath High Court has clearly discussed that the Hon Thile Apex Court in the case of Alom Extrusions Limited, never had the occasion to consider the deduction u/s 36(1)(va) with respect to employees contribution and the only controversy before the Supreme Court was with respect to the amendment (deletion) of second proviso to Sec.43B operative w.e.f 1.4.2004 or whether it operates retrospectively ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e same way, expenses incurred in foreign exchange for providing the technical services outside shall be allowed to exclude from the total turnover . Respectfully following the above decision, we dismiss ground No.2 raised by the Revenue. 13. Ground No.3 challenges the decision of the ld. CIT(A) in allowing belated remittance of Provident Fund/ ESI payments as deduction. The ld. Commissioner of Income Tax (Appeals) deleted the addition on the ground that payments are made within the due date of filing of return of income and not within the time stipulated u/s.36(1) (va) of the Act. The Hon ble Jurisdictional High Court in the case of CIT vs. M/s. Industrial Security Intelligence India Pvt. Ltd in TC Nos.585 586 of 2015, dated 24.07.2015, had held that when EPF/ESI contribution are made within due date of filing the return, the same should be allowed as deduction. Therefore we do not find any reason to interfere with the order of the ld. CIT(A). Ground No.3 raised by the Revenue stands dismissed. 14. In the result, the appeal of the Revenue in ITA No.18/CHNY/2018 stands dismissed. 15. To summarize the results, the appeal filed by the assessee in ITA No.182/CHNY/201 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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