2016 (12) TMI 1785 - AT - Income Tax

Delayed payment to the P.F. account (Employees Contribution) - CIT-A concluded that even if there is a delay in making payment to the P.F. Account, so long as it is paid before the date of filing of the return there cannot be any disallowance under the I.T. Act. - HELD THAT - We accept the claim of the assessee and hold that the Ld. CIT(A) having set aside the disallowance by following the decision of the Hon ble Delhi High Court AIMIL LIMITED, NIRMALA SWAMI, SPEARHEAD DIGITAL STUDIO, M/S. NET 4 INDIA LTD., MODIPON LTD., M/S. EKTA AGRO INDUSTRIES LTD., 2009 (12) TMI 38 - DELHI HIGH COURT which inturn, followed the ratio laid down by the Apex Court in the case of Vinay Cements Ltd. 2007 (3) TMI 346 - SC ORDER the view taken by the Ld. CIT(A) do not call for any interference. Accordingly, ground No.2 of the Revenue (for the A.Y. 2010-2011) is dismissed. D isallowance by applying the provisions of Section 40(a)(ia) - Addition set aside by CIT(A) on the ground that the said Section applies only in the case of amount payable and not in respect of the amount already paid - HELD THAT - Admittedly identical issue was decided by the ITAT, Hyderabad Bench, in number of cases, in favour of the assessee and against the Revenue in the light of observations of the Hon ble jurisdictional High Court in the case of CITII, Hyderabad vs., M/s. Janapriya Engineers Syndicate 2015 (5) TMI 309 - ANDHRA PRADESH HIGH COURT wherein the Court observed that until and unless the decision of the Special Bench is upset by this Court it is binding on smaller Benches and Coordinate Benches of the Tribunal. In ACIT, Central Circle-2, Hyderabad vs., M/s. Janapriya Properties Pvt. Ltd., Hyderabad 2015 (1) TMI 1208 - ITAT HYDERABAD wherein one of us is a party the Tribunal has analysed the issue and concluded that Section 40(a)(ia) cannot be invoked where the payments were already made. - Decided against revenue

Summary

Issues:
- Disallowance of employee's contribution to provident fund for A.Y. 2010-2011
- Disallowance u/s.40(a)(ia) of the Income Tax Act for A.Y. 2010-2011
- Disallowance u/s.40(a)(ia) of the Income Tax Act for A.Y. 2011-2012

Analysis:
1. Disallowed Addition for Employee's Contribution to Provident Fund (A.Y. 2010-2011):
- The Revenue challenged the deletion of the addition of ?10,11,130 towards delayed payment to the P.F. account. The CIT(A) referred to a Delhi High Court judgment and held that as long as the payment is made before the due date for filing the return of income, no disallowance can be made under the Income Tax Act. The ITAT, Hyderabad Benches consistently followed this view. The Tribunal accepted the assessee's claim, citing the Delhi High Court decision and the Apex Court's ruling in a related case. The Tribunal dismissed the Revenue's appeal for this issue.

2. Disallowance u/s.40(a)(ia) of the Income Tax Act (A.Y. 2010-2011 & A.Y. 2011-2012):
- The Revenue contested the disallowance made by the Assessing Officer under Section 40(a)(ia) for both assessment years. The CIT(A) set aside the disallowance, stating that the section applies to amounts "payable" and not already paid. The CIT(A) relied on a Special Bench decision and a High Court judgment. The ITAT, Hyderabad Benches had consistently ruled in favor of the assessee on this issue. The Tribunal, following the High Court's direction, held that Section 40(a)(ia) cannot be invoked if payments were already made by the assessee. The Tribunal dismissed the Revenue's appeals for both assessment years based on this issue.

3. Overall Decision:
- The Tribunal upheld the CIT(A)'s orders, rejecting the Revenue's contentions and dismissing the appeals filed by the Revenue for both assessment years. The decisions were based on the precedents set by the High Court, Special Bench, and previous ITAT rulings, emphasizing that the provisions of Section 40(a)(ia) do not apply when payments have already been made. The judgments were delivered on 8th December 2016 by the ITAT Hyderabad.