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TMI Blog2019 (9) TMI 143X X X X Extracts X X X X X X X X Extracts X X X X ..... te to the manufacturing activity. The disallowance of the provident fund/ ESIC payments has been made because of the statutory provisions-section 43B in the case of the employer's contribution and section 36(v) read with section 2(24) (x) in the case of the employees' contribution which has been deemed to be the income of the assessee. The plain consequence of the disallowance and the add back that has been made by the Assessing Officer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e disallowances made on the ground of non compliance of the mandatory provisions of the Act cannot be used for claiming deduction provided u/s 10A of the Income Tax Act? (iii) The appellant prays that the order of Ld. CIT(A) on the above directions be set aside and that of the Assessing Officer be restored. 2. Brief facts of the case are that the assessee is engaged in the business of providing various information technology enabled services to its group companies located within and outside India. The assessee filed its return of income for Assessment Year 2011-12 on 23.11.2011 declaring total income of ₹ 93,924/-. In the return of income, the assessee claimed deduction under section 10A for Assessme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar 2020-11 dated 28.02.2017. 4. On the other hand, the ld. Departmental Representative (DR) for the revenue after going through the contents of order of Tribunal relied upon the order of Assessing Officer. 5. We have considered the rival submission of the parties and gone through the orders of authorities below. We have also deliberated on case laws relied by lower authorities. We have noted that on identical grounds of appeal, the co-ordinate bench of Tribunal in assessee s own case for Assessment Year 2020-11 in ITA No. 1900/Mum/2015 passed the following order: 5. We have heard the rival submissions and also perused the material placed on record including the decisions relied upon by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntribution towards provident fund and ESIC, though beyond the due date including the grace period. The Assessing Officer added these payments to the total income of the assessee and made an addition in the amount of ₹ 71.59 lakhs, However, for the deduction under section 10A, the addition made on account of the employees' contribution was ignored in calculating the profits eligible for deduction on the ground that these receipts were not generated out of the manufacturing activity of the assessee-company. 12. By reason of the judgment of the Supreme Court in CIT vs. Alom Extrusions Limited [2009] 319 ITR 306 the employer's contribution was liable to be allowed, since it was deposited by the due date for the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plain consequence of the disallowance and the add back that has been made by the Assessing Officer is an increase in the business profits of the assessee. The contention of the Revenue that in computing the deduction under section 10A the addition made on account of the disallowance of the provident fund/ ESIC payments ought to be ignored cannot be accepted. No statutory provision to that effect having been made, the plain consequence of the disallowance made by the Assessing Officer must follow. The second question shall accordingly stand answered against the Revenue and in favour of the assessee. 7. We also notice that the ITAT Hyderabad Bench has decided the similar issue in favour of the assessee in the case of ITA No ..... X X X X Extracts X X X X X X X X Extracts X X X X
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