Income Tax Appellate Tribunal - CuttackKonark Aquatics & Export (P) Ltd, ... vs Acit, Circle-2(1), Bhubaneswar, on 28 April, 2017IN THE INCOME TAX APPELLATE TRIBUNAL,
                     CUTTACK BENCH, CUTTACK

         BEFORE S/SHRI N.S SAINI, ACCOUNTANT MEMBER
             AND KULDIP SINGH JUDICIAL MEMBER


                       ITA No.358/CTK /2014
                      Assessment Year : 2007-08


     Konark Aquatics & Exports       Vs.     ACIT,    Circle         2(1),
     Pvt Ltd., Plot No-1, Saheed             Bhubaneswar.
     nagar, Bhubaneswar.

     PAN/GIR No. AAACK 7219 A

            (Appellant)               ..            ( Respondent)



                     Assessee by           : Shri P.K.Mishra, AR
                         Revenue by : Shri A.Tigga, DR


                     Date of Hearing :           25/04/ 2017
                  Date of Pronouncement : 28 /04/ 2017


                                 ORDER

Per N.S.Saini, AMThis is an appeal filed by the assessee against the order of CIT(A)-

II, Bhubaneswar, dated 25.10.2012, for the assessment year 2007-08 .2.     Ground Nos.1,2,3,48,9,10 read as under:"1.For that the order of assessment as framed by the learned
       Assessing Officer as well as Order of CIT (A)-1I, Bhubaneswar has
       neither been based on the facts and circumstance of the case nor
       on points of law.2. For that the assessment as framed by the learned Assessing
       officer is not based on fact and therefore not maintainable in the
       eyes of law.2ITA No. 358/CT K/ 2014
                                                      Asse ssment Year : 20 07- 083.   For that addition to the tune of Rs.8100/-Under the head
      Professional tax is not sustainable on fact and law and liable to be
      deleted.4. For that addition to the tune of Rs.88116/-Under the head
      Service tax not sustainable on fact and law and liable to be deleted.8. For that the addition to the tune of Rs.1,76,334/- under the head
      depreciation not sustainable on fact and law and liable to be
      deleted.9. For that the assessee craves leave to add or amend any of the
      grounds of appeal either before or at the time of hearing of the
      appeal.10. For these grounds and other grounds, if any that will be
      adduced at the time of hearing. It is prayed that the order of
      assessment be quashed and the demand be annulled in the interest
      of justice and equity."4.    At the time of hearing, ld Authorised Representative of the

assessee submitted that he is not pressing the above grounds of appeal

and hence, same are dismissed for want of prosecution.5.    In Ground Nos.5 & 6, the grievance of the assessee is that the ld

CIT(A) erred in confirming the action of the Assessing Officer disallowing

Rs.77,51,608/-Under the head 'Ocean Freight', Rs.1,14,110/-Under the

head 'Survey expenses ,'Rs.4,49,815/- under the head 'Testing charges'

and Rs. 41,298/- under the head '' Legal charges'.6.    The brief facts of the case are that the Assessing Officer observed

that the assessee has made payment of Rs.77,51,608/-, Rs.1,14,110/-

Under the head 'Survey expenses ,'Rs.4,49,815/- under the head

'Testing charges' and Rs. 41,298/- under the head            '' Legal charges'

aggregating to Rs.83,56,831/- on which TDS was not deducted by the

assessee u/s 194C of the Act. Therefore, by invoking the provisions of3ITA No. 358/CT K/ 2014
                                                 Asse ssment Year : 20 07- 08


section 40(a)(ia) of the Act, the Assessing Officer disallowed the

deduction for the same.7.    On appeal, the CIT(A) confirmed the action of the Assessing

Officer.8.    Before us, the argument of the ld A.R. of the assessee is that as

can be observed from the order of the Assessing Officer that from the

profit and loss account, he observed that the assessee has debited

Rs.77,51,608/- towards Ocean freight, Rs.1,14,110/- towards survey

expenses, Rs.4,49,815/- towards testing charges and Rs.41,298/-

towards legal charges, on which no TDS has been deducted and

therefore, deduction was disallowed by the Assessing Officer. It was his

submission that at the end of the financial year 31.3.2007, no amount

was outstanding and payable under the above heads of expenses.

Therefore, in view of the decision of Hon'ble Allahabad High Court in the

case ofCIT vs. Victor Shipping Services (P) Ltd., (2013) 357 ITR

642(All), no disallowance is warranted. He further submitted that the

SLP filed against the judgment of Hon'ble Allahabad High Court has been

dismissed by the Hon'ble Supreme Court vide judgment dated 2.7.2014

in CC No.(s) 8068/2014. He       also submitted that where there are

contrary decisions of Hon'ble High Courts on an issue and none of which

is Hon'ble Jurisdictional High court, then the decision in favour of the

assessee should be followed in view of the decision of Hon'ble Supreme

Court in the case of CIT vs.Vegetable Products Ltd., 88 ITR 192 (SC).4ITA No. 358/CT K/ 2014
                                                  Asse ssment Year : 20 07- 089.    Ld D.R. relied on the orders of lower authorities and could not

controvert the above submission of ld A.R. of the assessee that out of

the expenditure aggregating to Rs.83,56,831/- claimed by the assessee

under the above heads, no amount was outstanding and payable as on

3.1.3.2007.10.In the facts and circumstances of the case, we find that the issue

is squarely covered by the decision of Hon'ble Allahabad High Court in

the case ofCIT vs. Vector Shipping Services (P) ltd., (supra) and,

therefore, respectfully following the decision of the Hon'ble Allahabad

High Court in the case ofCIT vs. Victor Shipping Services (P) Ltd(supra),

we set aside the orders of the lower authorities and delete the

disallowance of Rs.83,56,831/- made u/s.40(a)(ia) of the Act and allow

the above grounds of appeal of the assessee.11.   In Ground No.7 of the appeal, the grievance of the assessee is that

the CIT(A) erred in confirming the action of the Assessing Officer

disallowing deduction under the head employee's contribution to ESI of

Rs,3,86,372/-and employee's contribution to PF of Rs.47,135/-12.   The Assessing Officer disallowed the above claim of the assessee

on the ground that payment was not made            within the due dates

provided under theESI and PF Act.13. On appeal, the CIT(A) confirmed the action of the Assessing

Officer.5ITA No. 358/CT K/ 2014
                                                 Asse ssment Year : 20 07- 0814.   Ld A.R. of the assessee submitted that the Assessing Officer

disallowed deduction for employee's contribution to ESI of Rs.3,86,372/-

and to PF of Rs.47,135/-, as the said amounts were not deposited with

the concerned authorities within the due date prescribed under the

concerned Act.   He submitted that the payments were made by the

assessee before the due date of filing the return of incomeu/s.139(1)of the Act and, therefore, the disallowance made was not warranted.15.   Ld D.R. relied on the orders of lower authorities and could not

controvert the above submission of the ld A.R.16.   We find that the it is not in dispute that the employee's

contribution to ESI of Rs.3,86,372/- and to PF of Rs.47,135/-, were paid

by the assessee before the due date of filing the return of income

u/s.139(1) of the Act and the reasons for disallowing the same was that

the payments were not made within the due date specified under the

concerned Act.17.   We find that Hon'ble Delhi High Court inCIT Vs. AIMIL Limited[2010] 321 ITR 508 (DEL) has held that the employees' contribution

towards EPF and ESI etc. deposited after the due date but before the

time allowed for filing the return u/s.139(1) will not call for any

disallowance u/s.36(1)(va). Therefore, we set aside the orders of lower

authorities and delete the disallowance of employees contribution to ESI

of Rs.3,86,372/- and to PF of Rs.47,135/-, and allow this ground of

appeal of the assessee.6ITA No. 358/CT K/ 2014
                                                  Asse ssment Year : 20 07- 0818.   In the result, the appeal filed by the assessee is allowed.Order pronounced in the open court on       28   /04/2017 in the
presence of parties.Sd/-                                 sd/-

             (Kuldip Singh)                     (N.S Saini)
            JUDICIAL MEMBER               ACCOUNTANT MEMBER

Cuttack; Dated      28 /04/2017
B.K.Parida, SPS
Copy of the Order forwarded to :1. The Appellant : Konark Aquatics & Exports
     Pvt Ltd., Plot No-1, Saheed nagar,
     Bhubaneswar2. The Respondent.       ACIT, Circle 2(1),
     Bhubaneswar3. The CIT(A)-II, Bhubaneswar4. Pr.CIT-II, Bhubaneswar.5. DR, ITAT, Cuttack6. Guard file.                                                 BY ORDER,
      //True Copy//
                                                        SR.PRIVATE SECRETARY
                                                      ITAT, Cuttack