Income Tax Appellate Tribunal - IndoreM/S Tesla Transformers (India) Ltd, ... vs Acit 3(1) Bhopal, Bhopal on 2 March, 2023आयकर अपील य अ धकरण, इंदौर                 यायपीठ, इंदौर\n      IN THE INCOME TAX APPELLATE TRIBUNAL\n               INDORE BENCH, INDORE\n   BEFORE SHRI VIJAY PAL RAO, JUDICIAL MEMBER\n                           AND\n         SHRI B.M. BIYANI, ACCOUNTANT MEMBER\n                  ITA No. 190/Ind/2022\n                (Assessment Year:2020-21)\nM/s. Tesla Transformers                    ACIT 3(1)\n(India) Ltd.                                Bhopal\n                              Vs.\nBhopal\n   (Appellant / Assessee)           (Respondent/ Revenue)\n                    PAN: AAGCT 8705 J\nAssessee by                None\nRevenue by                 Shri Ashish Porwal, Sr. DR\nDate of Hearing            28.02.2023\nDate of Pronouncement 02.03.2023\n\n                             ORDE R\n\nPer Vijay Pal Rao, JM:This appeal by the assessee is directed against the order dated\n03.06.2022 of Ld. Commissioner of Income Tax (Appeals) (in short Ld.\nCIT(A), National Faceless Appeal Centre, Delhi for Assessment Year 2020-21.2. None has appeared on behalf of the assessee when this appeal was\ncalled for hearing. It transpires from record that since beginning assessee\nis not appearing before Tribunal despite repeated notice issued to the\nassessee through registered post as well as e-mail. Even today neither the\nassessee appeared nor any adjournment application is filed. Accordingly\nthis bench proposes to hear and dispose of this appeal ex-parte. The\nassessee has raised following grounds of appeal:Page 1 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 2 of 81. That the ld. CIT(A) erred in holding that the AO has not erred in\n      applying rate of tax of 22% prescribed under section 115BAA when\n      the assessee has filed prescribed Form 10-IC under section 115BAA\n      within time limit prescribed as per provisions of the Taxation And\n      Other laws (Relaxation and Amendment of Certain Provisions) Act,\n      2020..2.That in any case the ld. CIT(A) erred in holding that rate of tax\n      @22% was not applicable inspite of CBDT Circular No.6/ 2022 dt. 17-03-2022 prescribing time upto 30-06- 2022 to file form 10-IC3.That the ld. CIT(A) erred in disallowing delayed payment of\n      employee contribution to ESI/PF of Rs.33,17,085/- which have been\n      paid before due date of filing of return.3. Ground no.1 & 2 are regarding the applicability of the Income Tax rate\nas prescribed u/s 115BAA of Income Tax. We have heard the Ld. DR and\ncarefully perused the impugned order of the authorities below.3. The return of income filed by the assesee was processed u/s 143(1) of\nthe Act bythe CPCBanglore, whereby the tax was computed by applying\n30% rate of income tax as against the claim of assessee @ 22% as per the\nprovisions of section 115BAA of the Act. The assessee challenged the\nactionof the CPC, Banglore by filing the appeal before the Ld. CIT(A) and\nsubmitted that the assessee is eligible for the lower tax rate as prescribedu/s 115BAAof the Income Tax Act.3. Ld. CIT(A) did not accept this contention of the assessee on the ground\nthat the form 10-IC has not been filed/uploaded by the assessee within\nthe extended time limit which was also relaxed by the Amendment of\ncertain Provisions of Act 2020. It is noted that in grounds of appeal the\nassessee has specifically raised this issue that the assessee has filed the\nprescribed form 10-ICu/s 115BAAwithin time limit prescribed as per the\nProvisions of Taxation and other laws ("Relaxation and Amendment of\nCertain Provisions) Act 2020". The assessee has claimed that the Ld.\nCIT(A) has denied the claim despite the CBDT, Circular           6/2022 dated\n17.03.2022 prescribing time limit for filing form 10-IC up to 30th June,Page 2 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 3 of 82022 whereas the assessee undisputedly, filed/uploaded the form 10-IC\non 16.03.2021.4. Ld. DR has fairly submitted that the extension of time limit is required\nto be verified at the level of the Ld. AO.5. Having considered the contention of the assessee as well as the\nimpugned order of the Ld. CIT(A), we find that the Ld. CIT(A) has denied\nthe benefit of lower tax as providedu/s 115BAAof the Act on the ground\nthat the assessee fails to furnish the form 10-IC within the statutory time\nlimit. Ld. CIT(A) has not disputed the fact that the assessee uploaded form\n10-IC on 16.01.2021. However, the Ld. CIT(A) has considered the\nextended date of filing the form 10-IC as 15.01.2021 and thereby the form\nsubmitted by the assessee on 16.03.2021 was treated as beyond the time\nlimit. Since the assessee has claimed that the time limit was extended by\nthe CBDT vide circular no.6/2022 up to 30th June 2022 therefore, this\naspect of the matter is required to be verified by the Ld. AO as to whether\nthe time limit was extended as well as whether             the assessee has\nsubmitted form 10-IC within the time limit as extended from time to time\nby the CBDT. Accordingly, this issue is set aside to the record of the Ld.\nAO for reconsideration and adjudication after ascertaining extended time\nlimit for filing form 10-IC. Needless to say the assesee be given a proper\nopportunity of hearing before passing a fresh order.6. Ground no.3 is regarding disallowance of delayed payment on account\nof ESI/PF.7. The assessee has claimed that the payments towards Employees\nContribution were made before due date filing of return of incomeu/s\n139(1)of the Income Tax Act. However, it is not disputed that there was a\ndelay in payment as per respective acts of ESI/PF. This fact is recorded by\nthe Ld. CIT(A) in para 4.3 as under:"In the case on hand, the appellant claimed to have deposited the\n      employees contribution in respect of EPF/ESIC totaling to\n      Rs.33,17,085/- beyond the due date of the respective Acts but beforePage 3 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 4 of 8the due date of filing of return of income as specifiedu/s 139(1)of the\n     Act, and hence, appellant's claim for eligibility for deduction.8. Ld. DR has pointed out this issue is now covered by the judgement of\nHon'ble Supreme Court in the case of Checkmate Services (P.) Ltd.\n[2022] 448 ITR 518 (SC) the relevant para is extracted below:50. The Constitution Bench, in Commissioner. ofCustoms v. Dilip\n     Kumar & Co.23 endorsed as following:"24. In construing penal statutes and taxation statutes, the Court has\n     to apply strict rule of interpretation. The penal statute which tends to\n     deprive a person of right to life and liberty has to be given strict\n     interpretation or else many innocents might become victims of\n     discretionary decision-making. Insofar as taxation statutes are\n     concerned,Article 265of the Constitution [ "265. Taxes not to be\n     imposed save by authority of law.--No tax shall be levied or collected\n     except by authority of law."] prohibits the State from extracting tax\n     from the citizens without authority of law. It is axiomatic that taxation\n     statute has to be interpreted strictly because the State cannot at their\n     whims and fancies burden the citizens without authority of law. In\n     other words, when the competent legislature mandates taxing certain\n     persons/certain objects in certain circumstances, it cannot be\n     expanded/interpreted to include those, which were not intended by\n     the legislature.***34. The passages extracted above, were quoted with approval by this\n     Court in at least two decisions beingCIT v. Kasturi & Sons Ltd. [CITv.\n     Kasturi & Sons Ltd., (1999) 3 SCC 346] and State of W.B. v. Kesoram\n     Industries Ltd. [State of W.B. v. Kesoram Industries Ltd., (2004) 10\n     SCC 201] (hereinafter referred to as "Kesoram Industries case [State of\n     W.B. v. Kesoram Industries Ltd., (2004) 10 SCC 201]", for brevity). In\n     the later decision, a Bench of five Judges, after citing the above\n     passage from Justice G.P. Singh's treatise, summed up the following\n     principles applicable to the interpretation of a taxing statute:'(i) In interpreting a taxing statute, equitable considerations are\n     entirely out of place. A taxing statute cannot be interpreted on any\n     presumption or assumption. A taxing statute has to be interpreted in\n     the light of what is clearly expressed; it cannot imply anything whichPage 4 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 5 of 8is not expressed; it cannot import provisions in the statute so as to\nsupply any deficiency;(ii) Before taxing any person, it must be shown that he falls within the\nambit of the charging section by clear words used in the section; and(iii) If the words are ambiguous and open to two interpretations, the\nbenefit of interpretation is given to the subject and there is\nnothingCommissioner of Income Tax v. Ace Multi Axes Systems Ltd.,\n2018 (2) SCC 158 Commissioner.ofCustoms v. Dilip Kumar & Co,\n2018 (9) SCC 1.unjust in a taxpayer escaping if the letter of the law fails to catch him\non account of the legislature's failure to express itself clearly.'"51. The analysis of the various judgments cited on behalf of the\nassessee        i.e.,Commissioner     of      Income-Tax       v.     Aimil\nLtd.24;Commissioner of Income-Tax and another v. Sabari\nEnterprises25;Commissioner of Income Tax v. Pamwi Tissues\nLtd.26;Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh\nUtpadak Sahakari Sandh Ltd.27 and Nipso Polyfabriks(supra) would\nreveal that in all these cases, the High Courts principally relied upon\nomission of second proviso toSection 43B (b). No doubt, many of these\ndecisions also dealt withSection 36(va)with its explanation. However,\nthe primary consideration in all the judgments, cited by the assessee,\nwas that they adopted the approach indicated in the ruling in Alom\nExtrusions. As noticed previously, Alom Extrutions did not consider the\nfact of the introduction ofSection 2(24)(x)or in fact the other provisions\nof the Act.52. When Parliament introducedSection 43B, what was on the statute\nbook, was only employer's contribution (Section 34(1)(iv)). At that point\nin time, there was no question of employee's contribution being\nconsidered as part of the employer's earning. On the application of the\noriginal principles of law it could have been treated only as receipts\nnot amounting to income. When Parliament introduced the\namendments        in     1988-89,    insertingSection     36(1)(va)and\nsimultaneously inserting the second proviso ofSection 43B, its\nintention was not to treat the disparate nature of the amounts,\nsimilarly. As discussed previously, the memorandum introducing the\nFinance Bill clearly stated that the provisions - especially second\nproviso toSection 43B- was introduced to ensure timely payments\nwere made by the employer to the concerned fund (EPF, ESI, etc.) and\navoid the mischief of employers retaining amounts for long periods.That Commissioner of Income-Tax Vs. Aimil Ltd., [2010] 321 ITR 508\n(Delhi High Court).Page 5 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 6 of 8Commissioner of Income-Tax and another Vs. Sabari Enterprises,\n[2008] 298 ITR 141 (Karnataka High Court).Commissioner of Income Tax Vs. Pamwi Tissues Ltd., [2009] 313 ITR\n137 (Bombay High Court).Commissioner of Income-Tax, Udaipur v. Udaipur Dugdh Utpadak\nSahakari Sandh Ltd., [2013] 35 taxmann.com 616 (Rajasthan High\nCourt).Parliament intended to retain the separate character of these two\namounts, is evident from the use of different language.Section\n2(24)(x)too, deems amount received from the employees (whether the\namount is received from the employee or by way of deduction\nauthorized by the statute) as income - it is the character of the amount\nthat is important, i.e., not income earned. Thus, amounts retained by\nthe employer from out of the employee's income by way of deduction\netc. were treated as income in the hands of the employer. The\nsignificance of this provision is that on the one hand it brought into the\nfold of "income" amounts that were receipts or deductions from\nemployees income; at the time, payment within the prescribed time -\nby way of contribution of the employees' share to their credit with the\nrelevant fund is to be treated as deduction (Section 36(1)(va)). The\nother important feature is that this distinction between the employers'\ncontribution (Section 36(1)(iv)) and employees' contribution required to\nbe deposited by the employer (Section 36(1)(va)) was maintained - and\ncontinues to be maintained. On the other hand,Section 43Bcovers all\ndeductions that are permissible as expenditures, or out-goings forming\npart of the assessees' liability. These include liabilities such as tax\nliability, cess duties etc. or interest liability having regard to the terms\nof the contract. Thus, timely payment of these alone entitle an\nassessee to the benefit of deduction from the total income. The\nessential objective ofSection 43Bis to ensure that if assessees are\nfollowing the mercantile method of accounting, nevertheless, the\ndeduction of such liabilities, based only on book entries, would not be\ngiven. To pass muster, actual payments were a necessary pre-\ncondition for allowing the expenditure.53. The distinction between an employer's contribution which is its\nprimary liability under law - in terms ofSection 36(1)(iv), and its\nliability to deposit amounts received by it or deducted by it (Section\n36(1)(va)) is, thus crucial. The former forms part of the employers'\nincome, and the later retains its character as an income (albeit\ndeemed), by virtue ofSection 2(24)(x)- unless the conditions spelt by\nExplanation toSection 36(1)(va)are satisfied i.e., depositing\nsuch amount received or deducted from the employee on or before the\ndue date. In other words, there is a marked distinction between the\nnature and character of the two amounts - the employer's liability is\nto be paid out of its income whereas the second is deemed an income,Page 6 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 7 of 8by definition, since it is the deduction from the employees' income and\n     held in trust by the employer. This marked distinction has to be borne\n     while interpreting the obligation of every assessee underSection 43B.54. In the opinion of this Court, the reasoning in the impugned\n     judgment that the non-obstante clause would not in any manner\n     dilute or override the employer's obligation to deposit the amounts\n     retained by it or deducted by it from the employee's income, unless\n     the condition that it is deposited on or before the due date, is correct\n     and justified. The non-obstante clause has to be understood in the\n     context of the entire provision ofSection 43Bwhich is to ensure timely\n     payment before the returns are filed, of certain liabilities which are to\n     be borne by the assessee in the form of tax, interest payment and\n     other statutory liability. In the case of these liabilities, what\n     constitutes the due date is defined by the statute. Nevertheless, the\n     assessees are given some leeway in that as long as deposits are\n     made beyond the due date, but before the date of filing the return, the\n     deduction is allowed. That, however, cannot apply in the case of\n     amounts which are held in trust, as it is in the case of employees'\n     contributions- which are deducted from their income. They are not\n     part of the assessee employer's income, nor are they heads of\n     deduction per se in the form of statutory pay out. They are others'\n     income, monies, only deemed to be income, with the object of ensuring\n     that they are paid within the due date specified in the particular law.\n     They have to be deposited in terms of such welfare enactments. It is\n     upon deposit, in terms of those enactments and on or before the due\n     dates mandated by such concerned law, that the amount which is\n     otherwise retained, and deemed an income, is treated as a deduction.\n     Thus, it is an essential condition for the deduction that such amounts\n     are deposited on or before the due date. If such interpretation were to\n     be adopted, the non-obstante clause underSection 43Bor anything\n     contained in that provision would not absolve the assessee from its\n     liability to deposit the employee's contribution on or before the due\n     date as a condition for deduction.55. In the light of the above reasoning, this court is of the opinion that\n     there is no infirmity in the approach of the impugned judgment. The\n     decisions of the other High Courts, holding to the contrary, do not lay\n     down the correct law. For these reasons, this court does not find any\n     reason to interfere with the impugned judgment. The appeals are\n     accordingly dismissed.9. Having considered the undisputed facts of the case as well as the\nimpugned order of the CIT(A), at the outset, we noted that this issue is\nnow covered by the judgment of Hon'ble Supreme Court in the case of\nCheckmate Services (P.)Ltd.(supra). Accordingly, following bindingPage 7 of 8ITA No.190/Ind/2022M/s. Tesla Transformers (India) Ltd.Page 8 of 8precedence of Hon'ble Supreme Court, we do not find any error and illegal\nin the impugned order of Ld. CIT(A) qua this issue. Thus, ground no.3 of\nthis appeal is dismissed.10.   In the result, appeal of assessee is partly allowed for statistical\npurposes.Order pronounced in the open court on                02.03.2023.Sd/-                                                Sd/-\n(B.M. BIYANI)                                        (VIJAY PAL RAO)\nAccountant Member                                      Judicial Member\n\nIndore, 02.03.2023\n\nPatel/Sr. PS\n\nCopies to:   (1)   The appellant\n             (2)   The respondent\n             (3)   CIT\n             (4)   CIT(A)\n             (5)   Departmental Representative\n             (6)   Guard File\n                                                                         By order\nUE COPY\n                                                      Sr. Private Secretary\n                                             Income Tax Appellate Tribunal\n                                                     Indore Bench, IndorePage 8 of 8