IN INCOME-TAX APPELLATE TRIBUNAL C BENCH MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH JUDICIAL MEMBER ITA No. 4789/Mum/2016 (Assessment Year 2007-08) ITA No. 4790/Mum/2016 (Assessment Year 2010-11) M/s. Interex Arch Design Pvt. DCIT, Circle-5(2)(1) Ltd., Office No.3, Kailash Nagar, Aayakar Bhawan, Tardeo Road, Tardeo, Vs. M. K. Road, Mumbai-400007. Mumbai-400020. PAN: AABCI3867K Appellant Respondent Appellant by : Shri Ajay R. Singh (AR) Respondent by : Shri Chaudhary Arun Kumar Singh (DR) Date of Hearing : 29.08.2019 Date of Pronouncement : 01.10.2019 ORDERUNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. These two appeals by assessee are directed against separate orders of ld. CIT(A)-10, Mumbai dated 29.04.2016 for Assessment Year 2007-08 & 2010-11. These appeals were initially decided vide order dated 29.09.2018. However, subsequently order was recalled in Miscellaneous Application No. 612 & 613/Mum/2018 dated 03.05.2019. Hence, both appeals were heard afresh. 2. In ITA No. 4789/Mum/2016 for AY 2007-08, assessee has raised following grounds of appeal: ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. 1.1 Ld. Comm. of Income Tax (Appeal) - 10, Mumbai has erred in upholding finding of AO that there is no mistake apparent from record in order passed u/s 143(3) dated 20.07.2009 by AO and consequently upholding action of AO in rejecting application filed u/s 154 of Act. 1.2 Ld. Comm. of Income Tax (Appeal) - 10 Mumbai, has erred in law and in facts in not appreciating contention and submission of assessee that during relevant previous year, service tax was not applicable on work contract and as such disallowance made by assessee in computation is wrong and incorrect which needs to be rectified. 1.3 Ld. Comm. of Income Tax (Appeal)- 10 Mumbai is incorrect in holding that amount which remained unpaid was not added back in computation of income by Appellant. 1.4 Ld. Comm. of Income Tax (Appeal)- 10 Mumbai, has erred in law and in facts in not appreciating contention and submission of assessee that AO ought to compute correct income of assessee. 2. Brief facts of case are that assessee is company engaged in business of interior designing and turnkey projects contracts, filed its return of income for Assessment Year 2007-08 on 31.10.2007 declaring income of Rs. 76,19,992/-. case was selected for scrutiny and assessment was completed on 28.07.2009 under section 143(3) determining total income of Rs. 79,85,880/-. Assessing Officer made disallowance on travelling expenses of Rs. 1,32,437/- and disallowance under section 43B of Rs. 2,33,446/-. assessee filed application for rectification under section 154 stating therein that disallowance under section 43B on payment to Gujarat Value Added 2 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. Tax (Gujarat VAT) of service tax was wrong and incorrect and required rectification. application of assessee was rejected by Assessing Officer holding that there is no mistake in order. On further appeal before ld. CIT(A), action of Assessing Officer was confirmed. Thus, further aggrieved, assessee has filed present appeal before this Tribunal. 3. We have heard submission of ld. Authorized Representative (AR) of assessee and ld. Departmental Representative (DR) for revenue and gone through orders of lower authorities. ld. AR of assessee submits that disallowance made under section 43B in assessment order is contrary to law. levy of service tax on work contract was not applicable during relevant period as same was brought to tax only w.e.f. 01.06.2007. ld. AR of assessee also filed reconciliation of disallowance under section 43B as per page No. 24 of paper book, which is part of tax Audit report. ld. AR of assessee submits that direction may be issued to Assessing Officer to verify reconciliation and pass order accordingly. 4. On other hand, ld. DR for revenue supported order of lower authorities. 5. We have considered submission of both parties and perused material available on record. Assessing Officer made disallowance under section 43B by taking view that Gujarat VAT of Rs. 2,33,446/- 3 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. was not paid as per provisions of section 43B and disallowed accordingly. application filed by assessee under section 154 was also rejected by Assessing Officer. ld. CIT(A) confirmed action of Assessing Officer by taking view that amount was shown in books of assessee as collected but not paid to Gujarat VAT authority. Auditor has clearly pointed out this fact in its report. Therefore, there was no mistake in order of Assessing Officer. Before us, ld. AR of assessee made two fold submission i.e. (i) levy of service tax on one work contract was not applicable during Assessment Year 2007-08 as same was brought to tax by Finance Act w.e.f. 01.06.2007 and (ii) Assessing Officer has not verified reconciliation. Considering second submission of assessee that reconciliation was not examined by Assessing Officer, therefore, we restored this issue to file of Assessing Officer to examine reconciliation of liability under section 43B, which is part of Audit report, afresh and pass order in accordance with law. Needless to order that before passing order Assessing Officer shall grant opportunity to assessee. 6. In result, this ground of appeal is allowed for statistical purpose. ITA No. 4790/Mum/2016 for A.Y. 2010-11 7. assessee has raised following grounds of appeal: 4 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. 1.1 On facts and in circumstances of case and in law, learned CIT Appeal has erred in confirming disallowance of deduction claimed u/s 43B by assessee in respect of service tax amount reversed in books of accounts during relevant previous year. 1.2 Reasons assigned by him for confirming disallowance of deduction claimed by assessee are wrong and insufficient. 1.3 Ld. Comm of Income Tax (Appeal)- 10 Mumbai, has erred in law and in facts in not appreciating contention and submission of assessee that on reversal of service tax in books of account, no service tax remain payable and as such disallowance made in respect of unpaid service tax liability u/s 43B in earlier year is deductible 2.1 Ld. Comm of Income Tax (Appeal)- 10 Mumbai, has erred in upholding action of AO in not allowing deduction of disallowance wrongly made by assessee in respect of employees contribution to Provident Fund and ESIC in computation of income. 2.2 Reasons assigned by him for confirming disallowance of deduction claimed by assessee are wrong and insufficient. 2.3 Ld. Comm of Income Tax (Appeal)- 10 Mumbai, has erred in law and in facts in not appreciating contention and submission of assessee that employees contribution to Provident Fund & ESIC though delayed but made before due date of filling of return is deductible in view of judgment of Appex Court in case of CIT vs Alom Extrusion Limited. 8. Facts in brief are that assessee filed its return of income for A.Y. 2010-11 on 31.03.2010 declaring total income of Rs. 54,39,400/-. case was selected for scrutiny and assessment was completed under section 143(3) on 31.01.2013. Assessing Officer while passing assessment order made addition under section 43B of Rs. 18,65,555/- and disallowance of Rs. 2,22,788/- under section 36(v)(ia) on account of delay in filing ESI & PF Contribution after due date. On appeal before 5 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. ld. CIT(A), action of Assessing Officer on both disallowance was confirmed. 9. We have heard submission of ld. AR of assessee and ld. DR for revenue. ld. AR of assessee submits that Ground No.1 is identical to Ground No.1 in appeal for A.Y. 2007-08, Assessing Officer made disallowance on service tax due to non-payment in A.Y. 2007-08 as well. Part payment, which was made in year under consideration and remaining amount, was reversed by assessee. Assessing Officer disallowed remaining amount in this year. ld. AR of assessee submits that in case, disallowance for A.Y. 2007- 08 under section 43B is restored to file of Assessing Officer, accordingly issue for year under consideration may also be restored to file of Assessing Officer. 10. On other hand, ld. DR for revenue supported order of lower authorities. 11. We have considered submission of both parties and found that we have restored similar issue to file of Assessing Officer for verification of reconciliation. Therefore, this ground is restored to file of Assessing Officer to verify fact and grant appropriate relief to assessee in accordance with law. 12. In result, Ground No.1 of this appeal is allowed for statistical purpose. 6 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. 13. Ground No.2 relates to disallowance of ESI & PF Contribution due to delay in deposit. ld. AR of assessee submits that though there was delay in deposit of ESI and PF Contribution, though it was deposited before due date of filing return of income. ld. AR of assessee submits that this ground of appeal is covered by decision of Hon ble Bombay High Court in case of CIT vs. Ghatge Patil Transporters Ltd. [368 ITR 749 (Bom)]. 14. On other hand, ld. DR for revenue supported order of lower authorities. 15. We have considered submission of both parties and gone through order of lower authorities. We have also gone through various documentary evidences furnished by assessee from record. We find that assessee while computing total income for A.Y. 2010-11 has disallowed sum of Rs. 2,22,788/- being ESI and PF Contribution being paid after due date but before date of filing return of income. We find that similar addition was made in A.Y. 2009-10 and on appeal before ld. CIT(A), addition/disallowance was deleted. Therefore, considering fact that assessee claimed that Employees Contribution was deposited before due date on filing of return. Therefore, we direct Assessing Officer to verify facts about deposits of Employees Contribution, if same was deposited before 7 ITA No. 4789 & 4790 Mum 2016-M/s. Interex Arch Design Pvt. Ltd. due date and grant relief to assessee by following decision of Hon ble Bombay High Court in Ghatge Patil Transporters Ltd. (supra). 16. In result, appeal of assessee is allowed. Order pronounced in open court on 01/10/2019. Sd/- Sd/- R.C. SHARMA PAWAN SINGH ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Date: 01.10.2019 SK Copy of Order forwarded to : 1. Assessee 2. Respondent 3. concerned CIT(A) 4.The concerned CIT 5. DR C Bench, ITAT, Mumbai 6. Guard File BY ORDER, Dy./Asst. Registrar ITAT, Mumbai 8 Interex Arch Design Pvt. Ltd. v. DCIT, Circle- 5(2)(1), Mumbai