HSCC (INDIA) LIMITED,NOIDA V. DCIT CIRCLE 10(1), NEW DELHI

ITA 3473/DEL/2024

AI Insights

The case involves HSCC (India) Ltd, a public sector company under the Ministry of Health and Family Welfare, which appealed against the order of the National Faceless Appeal Centre (NFAC), Bengaluru. The appeal contested the addition of Rs 56,65,336 made by the Assessing Officer under section 143(1) of the Income-tax Act, 1961, concerning the employees' contribution to the Provident Fund for April and May 2020, which was deposited after the due date but before the end of the financial year. The Tribunal considered a circular from the EPFO that waived penal charges for delays during the lockdown and referenced a similar case, Diamour Jewels P Ltd vs CPC, where the Tribunal had allowed the deduction under similar circumstances.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 303102 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-04-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2021-2022
• Other Referred Cases: Checkmate Services Pvt Ltd vs CIT, Diamour Jewels P Ltd vs CPC
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJESH KUMAR DHANESTA
• Assessee Lawyers: LAKSHAY GUPTA
• Section: 143(1); 208

Judgement Text

"Page | 1 INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “B”: NEW DELHI BEFORE SHRI M. BALAGANESH, ACCOUNTANT MEMBER AND SHRI VIMAL KUMAR, JUDICIAL MEMBER ITA No. 3473/Del/2024 (Assessment Year: 2021-22) HSCC (India) Ltd, E-6(a), Sector-1, Noida Vs. ACIT-2, Bengaluru (Appellant) (Respondent) PAN:AAACH0086N Assessee by : Shri Lakshay Gupta, CA Revenue by: Shri Rajesh Kumar Dhanesta, Sr. DR Date of Hearing 05/03/2025 Date of pronouncement 16/04/2025 O R D E R PER M. BALAGANESH, A. M.: 1. The appeal in ITA No.3473/Del/2024 for AY 2021-22, arises out of the order of the National Faceless Appeal Centre (NFAC), Bengaluru [hereinafter referred to as ‘ld. NFAC’, in short] in Appeal No. ITBA/APL/S/250/2024-25/1065313290(1) dated 31.05.2024 against the order of assessment passed u/s 143(1) of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) dated 05.07.2022 by the Assessing Officer, ADIT, CPC, Bengaluru (hereinafter referred to as ‘ld. AO’). 2. The only issue to be decided in this appeal of the revenue is as to whether the ld CIT(A) was justified in confirming the addition made on account of employees contribution to provident fund in the sum of Rs 56,65,336/- in the facts and circumstances of the instant case. ITA No. 3473/Del/2024 HSCC (India) Ltd Page | 2 3. We have heard the rival submissions and perused the materials available on record. It is not in dispute that the assessee had remitted the employees contribution to Provident Fund for the months of April and May 2020 beyond the due date prescribed under the PF Act but paid within the end of the previous year. The ld CPC, Benguluru, while processing the return under section 143(1) of the Act, had made an addition of Rs 56,65,336/- under section 36(1)(va) of the Act. This action of the ld CPC was upheld by the ld JCIT(A). The assessee company is a public sector company under the control of Ministry of Health and Family Welfare, Government of India. The assessee company is engaged in the business of consultancy in health care, social sector and construction related contracts. The assessee company also provides procurement services on behalf of Government of India and also enters into construction contracts with contractors on behalf of Ministry for executing the construction projects. The ld AR placed on record Circular No. C- I/Misc./2020-21/Vol.I/1112 dated 15.05.2020 issued by Employees Provident Fund Organisation (EPFO), wherein EPFO had waived off the penal charges on delay in deposit of EPF during the lockdown period and thereby requested the payment made by the assessee for the months of April and May 2020 after the due date prescribed under the relevant statute due to prevailing Covid-19 pandemic and lockdown, to be allowed as deduction under section 36(1)(va) of the Act. This Circular dated 15.05.2020 is enclosed in Page 107 of the Paper Book. It is not in dispute that the assessee had deposited the entire Employees Contribution to PF dues for the months of April and May 2020 in the sum of Rs 56,65,336/- on 23.06.2020. It is not in dispute that the assessee had deposited the PF dues on or before the due date prescribed under the relevant PF Statute. Eventhough on merits, the issue is covered against the assessee by the decision of Hon’ble Supreme Court in the case of Checkmate ITA No. 3473/Del/2024 HSCC (India) Ltd Page | 3 Services Pvt Ltd vs CIT reported in 448 ITR 518 (SC), we find that the delay in the instant case was not attributable to the assessee and that the same was due to Covid -19 pandemic followed by nation wide lockdown imposed by the Government of India. Under similar circumstances, we find that the Co-ordinate Bench of Mumbai Tribunal in the case of Diamour Jewels P Ltd vs CPC reported in 208 ITD 189 (Mum Trib) dated 25.7.2024 for Assessment Year 2021-22 for the delay in remittance of very same months of April and May 2020 had held as under:- “8.4. In the present case before us, in the given peculiar fact pattern and circumstance, when the EPF Organisation itself has waived off the levy of penal damages for delayed payment during the period of lockdown by issuing the aforesaid circular, there is no question of treating the delay which occurred during the period of lockdown detrimental to the assessee under the Act, more specifically under the explanation to section 36(1)(va) of the Act. The delay in deposit of PF and ESI of the employees' share is for the month of April 2020 and May 2020. These months fell in the period of lockdown when pandemic of COVID-19 was at its peak. Due dates to deposit for these two months were 15.05.2020 and 15.06.2020 as per the relevant enactments. Assessee deposited the delayed amount in the month of June 2020 when there was relaxation in the lockdown and banking was permitted. There is no mischief on the part of the assessee in holding the employees' contribution for long periods as contemplated in the memorandum explaining the provisions introduced in the Finance Bill, 1987 and CBDT circular and dealt by the Hon'ble Supreme Court in Checkmate Services (P.) Ltd. (supra). In fact, assessee demonstrated its vigilance in depositing the impugned amounts at the first opportunity it got when the relaxation was given in the lockdown. Also, for all the subsequent months, the deposits have been on or before the prescribed due dates under the relevant enactments. Thus, in the present case under its peculiar set of facts, there cannot be any adverse effect on the assessee of not depositing the employees' contribution of EPF and ESI within the meaning of section 36(1)(va) of the Act when the relevant enactment itself had given a waiver from levy of penal damages for the delay in deposit 'during the lockdown period'. We delete the addition so made. Grounds taken by the assessee in this respect are allowed.” 4. Respectfully following the same, we direct the learned AO to delete the addition made in the sum of Rs 56,65, 336/- under section 36(1)(va) of the Act. Accordingly, the grounds raised by the assessee are allowed. ITA No. 3473/Del/2024 HSCC (India) Ltd Page | 4 5. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 16/04/2025. -Sd/- -Sd/- (VIMAL KUMAR) (M. BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 16/04/2025 A K Keot Copy forwarded to 1. Applicant 2. Respondent 3. CIT 4. CIT (A) 5. DR:ITAT ASSISTANT REGISTRAR ITAT, New Delhi "