Samir Kumar Dey, Angul V. ADIT, CPC, Bengaluru

ITA 106/CTK/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 6145 (ITAT-CUTTACK)
• Duration Of Justice: 2 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-12-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2019-2020
• Appeal Filed On: 10-10-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Set aside
• Section: 43B; 250; 43; 119

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, BEFORE Samir Kumar Dey NALCO Nagar, Angul PAN/GIR No. (Appellant This is an appeal filed by the assessee against the or CIT(A), National Faceless Appeal Centre, Delhi dated 12.8.2021 assessment year 2. The sole grievance of the assessee justified by not allowing Rs.20,26,574/ and ESI although deposited before due date of filing return of income. 3. Facts giving rise to the present appeal are that the Asst. Income Tax, Centralized Processing Centre (“CPC”) , Bengaluru, while processing the return of the assessee, disallowed the claim of employee’s contribution towards PF and ESI on account of amount of Rs.17,87,415/ IN THE INCOME TAX APPELLATE TRIBUNAL, CUTTACK ‘SMC’ BENCH, CUTTACK BEFORE SHRI CHANDRA MOHAN GARG, JUDICIAL ITA No.106/CTK/2021 Assessment Year : 2019-2020 Samir Kumar Dey, Kandasar, NALCO Nagar, Angul-759145 Vs. Asst. Director of Income Tax, CPC, Bengaluru No.AFRPD 4252 R (Appellant) .. ( Respondent Assessee by : Shri K.C.Jena, AR Revenue by : Shri Charan Das Date of Hearing : 07/12/ 20 Date of Pronouncement : 20 /12 O R D E R This is an appeal filed by the assessee against the or CIT(A), National Faceless Appeal Centre, Delhi dated 12.8.2021 assessment year 2019-2020. The sole grievance of the assessee is that the ld CIT, NFAC was not justified by not allowing Rs.20,26,574/- as contribution of employees to EPF and ESI although deposited before due date of filing return of income. Facts giving rise to the present appeal are that the Asst. Income Tax, Centralized Processing Centre (“CPC”) , Bengaluru, while processing the return of the assessee, disallowed the claim of employee’s contribution towards PF and ESI on account of delay in depositing the amount of Rs.17,87,415/- and Rs.2,39,159/-, respectively. Page1 | 8 IN THE INCOME TAX APPELLATE TRIBUNAL, BENCH, CUTTACK JUDICIAL MEMBER 2020 Asst. Director of Income Tax, CPC, Bengaluru Respondent) , AR Charan Das (DR) / 2021 12/2021 This is an appeal filed by the assessee against the order of the CIT(A), National Faceless Appeal Centre, Delhi dated 12.8.2021 for the is that the ld CIT, NFAC was not as contribution of employees to EPF and ESI although deposited before due date of filing return of income. Facts giving rise to the present appeal are that the Asst. Director of Income Tax, Centralized Processing Centre (“CPC”) , Bengaluru, while processing the return of the assessee, disallowed the claim of employee’s delay in depositing the , respectively. ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page2 | 8 4. Aggrieved against this, the assessee preferred appeal before first appellate authority, i.e. CIT (A), NFAC, who sustained the addition on account of employee’s contribution to PF and ESI. 5. Hence, the assessee has preferred appeal before this Tribunal. 6. Ld. Counsel for the assessee submitted that the authorities below were not justified in disallowing the claim and making the addition. He submitted that the contributions to PF and ESIC are deposited before the due date of filing the return of income and, hence, same should be allowed. He submitted that Ld.CIT(A) had relied upon the several decisions of Hon’ble High Courts and especially the CBDT Circular No.2/2015 dated 17.12.2015 to confirm the addition. He referred to the decision of Hon’ble Rajasthan High Court in the case of CIT vs. Rajasthan State Beverages Corporation ltd (2017) 250 Taxman 32 (Raj), wherein, the Hon’ble High Court has held that the employees contributions to PF and ESI made within the due date of filing the return u/s.139(1) of the Act shall be allowable as deduction. He submitted that against the aforesaid decision, SLP filed by the department before the Hon’ble Supreme Court has been dismissed. He also referred the various co-ordinate Benches of the Tribunal, wherein also, the payment on account of PF and ESI deposited before the due date of filing the return of income, was allowed. Ld A.R. also referred to the recent decision of ITAT Jodhpur in the case of Mohangarh Engineers and Construction Company vs DCIT, CPC, Bangalore in ITA No.05/Jodh/2021 ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page3 | 8 and others for A.Y. 2019-2020 order dated 12.8.2021, wherein also, the CPC Bangalore had disallowed the contribution of PF and ESI made before the due date, which was also confirmed by CIT(A) Delhi (NFAC) vide order dated 5.3.2021 and on appeal, the ITAT Jodhpur directed to allow the contribution to PF and ESI made deposited before the due date of filing the return of income. Ld A.R. also relied on the decision of ITAT Kolkata order dated 16.7.2021 in the case of Harendra Nath Biswas vs DCIT in ITA No.186/Kol/2021 for A.Y. 2019-2020, wherein also following the decision of Hon’ble Calcutta High Court in the case of Vijayshree, (2014) 43 taxmann.com 396 (Cal) and the decision of Hon’ble Supreme Court in the case of CIT vs. Alom Extrusion Ltd., 390 ITR 306 (SC) allowed the contribution to PF and ESIC deposited before the due date of filing of return of income as deduction. 7. Replying to above, Ld. DR supported the decisions of the authorities below and relied on the case laws referred by Ld.CIT(A) Delhi (NFAC) in the impugned order. 8. I have heard the rival contentions and perused the material available on record and perused the orders of the authorities below. In the instant case, the Asst. Director of Income Tax, CPC, Bengaluru disallowed deduction for employees contribution made PF and ESIC amounting to Rs.17,87,415/- and Rs.2,39,159/-, respectively, as the same were not deposited by the assessee within the due date prescribed under ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page4 | 8 the respective Acts. The CIT(A) Delhi NFAC confirmed the action of the Assessing Officer following the CBDT Circular No.22/2015 dated 17.12.2015, decision of ITAT Ahmedabad in the case of Morakhia Copper and Alloys Pvt Ltd., 119 taxmann.214, decision of Hon’ble Kerala High Court in the case of Merchem Ltd, 61 taxmann.com 119, Hon’ble Gujarat High Court in the case of Gujarat State Road Transport Corporation, 41 taxmann.com 100 and Hon’ble Madras High Court in the case of Unifac Management Services (India) Pvt Ltd., 100 taxmann.com 244 (Mad). 9. I find that the Hon'ble Supreme Court in the case of CIT vs Alom Extrusions Ltd, [2009]319 ITR 306(SC) has held as under: Prior to the Finance Act, 2003, the second proviso to section 43B of the Income-tax Act, 1961 (for short, " the Act" ) restricted the deduction in respect of any sum payable by an employer by way of contribution to provident fund/superannuation fund or any other fund for the welfare of employees, unless it stood paid within the specified due date. According to the second proviso, the payment made by the employer towards contribution to provident fund or any other welfare fund was allowable as deduction, if paid before the date for filing the return of income and necessary evidence of such payment was enclosed with the return of income. In other words, if contribution stood paid after the date for filing of the return, it stood disallowed. Ld A.R. has relied also several decisions of Hon’ble High Courts and Co-ordinate Benches of the Tribunal on this issue, ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page5 | 8 especially the decision of ITAT Kolkata in the case of Harendra Nath Biswas(supra) wherein, on similar facts, the Tribunal has decided the assessee as under: “3. Brief facts of the case is that the CPC while processing the return disallowed/added Rs. 1,10,62,263/- on the ground that employees contribution to employees provident fund (EPF) and ESI fund has been deposited beyond the due date applicable under the provision of ESI Act, 1948 and EPF Act by invoking the provision of Section 36(1)(va) of the Act. Aggrieved by this disallowance, the assessee filed the appeal before the national Faceless Appeal Centre (NFAC), Delhi where the Ld. CIT(A) has taken note of the assessee’s submission that no disallowance was warranted in respect of delayed deposit of employees contribution to EPF /ESI fund since the assessee has deposited the employees contribution in respect of both these Acts (EPF & ESI Act) before filing the return of income and relied on the various judicial decision including that of the jurisdictional Hon’ble High Court of Calcutta in the case of CIT vs. Vijayshree Ltd. in [2014] 43 taxman.com 396(Cal). However the Ld. CIT(A) did not accept the contentions of the assessee in this regard and by relying on the Explanation-5 below section 43B which was brought in by Finance Act, 2021 to deny the claim of assessee. Therefore, the assessee is before us by preferring this appeal. 4. We have heard both the parties and perused the record. First of all we do not countenance this action of the Ld. CIT(A) for the simple reason that the Explanation 5 was inserted by the Finance Act, 2021, with effect from 01.04.2021 and relevant assessment year before us is AY 2019-20. Therefore the law laid down by the Jurisdictional Hon’ble High Court will apply and since this Explanation-5 has not been made retrospectively. So we are inclined to follow the same and we reproduce the order of Hon’ble Calcutta High Court in the case of Vijayshree Ltd. supra wherein the Hon’ble Calcutta High Court has taken note of the Hon’ble Supreme Court decision in CIT vs. Alom Extrusion Ltd. reported in 390 ITR 306. The Hon’ble Calcutta High Court’s decision in Vijayshree Ltd. supra is reproduced as under: “This appeal is at the instance of the Revenue and is directed against an order dated 28th April, 2011 passed by the Income Tax Appellate Tribunal, “A” Bench, Kolkata in ITA No. 1091/Kol/2010 relating to assessment year 2006-07 by which the Tribunal dismissed the appeal preferred by the Revenue against the order of CIT(A). The only issue involved in this ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page6 | 8 appeal is as to whether the deletion of the addition by the AO on account of Employees ‘Contribution to ESI and PF by invoking the provision of Section 36(1)(va) read with Section 2(24)(x) of the Act was correct or not. It appears that the Tribunal below, in view of the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., reported in 2009 Vol.390 ITR 306, held that the deletion was justified. Being dissatisfied, the Revenue has come up with the present appeal. After hearing Mr. Sinha, learned advocate, appearing on behalf of the appellant and after going through the decision of the Supreme Court in the case of Commissioner of Income Tax vs. Alom Extrusion Ltd., we find that the Supreme Court in the aforesaid case has held that the amendment to the second proviso to the Sec 43(B) of the Income Tax Act, as introduced by Finance Act, 2003, was curative in nature and is required to be applied retrospectively with effect from 1st April, 1988. Such being the position, the deletion of the amount paid by the Employees’ Contribution beyond due date was deductible by invoking the aforesaid amended provisions of Section 43(B) of the Act. We, therefore, find that no substantial question of law is involved in this appeal and consequently, we dismiss this appeal. Urgent xerox certified copy of this order, if applied for, be supplied to the parties subject to compliance with all requisite formalities.” In the light of the aforesaid discussion we do not accept the Ld. CIT(A)’s stand denying the claim of assessee since assessee delayed the employees contribtion of EPF & ESI fund and as per the binding decision of the Hon’ble High Court in Vijayshree Ltd. (supra) u/s 36(1)(va) of the Act since assessee had deposited the employees contribution before filing of Return of Income. Therefore, the assessee succeeds and we allow the appeal of the assessee.” 10. It is settled law that when conflicting judgments are available giving different views on a particular issue, then the judgment which is in favour of the assessee shall apply as held in case of Vegetable Products Ltd. 82 ITR 192 by the Hon'ble Supreme Court. Hence, in light of the latest decision of ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page7 | 8 ITAT Jodhpur in the case of Mohangarh Engineers and Construction Company (supra) order dated 12.8.2021 (supra) and decision of ITAT Kolkata in the case of Harendra Nath Biswas (supra), I set aside the orders of lower authorities and remit the matter back to the file of the Assessing Officer to take note of the rulings cited (supra) and examine/verify the fact as to whether the assessee had deposited the impugned amount of PF and ESIC before filing of the return. If the AO is satisfied about the said fact then he is directed to allow the claim of the assessee regarding payment of PF and ESIC paid before filing the return of income. 11. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced on 20 /12/2021. Sd/- (Chandra Mohan Garg) JUDICIAL MEMBER Cuttack; Dated 20 /12/2021 B.K.Parida, SPS (OS) ITA No.106/CTK/2021 Assessment Year : 2019-2020 Page8 | 8 Copy of the Order forwarded to : By order Sr.Pvt.secretary ITAT, Cuttack 1. The Appellant : Samir Kumar Dey, Kandasar, NALCO Nagar, Angul-759145 2. The Respondent. Asst. Director of Income Tax, CPC, Bengaluru 3. The CIT(A)-National Faceless Appeal Centre, Delhi 4. Pr.CIT-, 5. DR, ITAT, Cuttack 6. Guard file. //True Copy//