Ni-chrome Alloy Castings Private Limited, Anakapalli V. The Income Tax Officer, Ward-1, Anakapalli

ITA 107/VIZ/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 9165 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 5 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-02-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2018-2019
• Appeal Filed On: 15-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(1); 139(1)

Judgement Text

आयकर अपीलीय अधिकरण, धिशाखापटणम पीठ, धिशाखापटणम IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM (through web-based video conferencing platform) श्री द ु व्वूरु आर एल रेड्डी, न्याधयक सदस्य एिं श्री एस बालाकृ ष्णन, लेखा सदस्य के समक्ष BEFORE SHRI DUVVURU RL REDDY, HON’BLE JUDICIAL MEMBER & SHRI S BALAKRISHNAN, HON’BLE ACCOUNTANT MEMBER आयकर अपील सं./I.T.A.No. 107/Viz/2021 (निर्धारण वर्ा/Assessment Year : 2018-19) Ni-chrome Alloy Castings Pvt. Ltd Plot No.C1 to C8 Industrial Development Area Anakapalle [PAN : AACCN1049D] Vs. Income Tax Officer, Ward-1 Anakapalle (अपीलार्थी/ Appellant) (प्रत्यर्थी/ Respondent) अपीलधथी की ओर से/ Appellant by : Shri C.Subrahmanyam, AR प्रत्यधथी की ओर से / Respondent by : Shri SPG Mudaliar, DR सुिवधई की तधरीख / Date of Hearing : 31.01.2022 घोर्णध की तधरीख/Date of Pronouncement : 09.02.2022 आदेश /O R D E R Per Shri Duvvuru RL Reddy, Judicial Member : This appeal is filed by the assessee against the order of the Commissioner of Income Tax (Appeals) [CIT(A)], National Faceless Appeal Centre (NFAC), Delhi dated 26.03.2021 for the Assessment Year (A.Y.) 2018-19. 2 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle 2. Brief facts of the case are that the assessee is a private limited company filed its return of income for the A.Y.2018-19 admitting total income of Rs.72,13,930/-. The Central Processing Center (CPC), Bangalore has processed the return u/s 143(1), determining the taxable income of Rs.74,30,621/-. While processing the return of income, the CPC, Bangalore has disallowed Rs.2,01,692/- pertaining to employees contribution towards PF and ESI, since the same was not paid within the date of filing the return under respective Acts and on the ground that the belated payment of employees contribution is not allowable u/s 36(1)(va) of the Income Tax Act, 1961. 3. On being aggrieved, the assessee preferred an appeal before the Ld.CIT(A). After considering the grounds raised by the assessee, the Ld.CIT(A) confirmed the disallowance made by the Assessing Officer(AO). 4. On being aggrieved, the assessee preferred an appeal before us and raised the following grounds : 1. That under the facts and circumstances of the case, the order passed u/s 143(1) of the I.T.Act is contrary to the provisions of the Act and the facts of the case. 2. The Ld.Commissioner of Income Tax (Appeals), National Faceless Appeals Centre (in short “CIT(A), NFAC”) erred in confirming the addition of Rs.2,01,692/-, the payment of Employees’ share of ESI & PF on the ground that the belated payment of employees’ contribution s not allowable u/s 36(1)(va) of the I.T. Act. 3 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle 3. The “Ld.CIT(A), NFAC” ought to have held that PF contribution of Employees if paid within the due date of filing of return of income is allowable for deduction in view of the provisions of sec.36(1)(va) and sec.43B of the I.T.Act. 4. The “Ld.CIT(A),NFAC” before giving the verdict on the disputed issue failed to discuss / consider the various submissions made by the assessee vide submissions made on 22.01.2021. This way the order passed by the “Ld.CIT(A), NFAC” is one sided and against all judicial norms. 5. The “Ld.CIT(A),NFAC” failed to adhere to the judicial discipline as laid down by the Hon’ble Bombay and Andhra Pradesh High Courts, reported in 156 ITR 11 & 169 ITR 564 respectively, for the proposition that when there are several judgements of different Hon’ble High Courts both in favour and against the assessee, the view favourable to the assessee is to be followed. 6. For these and other reasons that are to be urged at the time of hearing of the case, the appellant prays that the impugned disputed addition is to be deleted in the interest of justice. 5. The only grievance of the assessee is that the lower authorities made disallowance of Rs.2,01,692/- on account of late deposit of ESI and EPF contribution from the employees. The Ld.Counsel for the assessee has submitted that the assessee made the payment before filing of the due date of filing of return of income u/s 139(1) of the Income Tax Act, 1961 (in short ‘Act’) and relied on the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P) Ltd. Vs. DCIT, reported in 366 ITR 408, wherein, it was held that if the payments were made before filing of the due date of filing of return of income u/s 139(1), the assessee is entitled to claim the deduction. The assessee also relied on the decision of Hon’ble Bombay and Andhra Pradesh High Courts, reported in 156 ITR 11 & 169 4 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle ITR 564 respectively, for the proposition that when there are several judgements of different Hon’ble High Courts both in favour and against the assessee, the view favourable to the assessee is to be followed. Therefore, submitted that the ground raised by the assessee is to be allowed. 6. On the other hand, the DR submitted that the lower authorities have rightly disallowed the payments made belatedly as per the respective Acts. He further submitted that the Employees Contribution to PF is allowed as deduction, if the same is deposited on or before the due date specified under the provisions of Provident Fund Act. He further submitted that since the assessee has not deposited the contribution to respective fund account on the date as prescribed in Explanation to section 36(1)(va) of the Act, the disallowance made by the AO was just, proper and reasonable, therefore, submitted that the Ld.CIT(A) rightly confirmed the disallowance made by the AO, hence the addition is to be sustained. The Ld.DR relied on the decision of Hon’ble Kerala High Court in the case of CIT Vs. Merchem Ltd. reported in (2015) 378 ITR 443 and Hon’ble Gujarat High Court in the case of CIT Vs. Gujarat State Road Transport Corporation (366 ITR 170) [2014] (Gujarat) reported in (2014) 366 ITR 170 41 taxmann.com 100. 5 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle 7. We have heard both the parties and perused the records and after considering the facts and circumstance of the case, it is undisputed fact that the payments were made beyond due date of specified time mentioned in the Provident Fund Act. It is also admitted fact that the payments were made by the assessee before filing of the due date of filing the return of income. On this aspect, the coordinate Bench of ITAT, Visakhapatnam on similar set of facts decided the issue in favour of the assessee, relying on the decision of Hon’ble Karnataka High Court in the case of Essae Teraoka (P) Ltd. Vs. DCIT (supra), wherein, the Hon’ble Karnataka High Court viewed as follows : “8. The Hon’ble Karnataka High Court, in the case of Essae Teraoka (P) Ltd. Vs. DCIT 366 ITR 408 took the view that the word contribution occurring in section 43B of the Act would include employees’ contribution to PF in the light of the definition of the word contribution as per the provisions of section 2(c) of the PF Act. As per the said section, contribution would mean both employer’s contribution and employees’ contribution. Accordingly, it was held that the provisions of section 43B of the Act allowing deduction for payment made before the due date of filing of Income Tax return cannot be ignored. Similarly, the ITAT, Hyderabad Tribunal in the case of Tetra Soft (India) Pvt. Ltd. Vs. ACIT (2015) 40 ITR (Trib) 470 held that when assessee remitted employees’ contribution to PF within due date of filing return of income u/s 139(1) of the Act, amount of employees’ contribution to PF cannot be disallowed. Similar view was upheld by the Chennai bench of the ITAT, in the case of ACIT Vs. Farida Shoes Pvt. Ltd. (2016) 46 CCH 29. The coordinate bench held that if assessee had not deposited employees’ contribution towards provident fund up to the due date as prescribed under relevant statute, but before due date of filing of return no disallowance could be made in view of the provisions of section 43B of the Act. In the case of CIT Vs. Udaipur Dugdh Utpadak Sahakari Sangh Ltd. 35 Taxman 616, the Hon’ble High Court of Rajasthan, after referring to the apex court decision in the case of CIT Vs. Alom Extrusions Ltd. 319 ITR 306 & CIT Vs. Vinay Cement Ltd. held that the deductions should be allowed for the payment of employees’ contribution made before the due date of filing of return. Similarly, in the case of CIT Vs. State Bank of Bikaner, the Hon’ble 6 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle Rajasthan High Court held that contribution paid after the due date under the respective Act, but before filing the return of income u/s 139(1) of the Act cannot be disallowed u/s 43B of the Act and or u/s 36(1)(va) of the Act. “ Coordinate Bench of ITAT, Visakhapatnam considered the decision of Hon’ble Kerala High Court, Hon’ble High Court of Gujarat (supra) and also considered the decision of Hon’ble Supreme Court in the case of CIT Vs. M/s Vegetables Products Ltd. reported in 88 ITR 192, wherein it was held that if two reasonable constructions of a taxing provision are possible that construction which favours the assessee must be adopted. After considering all these decisions, the coordinate Bench of this Tribunal has allowed the appeal of the assessee in the case of Focus Trans Tech Shipping Private Ltd., Vs DCIT, Visakhapatnam in I.T.A. No.132/Viz/2021 dated 23.09.2021. Therefore, respectfully following the view taken by the Tribunal on similar set of facts, we hold that the orders passed by the AO as well as the Ld.CIT(A) are erroneous. Hence, the disallowance on account of late deposit of employees contribution to PF / ESI is hereby deleted and thus this ground is allowed. 8. In the result, appeal of the assessee is allowed. 7 ITA No. 107/Viz/2021, A.Y.2018-19 Ni-Chrome Alloy Castings Pvt. Ltd., Anakapalle Order pronounced in the open court on 9 th February, 2022. Sd/- Sd/- (एस बालाकृ ष्णन) (द ु व्वूरु आर.एल रेड्डी) (S.BALAKRISHNAN) (DUVVURU RL REDDY) लेखा सदस्य/ACCOUNTANT MEMBER न्याधयक सदस्य/ JUDICIAL MEMBER Dated :09.02.2022 L.Rama, SPS आदेश की प्रतितिति अग्रेतषि/Copy of the order forwarded to:- 1. तिर्धाररिी/ The Assessee – Ni-chrome Alloy Castings Pvt. Ltd, Plot No.C1 to C8, Industrial Development Area, Anakapalle 2. रधजस्व/The Revenue – Income Tax Officer, Ward-1, Anakapalle 3. आयकर आयुक्त (अपील)/ CIT(A), National Faceless Appeal Centre (NFAC), Delhi 4. प्रर्धि आयकर आयुक्त / Pr.CIT 4. तवभधगीय प्रतितितर्, आयकर अिीिीय अतर्करण, तवशधखधिटणम/DR, ITAT, Visakhapatnam 5.गधर्ाफ़धईि / Guard file आदेशधिुसधर / BY ORDER // True Copy // Sr. Private Secretary ITAT, Visakhapatnam