ECON, Ghaziabad V. ADIT, CPC, Bangalore

ITA 1086/DEL/2021

• Counselvise Citation: [2021] 104 COUNSELVISE.COM (IT) 7553 (ITAT-DELHI)
• Duration Of Justice: 2 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-11-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 08-09-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india
• Section: 43B; 139(1); 13

Judgement Text

ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 1 of 19 IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH: ‘SMC’: NEW DELHI) (THROUGH VIDEO CONFERENCING) BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER AND SHRI ANADEE NATH MISSHRA, ACCOUNTANT MEMBER ITA No:-1086/Del/2021 ( Assessment Year: 2018-19) ECON C-16/13, Tamanna Building Sector-10C, Vasundhara, Ghaziabad, UP-201012 Vs. ADIT CPC Bangalore APPELLANT RESPONDENT PAN NO. AABFE3537D Assessee By : None Revenue By : Shri Om Prakash, SR DR ITA No:-1048/Del/2021 ( Assessment Year: 2018-19) M/s. PS PC Press Private Limited , E-8, Rani Jhansi Road, Jhandewalan Estate, New Delhi -11005 Vs. DCIT CPC Bangalore APPELLANT RESPONDENT PAN No.AADCP6034B Assessee By : Shri Manish Kumar, CA Revenue By : Shri Om Prakash, SR DR ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 2 of 19 (A) For the sake of convenience these two appeals are being disposed off through this consolidated order. These appeals by two different assessees are filed against the respective impugned orders of Learned Commissioners of Income Tax (Appeals), [“Ld. CIT(A)”, for short], dated 29.07.2021 and 26.04.2021 for Assessment Year 2018-19. Grounds taken in these appeals of assessees are as under: ITA No.1086/Del/2021 (A.Y.2018-19) 1. Ld. CIT (A) has erred in law and on merits of the case was not justified in confirming the addition of Rs.4.98,153/- made by A.O. (CPC) on account of late deposit of employee contribution towards PF/ESI, even it is paid before the due date of filing of ITR in view of Section 43B of The Income Tax Act, 1961 and ignored various judicial pronouncement cited by the assessee. 2. CIT (A) has erred in law in confirming the disallowance of employee contribution to PF/ESI in the light of amendment in sections 36(va) as well as in section 43B by inserting corresponding explanations through finance Act 2021. Although the impugned employee PF/ESI now comes under the provision of section 36(va) only, but the memorandum explaining Finance Bill 2021 says that these amendments will take effect from 01.04.2021 and will accordingly apply to AY 2021-22 and subsequent assessment years. Thus the legislature itself has condoned the impugned default before 01.04.2021. 3. ITAT Branch of Delhi in the case of Insta Exhibitions Pvt Ltd vs ACIT ITA no. 6941/DEL/2017 (and ITA no. 4959/DEL/2016) wherein it was held that the belated payments of ESI and PF cannot be treated as deemed income under section 2(24) . Further it was held that notes on clauses introducing Finance Bill ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 3 of 19 holds that amendment is effective from AY 2021-22 and thus deleted the addition on this account. 4. That the appellant craves leave to add, amend or alter any of the grounds of appeal on or before the date of hearing. ITA No.1048/Del/2021 ( A.Y.2018-19) 1. The CIT(A) failed to appreciate the amendment vide Finance Act 2021 that the relevant funds as well as Section 36(l)(va) specifically contemplates that payment should be made on or before the due date fixed at the relevant fund only, the employer is not entitled to claim the deduction towards such payment if he paid the same after such date but before the filing of return is applicable from AY2021-22 Prospective and not retrospective and therefore the instant case of assessee for AY 2018-19 is not hit by this amendment. 2. The CIT(A) while upholding the disallowance of late deposit of PF& ESI of Rsl,81,855/- failed to appreciate that the Hon’ble supreme court vide the case of CIT v/s Alom Extrusions Ltd 319 ITR 306 set at rest the issue of Late deposit of PF & ESI after the due date as per the respective Act but before the due date of return u/s 139(1 )in view of the omission of the second Proviso to section 43-B of the Income Tax Act by the Finance Act 2003. 3. The CIT(A) failed to appreciate that the revenue in the case of CIT v/s Lakhani Rubber Works 326 ITR 415(P& H) did not press the question relating to late deposit of PF & ESI of Employee’s Contribution as the issue was no more res integra in view of Judgment of CIT v/s Alom Extrusions Ltd 319 ITR 306 (SC). ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 4 of 19 4. The CIT(A) failed to appreciate that Section 43-B is non obstanti Clause as it begins with Notwithstanding anything contained in any other provision of this Act which makes it clear that the Provision of Clause (b) of section 43B overrides the explanation (va) of subsection (.1) of section 36. 5. The CIT(A) failed to appreciate that the word” Contribution” used in clause(b) of section 43-B of the Act means the Contribution of the employee & employer and thus being so, if the contribution is made on or before the due date of furnishing return of income under Section 139(1) the employer is entitled to deduction. 6. The .CIT(A) failed to appreciate that if on any issue there is bifurcation of Opinion between courts or in other words on any issue if two views are available then view which is favorable to assessee should be adopted in view of the settled legal position by the Hon’ble Supreme court vide the case of CIT v/s Vegetable Products Limited 88 ITR 192. 7. The appellant/assessee Craves your honour leave to add, delete or modify any grounds of appeal during the course of hearing . (B) In each of these appeals, common legal issue is involved. The assessees claimed deduction on account of payment of PF/ESI. These payments were made after the due date of payment prescribed under respective acts. However, these payments were made before due date of filing of return under IT Act, 1961. The respective Assessing Officers have made the disallowances under section 36(1) (va) / section 43B of IT Act. The quantum of disallowance is Rs.1,81,855/- in the case of M/s. PSPC Press Private Limited and Rs.4,98,153/- in the case of M/s. ECON Ghaziabad. Vide the respective impugned appellate orders dated 29.07.2021 and 26.04.2021, the respective ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 5 of 19 Ld. CIT(A) confirmed the aforesaid disallowances of Rs.4,98,153/- and 1,81,855/-. The present appeals before us have been filed by the assessees in Income Tax Appellate Tribunal (ITAT, for short) against these impugned appellate orders dated 29.07.2021 and 26.04.2021 of the respective Ld. CIT(A). In the course of appellate proceedings in ITAT the following written submissions were filed from the asessee’s side in the case of M/s. PS PC Press Private Limited, reproduced as under :- “ ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 6 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 7 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 8 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 9 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 10 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 11 of 19 (B.I) At the time of hearing before us the Ld. Counsel for the assessee in the case of M/s. PS PC press Private Limited relied on the aforesaid written submissions. In the case of ECON, Ghaziabad the assessee was represented by none at the time of hearing before us. The Learned Senior Departmental Representative (Ld. DR, for short) relied on the respective orders of Assessing Officers and Ld. CIT(A) in the case of M/s. PS PC Press Private Limited as well as in the case of ECON, Ghaziabad. (C) We have perused the materials available on record. We have heard the Ld. Sr. DR for Revenue and Ld. Counsel for the assessee in the case of M/s. PS PC Press Private Limited. It is not in dispute that the payments on account of PF/ ESI were made by the assesees after due date prescribed in the respective acts; but before due date of filing of return under the IT Act. A similar issue had come up before us in the case of Pachouli Wellness Clinic LLP Vs. ITO vide order dated 25.11.2021 in ITA No.999/Del/2021. We have decided the issue in favour of the assessee and against Revenue. The relevant portion of our order dated 25.1.2021 in the case of M/s. Pachouli Wellness Clinic LLP Vs. ITO is reproduced as under :- ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 12 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 13 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 14 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 15 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 16 of 19 ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 17 of 19 (C.1) In view of the foregoing; and consistent with the view already taken by ITAT in the aforesaid case of Pachouli Wellness Clinic LLP Vs. ITO (supra) and in the case of DCIT Vs. Planman HR (P) Ltd. vide ITA No.5152/Del/2017 vide order dated 15.07.2021; we decide the issue in dispute before us in the present two appeals, also, against Revenue and in favour of the assessees. Accordingly, we direct the respective Assessing Officers to delete the aforesaid amounts of Rs.1,81,855/- and Rs.4,98,153/- respectively. In the result, these appeals filed by the two assessees are allowed. ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 18 of 19 This order was already pronounced orally on 25 th November, 2021 in Open Court, in the presence of representatives of both sides, after conclusion of the hearing. Now this order in writing is signed today on 26.11.2021. Sd/- Sd/- (SUCHITRA KAMBLE) (ANADEE NATH MISSHRA) JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 26.11.2021 (NEHA) Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT NEW DELHI ITA No.-1048/Del/2021 PS PC Press Private Limited 1086/Del/2021 ECON, Ghaziabad Page 19 of 19 Date of dictation Date on which the typed draft is placed before the dictating Member Date on which the typed draft is placed before the Other Member Date on which the approved draft comes to the Sr. PS/PS Date on which the fair order is placed before the Dictating Member for pronouncement Date on which the fair order comes back to the Sr. PS/PS Date on which the final order is uploaded on the website of ITAT Date on which the file goes to the Bench Clerk Date on which the file goes to the Head Clerk The date on which the file goes to the Assistant Registrar for signature on the order Date of dispatch of the Order