MINDCREST (INDIA) PVT. LTD, MUMBAI V. ASST DIR INCOME TAX CPC, MUMBAI

ITA 1430/MUM/2021

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3797 (ITAT-MUMBAI)
• Duration Of Justice: 8 month(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2022
• Appeal Filed By: Assessee
• Order Result: PartlyAllowed
• Bench Allotted: B
• Assessment Year: 2019-2020
• Appeal Filed On: 16-08-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 43B; 143(1); 250

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, MUMBAI BEFORE SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER AND SHRI SANDEEP SINGH KARHAIL, JUDICIAL MEMBER ITA No.1430/Mum./2021 (Assessment Year : 2019–20) Mindcrest (India) Pvt. Ltd. 106, Peninsula Centre, Parel Mumbai 400 012 PAN – AACCM5872D ................ Appellant v/s Asstt. Director of Income Tax Centralized Processing Centre, Bengaluru ................ Respondent Assessee by : Shri Hiro Rai, Advocate Revenue by : Shri C.T. Mathews, Sr. AR Date of Hearing – 30.03.2022 Date of Order – 26.04.2022 O R D E R PER SANDEEP SINGH KARHAIL, J.M. The present appeal has been filed by the assessee challenging the impugned order dated 23.07.2021, passed under section 250 of the Income Tax Act, 1961 ("the Act") by the learned Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, (“learned CIT(A)”) for the assessment year 2019–20. 2. In this appeal, the assessee has raised following grounds:– “The Appellant appeals against the impugned order dated 23 July 2021 Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 2 passed by Commissioner of income Tax - National Faceless Appeal Centre (NFAC) (hereinafter referred to as CIT(A)-NFAC') under section 250 of the Income-tax Act, 1961 ('The Act'), on the following ground(s): 1. The Learned CIT(A)-NFAC erred in law and as well as facts of the case in upholding the disallowance made by Asst Director of Income Tax , CPC towards delayed payment of employee's contribution to provident fund of INR 17,17,650 under section 36(1)(va) of the Act, without appreciating the fact that the said payments were made within the due date of filing of appellant's income-tax return for the year under consideration. 2. The Learned CIT(A)-NFAC erred in law in confirming an addition made by Asst Director of Income Tax, CPC which is outside the scope of provisions of section 143(1) of the Act.” 3. The issue arising in ground No. 1 raised in assessee’s appeal is with regard to the disallowance towards delayed payment of employee’s contribution to provident fund under section 36(1)(va) of the Act. 4. The brief facts of the case pertaining to this issue as emanating from record are: The assessee is engaged in the business of low end IT enabled services. For the year under consideration, the assessee filed the return of income on 28.11.2019 declaring total taxable income at Rs.6,35,44,028 and paid taxes at Rs.1,94,61,305. The return of income filed by the assessee was processed vide intimation dated 30.04.2020 issued under section 143(1) of the Act by Centralized Processing Centre, whereby, employee’s contribution to provident fund amounting to Rs.17,17,650 was disallowed under section 36(1)(va) of the Act. 5. In appeal before the learned CIT(A), assessee by placing reliance upon the decision of Hon’ble Jurisdictional High Court in CIT v/s Ghatge Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 3 Patil Transports Ltd.: [2014] 368 ITR 749 (Bom) submitted that the delay in payment of employee’s contribution to welfare funds is allowable as deduction once the same is paid before the due date of filing the return of income. The learned CIT (A) vide impugned order dated 23.07.2021 dismissed the appeal filed by the assessee holding that belated payment of employee’s contribution towards provident fund is not allowable under section 36(1)(va) of the Act relying upon the decisions of Hon’ble Madras High Court and Hon’ble Gujarat High Court. The learned CIT (A) further held that the amendment has been brought in the recent Finance Act that the delayed payment cannot be allowed under section 43B. Being aggrieved, the assessee is in appeal before us. 6. During the course of hearing, Shri Hiro Rai, learned counsel appearing for the assessee submitted that employee’s share of provident fund was deposited well before the due date of filing income tax return. The late payment is with regard to the due date provided in Employees Provident Fund and Miscellaneous Provisions Act, 1932. The learned counsel referred to the details of contributions received from employees towards provident fund, which are forming part of Tax Audit Report. The learned counsel, further, by placing reliance on various judicial precedents submitted that such contribution deposited after the due date prescribed under the respective law, but before the due date of filing of return of income is allowable under section 36(1)(va) of the Act. The learned counsel also submitted that the amendment to section 36(1)(va) and section 43B Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 4 by Finance Act, 2021 apply only with effect from assessment year 2021–22 and onwards. 7. On the other hand, Shri C.T. Mathews, learned Departmental Representative vehemently relied upon the orders passed by the lower authorities. 8. We have considered the rival submissions and perused the material available on record. From the facts available on record, it is evident that the due date of filing the return of income for the year under consideration was 30.11.2019. Further, from the details of contribution received from employees towards provident fund, as forming part of tax audit report, we find that on certain occasions payments were made to the concerned authorities beyond the due date provided under the relevant provident fund statute. Further, in the present case, it has not been disputed that the payment of employee’s contribution towards provident fund was made before the due date of filing of return of income. The only basis on which the Revenue denied the claim of assessee in respect of employee’s contribution to provident fund was that the payment was made beyond the due date prescribed under the relevant provident fund statute. 9. We find that the Hon’ble Jurisdictional High Court in Ghatge Patil Transports Ltd. (supra) held that both employee’s and employer’s contributions are covered under the amendment to section 43B of the Act, relying upon the decision of the Hon’ble Supreme Court in CIT v/s Alom Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 5 Extrusions 319 ITR 306(SC), and therefore payment of employee’s contribution on or before the due date of filing of return of income is allowable. 10. We further find that the Co-ordinate Bench of Tribunal in New Consolidated Construction Co. Ltd v/s DDIT, CPC in ITA No. 1632/MUM/2021 vide order dated 29.03.2022, after referring to the decisions of other Co-ordinate Benches wherein it has been held that amendment to provisions of section 36(1)(va) and section 43B by Finance Act, 2021, is prospective in nature, allowed employee’s contribution towards PF/ESIC made beyond the due date for payment as specified in PF/ESIC Act, but within the due date for filing the return of income. 11. In the present case, the payment of employee’s contribution towards provident fund was made after the due date prescribed under the relevant provident fund statute though before the due date of filing the return of income. Thus, respectfully following the aforesaid judicial precedents, we direct the jurisdictional Assessing Officer to delete the disallowance made under section 36(1)(va) of the Act. As a result, ground No. 1 raised in assessee’s appeal is allowed. 12. The issue arising in ground No. 2 raised in assessee’s appeal was not pressed during the course of hearing and is accordingly dismissed as not pressed. Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 6 13. In the result, appeal by the assessee is partly allowed. Order pronounced in the open court on 26.04.2022 Sd/-- OM PRAKASH KANT ACCOUNTANT MEMBER Sd/- SANDEEP SINGH KARHAIL JUDICIAL MEMBER MUMBAI, DATED: 26.04.2022 Copy of the order forwarded to: (1) The Assessee; (2) The Revenue; (3) The CIT(A); (4) The CIT, Mumbai City concerned; (5) The DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary Assistant Registrar ITAT, Mumbai Mindcrest India Pvt. Ltd. ITA No.1430/Mum./2021 7